US electronics company Key Tronic is to close its manufacturing base at Dundalk, Co Louth, with the loss of 316 jobs. The company, which is one of the town's biggest employers, will continue to employ 75 full time staff at its Dundalk plant where it will now focus on the distribution and development of computer keyboards, it said yesterday.

Some good news on the jobs front, however, is expected today with a new 200 job enterprise expected to be confirmed for Dundalk by the Minister for Enterprise and Employment.

Responding to news of the job losses yesterday, Mr Bruton said he was "confident" that employment could be rebuilt quickly in Dundalk.

Mr Bruton said it was clear that intense global competition hag a major impact on the competitiveness of Key Tronic. "Every effort has been made by IDA Ireland to assist the company over the past difficult period," he said.

While rumours of lay offs have been circulating for some time, ATGWU union official Mr Brendan O'Rourke said the announcement of more than 300 job losses came as a surprise to most of the workers yesterday. The ATGWU was now urging the Government to set up a task force to secure new employment for the workers.

Key Tronic had been working closely with IDA Ireland to attract new investment to the town to replace the jobs being lost at the company, the Minister said. Employees affected by the latest announcement are expected to leave by the end of June.

The scaling down of Key Tronic's Irish operations is part of a global reorganisation of the group's electronics business in response to intense competition from manufacturers in the Far East. Workers were told that, in its present form, Key Tronic is no longer cost competitive.

Key Tronic claims that computer keyboards manufactured in the Far East can be imported into European markets at a much lower cost than those produced in Dundalk.

In a statement yesterday, the company stressed that, despite its best efforts to introduce the most advanced production processes and systems at the Irish plant, it was no longer able to match the cost structures of its competitors. Its customers, it added, were "no longer willing to pay a premium for keyboards produced in Europe'.

It now intends to manufacture keyboards at other Key Tronic facilities. It is understood that some of its production will also be contracted out to companies in the Far East.

Key Tronic laid off 78 temporary staff earlier this year, blaming a downturn in demand for its products. It is understood that two of its biggest customers had, at that time, substantially reduced their orders.

Key Tronic makes computer keyboards for the European market, selling to computer distributors and hardware manufacturers.

The electronics company was established in Dundalk more than 10 years ago and has received grants of £3.5 million from IDA Ireland. While the group does not disclose figures for its subsidiaries, it has been estimated that the company had a turnover of around £23 million last year.