A total of 337 jobs are under threat at Hoover's headquarters in south Wales as managers announced the "possibility" of an end to manufacturing at the site.
In a statement on Tuesday afternoon, the company said it was starting a consultation with its manufacturing employees at the Merthyr Tydfil site.
The factory employs 450 staff and makes washing machines and tumble dryers.
The company said it was no longer able to produce competitively-priced items at the site.
In a statement, it added: "Regretfully, to ensure that Hoover Candy becomes more competitive we must consider all of our options, including the possibility of the cessation of manufacture at Merthyr Tydfil."
Other departments including finance, legal, IT, order processing, transport and logistics, warehouse and distribution departments, are not affected by the announcement at this stage.
HOOVER IN MERTHYR
The company has a long history as a major employer in the town, with the factory on the edge of Merthyr opening back in 1948 and once employing 5,000 staff.
Workers were called to a meeting earlier this afternoon.
It follows concerns from local assembly member Huw Lewis earlier this month that jobs could be under threat.
Mr Lewis called Tuesday's news a "terrible blow" for the workforce and Merthyr Tydfil.
"It is crucial that we now see a proactive response from the Welsh assembly government that provides for a positive future for the workforce as a whole.
"The company's statement clearly indicates that there is a future for Hoover in Merthyr Tydfil and we have to do everything we can to maximise the opportunities that remain."
Deputy First Minister Ieuan Wyn Jones said: "We have always worked with the employers at this important site in order to try and safeguard jobs and continued investment.
"We are saddened and disappointed to hear that Hoover Candy is now considering bringing an end to manufacturing at the plant.
"I am making arrangements to meet with senior executives from Hoover and trade union leaders, and no effort will be spared in trying to help maintain employment at the Hoover operation."
He added he did not want to "raise expectations, because this is a very difficult period".
"What I want the people of Merthyr to understand is how determined we are to be on their side and work with them."
Conservative economic spokesman David Melding AM said it was the "grimmest confirmation so far that Wales faces a nasty and deep recession".
He added: "Hoover is a premier league manufacturer and the significance of this decision will be lost on no-one. For generations. Hoover has been at the heart of manufacturing in the valleys."
Mike German, leader of the Welsh Liberal Democrats and local AM said: "It is very sad news that the manufacturing side of the company could pull out of Merthyr.
"This is an area that depends on manufacturing jobs like this, as is the rest of Wales.
"These are uncertain times for many people in the region just before the Christmas period and I urge the Assembly Government to do all it can to work with Hoover to minimise the threat of job cuts."
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