Tobacco firm PJ Carroll is considering a proposal to close its Dundalk plant with the loss of 66 jobs.
In a statement today, the company said it had initiated talks with employees regarding the proposal to close the factory which has been in operation since 1905.
A British American Tobacco statement
The company said production at the factory has been in decline for some time and is currently operating at only 45 per cent of its capacity.
It said: "The management of the company are of the view that the operation will not remain viable for the future."
The consultation process does not impact the PJ Carroll sales and marketing operation in Sandyford, Co Dublin.
The move comes as part of a wider restructuring plan by PJ Carroll's parent company British American Tobacco.
The world's second largest tobacco maker said it was seeking to close its Southampton factory within 18 to 24 months with the loss of around 530 jobs.
"Today's announcements come as a result of separate reviews into the prospects for both factories. Regrettably, both reviews have concluded, subject to consultations, that there is no viable future for either," BAT said in a statement.
A spokesman for the company said that most of the 24 billion cigarettes made at Southampton each year went for export and it made sense to produce them nearer their markets.
The group, including associated companies, employs more than 90,000 people worldwide. BAT, which sold 853 billion cigarettes in 2004, performed strongly in countries such as Russia, Turkey, India and Pakistan last year.
Last month it announced that 25 per cent of Southampton's production would be moved to Singapore and Korea.
The restructuring will cost around €233 million said BAT, most of that charged to 2005, but would save €58 million a year thereafter.
The maker of Dunhill and Lucky Strike cigarettes is looking to drive profits through substantial cost cutting which analysts read as large-scale factory closures in Europe, pushing savings to €290 million over the next one to two years.
Additional reporting by Reuters
