CARPET manufacturer Gaskell PLC has announced the closure of its Rishton operations as part of a major restructuring - which will mean 80 redundancies among the 400-strong workforce.

The announcement comes just months after the business was saved from closure by the sale of its carpet tile division and its Kidderminster factory in a £21million deal.

In a shock announcement to the Stock Exchange, Gaskell also warned that operating losses for 2003 would be higher than the £1.1million expected. Chairman, Alan Chamberlain, said the continuing challenging market conditions for carpets meant there was a need for a major overhaul of the business and outlined a corporate rescue plan, including:

moving the group's manufacturing operations to the Clayton Park site at Clayton-le-Moors;

the closure and sale of its Rishton factory;

importing some products from low-cost manufacturers in continental Europe;

combining existing logistics operations on a retail distribution centre in Kidderminster and a contract hub at Clayton;

and investment of £600,000 in high-speed loom technology and underlay equipment. Mr Chamberlain said the restructuring was expected to be completed by September 2004.

"These measures will create a cost structure more commensurate with the current size of the group and allow it to concentrate its manufacturing investment in areas where it has sustainable competitive advantage," he said.

"The restructuring is expected to involve the loss of approximately 80 jobs and generate significant savings. The measures are critical to the long-term profitability of Gaskell and will result in a leaner and more efficient structure. By focusing on Axminster weaving and traditional felt underlays, we can concentrate our manufacturing activities and channel capital investment in to these market leading businesses."

The 80 job losses will be split between Rishton and Clayton-le-Moors.

Gaskell - once Britain's third largest carpet manufacturer - has been in crisis for the past three years after buying Tomkinsons Carpets in Kidderminster in an ill-fated £12million deal. It closed its Kidderminster operations following a series of profits warnings and senior management changes.

In September, Gaskell announced a pre-tax profit of £3.1million for the first six months of the year, solely because of £21million asset sales.