Thread supplier Donisthorpe & Co Ltd is to cease production in Bath Lane, Leicester, at a cost of up to 80 jobs, the Leicester Mercury has reported.

Donisthorpe, which has operated at the site for more than 100 years, blamed the shutdown on most of its customers moving their production outside of Europe, making it difficult and costly to supply products to them.

The company's workload will now be spread between its German owner's factories in eastern Europe, northern Africa and south-east Asia, where its main customers are based.

A service and distribution centre, which employs 26 people, will remain in Leicester.

According to sales director Kenny McMaster, the decision to end local production was a "very difficult" one.

"We have made an immense effort to stay in UK manufacturing, but we had no other choice," he said, adding that the firm's high labour costs compared to its offshore competitors had a bearing on the decision.

"All the way along we have tried to involve the workforce and give them time to understand the process.

"Our staff have been absolutely first-class for generations."

About 50 jobs will go at the end of May, with the remainder to be cut by early 2005.

Donisthorpe will sell its 1.7-acre Friar Mills factory site to Leicester-based developer Wilson Bowden City Homes, which will turn it into residential units.