Up to 1,000 jobs could be lost at Dairygold when a "root and branch" review of its operations is completed, staff at the Cork-based dairy giant were told yesterday.

Both management and SIPTU, however, played down reports of imminent large-scale job cuts and said there would be no drastic changes without negotiations.

Speculation about the job security of the co-op's 3,200 workers intensified this week following its announcement last Friday that it is to outsource its transport operations, which currently employ 170.

The move is the first phase of a rationalisation programme which is likely to lead to further job cuts and a sell-off the some non-core operations.

But the company yesterday rejected a newspaper report that its chief executive, Mr Jerry Henchy, told the Tánaiste, Ms Harney, recently that up to 2,000 job losses at the co-op could be involved.

In a memo circulated to staff, seen by The Irish Times, management said the newspaper story in question was "pure speculation" and had "no basis in fact".

There was not and never had been any proposal to cut staff numbers to the degree suggested.

It was a matter of public record, the memo added, that the co-op was engaged in a root and branch review of its operations, through a process of consultation with staff and unions.