The announcement comes a day after it agreed to a £4bn ($6.59bn) takeover by American company TRW.

Unions have threated to call in the regulatory authorities

Production of wiring harnesses is to end at the Lucas SEI plant in Ystradgynlais, near Swansea, in South Wales, by the end of July. The work will be transferred to other European sites.

The company, a joint venture between LucasVarity and Japanese firm Sumitomo Electric Industries, said it was restructuring its UK business.

The Ystradgynlais site will be changed to a customer support centre, employing 100 staff, compared with the 840 workers presently on site.

Decline in demand

General manager David Boulton said: "The decision to cease manufacture at the location has been driven by a pronounced decline in UK automotive customer volumes and the necessity to remain globally competitive."

Roger James, Welsh regional secretary of the Amalgamated Engineering and Electrical Union, said the job cuts were a "devastating blow" to the local economy.

Patrick Bartlett: Car parts companies also becoming global

"It is an outrageous decision - a real kick in the teeth for the workers who have supported changes in working practices.

"The workers feel very bitter about this. The company has said it will help workers find alternative employment, but they must be living in cloud cuckoo land because skilled jobs like this are not easy to find in this area."

Ken Jackson, general secretary of the Amalgamated Engineering and Electrical Union, said: "I cannot see any reason for these job losses. The union will be arguing for the decision to be reversed."

In a separate development, LucasVarity also announced plans to close a brakes-producing plant in Cincinnati, Ohio by January 2000, which will result in 230 job losses.

Production will be transferred to other plants in Ohio, Germany and Mexico.

Pension fears

Meanwhile another union leader warned that the multi-billion pound pension fund at LucasVarity could be under threat as a result of its takeover.

The car parts giant is the subject of a bidding battle between airbags-to-aerospace group TRW and rival contender brakes maker Federal-Mogul.

Federal had its £3.9bn 50-50 cash and shares bid for LucasVarity rejected on Monday but is considering making a higher bid.

Roger Lyons: Union will be seeking legal protection for pension fund

Roger Lyons, general secretary of the Manufacturing Science and Finance union, said that while potential buyers wanted to reap the benefits of "synergies" from the deal, they also wanted access to LucasVarity's near £1bn pension surplus.

He told BBC Radio 5 Live: "The £4bn in the fund and particularly the £1bn surplus is very attractive indeed."

"The employees are concerned that while they are only 15,000 in number in the UK, the fund has to look after 40,000 pensioners," he added.