A US multinational is to close a plant in Co Galway with the loss of 150 jobs. The work done at the plant is to be relocated to China.

The Crown Equipment Corporation's plant at Mervue, Galway, is to close in 2006, staff were told yesterday.

The plant has been in operation since the early 1960s and at its height employed more than 300 people.

The company said the decision to move was "economics based" and that it greatly regretted the decision.

Crown Equipment Corporation is one of the largest lift truck manufacturers in the world. It bought the plant in Galway in 1968.

It has its headquarters in Ohio and has manufacturing plants in six US locations as well as in Galway; Sydney, Australia; Roding, Germany; and Queretaro, Mexico.

The Irish Engineering Enterprises Federation expressed its concern following the announcement, noting that it came in the wake of the announcement earlier this month that 245 jobs were to be lost at Magna Donnelly Electronics, in Naas, Co Kildare.

"This confirms the fears of the engineering sector that increased costs equal decreased competitiveness and job losses," said Mr Paul Kelly, director of the federation.

"Business costs should be dealt with as a matter of national urgency to stem the loss of jobs in the engineering and wider manufacturing sectors."

He said non-pay costs for business rose by a cumulative 21.7 per cent in the 2002-2004 period, while cumulative inflation for the same period was 5.9 per cent.

He said these rises were having a very damaging effect.

"The engineering sector in Ireland is a bedrock of many communities, employing more than 50,000 people in all parts of the country."

"It is also crucial to the national economy, with a turnover in excess of €10 billion and accounting for 11 per cent of gross added value in Irish manufacturing."