More than 250 jobs are likely to be lost in Dundalk following an announcement last night that the US technology firm Quantum is reviewing its plant in the city.

Quantum, which provides data storage services to customers, confirmed that it is planning to outsource work from its factory in Dundalk as part of a wider European business review.

The review is expected to last around 45 days and could result in the closure of the factory, possibly by the end of 2006. The manufacture of digital tape at the plant is likely to be outsourced to companies in eastern Europe to cut costs.

Kevin Devlin, managing director of Quantum in Dundalk, said a consultation process had been entered into with staff. He said Dundalk was one of the last Quantum plants involved in the manufacture of digital tape, which is used to store data.

"Outsourcing is a general trend in the electronics industry and Ireland is no longer the low-cost destination it once was," he added.

Founded in 1980, Quantum, which is based in California, is a global leader in storage, delivering highly reliable backup, recovery and archive solutions.

Quantum is the world's largest supplier of digital tape drives, which are incorporated into products by all the major computer manufacturers.

Its DLT tape (digital linear tape) technology is the standard for back-up, archiving and recovery of data on computer.

There are more than two million DLT tape drives in current use. The Dundalk facility was established in 1991 and employs about 250 full-time staff.

In September 2002 the company and the Tánaiste, Ms Harney, announced an expansion of 120 jobs in Dundalk. At the time, the firm employed about 280 people.