Bus and coach builder Plaxtons of Scarborough is to close with the loss of 700 jobs, leaving the whole region devastated.

The foot and mouth crisis was partially blamed for the shock news that the troubled 94-year-old firm will close with phased redundancies right up to early August. The plan was announced by management teams from TransBus International to stunned workers throughout yesterday as well as to last night's shifts. All workers were allowed home early.

They learned that the effect of foot and mouth disease on tourism and the reluctance as a result of coach operators to buy new vehicles played a crucial part in a 21 per cent slowdown in the UK bus and coach market in the first quarter of this year.

That and the end of an eight- year boom in manoeuvrable small midibuses manufactured at Scarborough and long favoured by bus operators, finally put the nail in the coffin of the town's biggest employer. Production will now be transferred to TransBus International's factory in Falkirk.

Bill Simpson, director of corporate affairs for TransBus International, said this morning that management would be working throughout this Bank Holiday weekend to find solutions to minimise the impact on Plaxton's workers. A task force and jobs clinic helped by outside consultants would seek to give one-to-one assistance.

Mr Simpson also held out the hope that the organisation might be able to "retain a core team of engineers - perhaps about 50 people".

The mood inside the factory this morning was described by coachbuilder Stephen Gaines, of Bilsdale Close, York as "very grim and sombre". He added: "We're all still shell-shocked."

Economic experts estimate that the knock-on effect of the shutdown will hit five per cent of the entire workforce of Scarborough as suppliers and the wider economy are hit. For about 100 of the workers who joined Plaxtons during redundancies in the build-up to closure of ABB in York in 1996, it is a nightmare returned.

As an emergency meeting was called today by Scarborough Council's leader Eileen Bosomworth, with the town's economic development unit, Trade Secretary Stephen Byers promised Lawrie Quinn, Scarborough's Labour MP, that the government would work with local authorities, Yorkshire Forward and skills and learning councils to soften the blow.

Mr Quinn, who complained he received ten minutes' notice from managing director Neil Beresford before the news was announced, said: "This is a devastating blow to the local authority and to the community in Scarborough and the thousands of families who have been associated with it over the years.

"It is also next door to the Eastfield area, one of the most deprived parts of my constituency and among the poorest ten per cent in the region."

Scarborough's economic development officials, he said, had verified his estimate of a knock-on effect hitting five per cent of the town's workforce.

The MP for the resort added: "We have been trying to find ways of getting jobs to Scarborough, but closure puts us back decades," said the MP.

TransBus International was formed in January with the merger of the UK bus and coach operations of Henlys Group which included Plaxtons, and The Mayflower Corporation. The idea behind the merger was to band together to fight serious European competition in the European market.

And at the time it was made clear that there were overlaps in production which would need to be sorted out in a review of operations at Guildford, Surrey, Scarborough and Anston, near Sheffield, at Wigan in Lancashire, Falkirk and Larbert in Central Scotland and in Belfast, Northern Ireland.

But TransBus say that the review coincided with the massive slowdown in the UK bus and coach market and it was decided to move Scarborough's operations to the group's principal bus body manufacturing site at Falkirk.

John Fleming, chairman of TransBus, said: "We regret having to take this difficult decision and are mindful of the impact it will have on the local community.

"These latest steps, however, are essential to ensure that TransBus is in the right shape to compete at home and internationally and to capitalise on our position as the UK's leading bus and coach business."

Updated: 12:51 Friday, May 04, 2001