Rennicks Plastics, which employs 88 people at its plant in Kilbride, Co Meath, is to close. The company said it was closing because its customer base had been eroded by competition from lower-cost economies.

It is understood rival groups from Eastern Europe and Asia, where production costs are considerably lower, have been undercutting the Irish firm, resulting in a loss of business.

Around 90 jobs at its road signage division will be unaffected.

A spokesman for the group said that division was growing.

He said most of the workers would leave the plastics plant on September 27th with a smaller number being kept on into October before the facility closes at the end of October.

Some of the company's customers may be supplied by a rival Cork group, Keytech, but Rennicks said there was no possibility that Keytech would offer employment to the Rennicks employees.

Rennicks, which manufactures plastic moulded products such as traffic cones, is owned by the Fitzwilton group, of which Sir Anthony O'Reilly is a major shareholder.

The union SIPTU said it was due to meet management at the group tomorrow to finalise redundancy packages.

The company is offering employees four weeks' pay for every year of service with a cap of one year's salary.

SIPTU branch secretary Mr Gerry Lynch said this was not satisfactory.

He added that the union would ballot its members for strike action if the severance packages were not improved and the cap removed.

Mr Lynch said the announcement was a devastating blow to the workers and the local community of Kilbride.

"We are calling on the Minister for Enterprise, Trade and Employment, the IDA and other relevant State agencies to use the intervening period between now and the intended closing date of October 30th to lobby for a replacement industry," he said.

"It is our intention to ballot our members for industrial action in pursuit of improved redundancy terms over and above those initially offered by the management.

Fine Gael front bench spokesman Mr John Bruton said the Government was directly responsible for the jobs losses.

"The disastrous loss of 88 jobs in Rennicks . . . is a direct result of the loss of cost-competitiveness in the Irish economy," Mr Bruton said.

"This is because inflation is too high. The workers of Kilbride are suffering because the Government overheated the Irish economy to win the election."