More than 200 jobs at Youghal Carpets are under threat as the company announced its closure following a breakdown of negotiations on a rationalisation plan.

Management at the Youghal Carpet Yarns plant at Kilacloyne, near Cork, said it would close on February 8th next. The unexpected announcement was made to staff at the plant yesterday after the group of unions there had failed to agree proposals for a rationalisation plan, which management said was necessary to offset the worldwide downturn in demand for carpets.

The Cork plant manufactured raw materials for carpet-makers and exported chiefly to the European and export markets.

It is understood that while Mandate had agreed to the rationalisation proposals, SIPTU, the largest union at the plant, rejected them and management responded yesterday by issuing protective notice to all staff.

Last night, the Tβnaiste, Ms Harney, urged all parties to work together to find a speedy solution to the difficulties. Officials from the Department of Enterprise, Trade and Employment have been in contact with all parties to help ensure the survival of the company.

Last week, 40 Youghal Carpets workers were made redundant as part of the initial phase of the rationalisation plan. The workers affected had relatively short service and lost their jobs on a last-in, first-out basis.

Management was seeking a further 120 redundancies from the main workforce and, during talks over the past week, it is understood this figure had been reduced to 85. However, SIPTU felt the work practices demanded under the rationalisation plan were unacceptable and, when management was informed, closure of the plant was announced.

If the closure goes ahead, it could have serious repercussions for Navan Carpets, which is supplied by the Cork plant, and for the general economy of the east Cork area, which has suffered major closures in recent years. Two years ago East Cork Foods closed with the loss of more than 100 jobs, while last summer the ISPAT steel plant closed, with the loss of 300 jobs amongst workers directly employed at the plant and a further 350 amongst service providers.

Estimates vary, but according to some analysts, the loss to the east Cork economy could be as high as £4 million per annum when salaries and services provided by local firms are taken into account.

In its heyday, the plant was the major employer in the east Cork area and had more than 1,000 workers on its payroll. Over the past 15 years, it has undergone a series of rationalisation plans and takeovers, the most recent of which was when it was acquired by Mr George Courri, the US-based businessman, last year.

Mr Courri had carpet-making interests in Milton Keynes in Britain, as well as the US.