Train builder Hitachi has said 250 jobs could go at its County Durham plant as it comes close to completing a major order.
The Newton Aycliffe site opened in 2015 and has a workforce of 900 and will this year finish a £5.7 billion order for Inter City Express trains.
The manufacturer said it will begin a 45-day consultation process with staff about job losses as it looks to make its UK plant “more flexible, agile and globally competitive”, it said in a statement.
Hitachi said in the same announcement it will be spending £8.5 million on new carriage welding and painting facilities, making Newton Aycliffe similar to sister plants in Japan and Italy.
The firm said the job losses were unconnected to Brexit.
Ross Nagle, chief operating officer manufacturing, said: “New train fleets built by employees at Newton Aycliffe over the last four years are helping to transform Britain’s railway, of which we couldn’t be more proud.
“However, the cyclical nature of demand in the industry means the factory must be more flexible and agile to secure a long-term, sustainable future.”
The plant has won contracts to build trains for two British operators, starting this year.
The Tory elected mayor for Tees Valley Ben Houchen has previously criticised the Tyne and Wear Metro operators Nexus for not giving Hitachi a major contract to build new trains.
After the job loss announcement on Thursday, he said: “This news will be absolutely devastating to the loyal, hard-working staff at Hitachi Rail.
“This is yet more proof, if any more was needed, that Nexus have absolutely no intention of awarding the Tyne and Wear metro contract to Hitachi Rail.
“I said months ago that this would be the consequences of not awarding the contract to Hitachi, and I am sad that my prediction has become reality for 250 highly skilled people.
“This is the real-life cost of making stupid decisions and it’s clear that the Tyne and Wear council leaders who control Nexus have little regard for protecting jobs in the North East.”
The local Conservative MP for Sedgefield Paul Howell wrote on Facebook: “The news of potential job losses at Hitachi Rail is disappointing and I feel for employees receiving today’s most unwelcome news.
“At this stage it is a consultation and I am assured that Hitachi will work with all parties to look at opportunities to mitigate the impact to employees.
“I have spoken at length with Hitachi Rail and I have been personally assured that Hitachi Rail remains completely committed to Newton Aycliffe, the North East and the UK.
“I will be meeting with them next week for further discussion.
“Hitachi has clearly stated this decision is not related to Brexit and I understand today’s decision is about transitioning the factory so it can become even more sustainable and competitive for the long term and win more orders in the future.”
Unite regional officer Pat McCourt said: “The announcement of such large scale redundancies is bad news for the affected workers, their families and the local community.
“These redundancies need to be laid at the door of the Government.
“Its existing procurement policies mean that major contracts for new trains are too readily awarded to overseas companies, depriving factories in the UK of work.
“If the Government is serious about protecting jobs and skills going forward then procurement policies need to be radically reformed.
“Ensuring that future major train contracts are awarded in the UK will be an early test of the Government and whether it is serious about backing UK manufacturing.
“Ensuring that new work is secured for the Hitachi factory will be a major test for the new Conservative MP who was elected last month on a pledge to deliver for local people.”