Small and medium-sized manufacturing firms are at risk because of rising environmental legislation.
A study found almost half (46 per cent) of SME managers in manufacturing companies unaware of existing environ-mental laws.
One in seven were ignorant of the fact that not following these laws could result in hefty fines and 12 per cent did not know they could face prosecution.
New rules introduced in last year's Clean Neighbourhoods and Environment Act mean that environmental polluters can be arrested, and face prison sentences and fines of up to £50,000.
However, only 19 per cent of managers believed that an environmental offence caused by their company could put them out of business, despite the fact that 42 per cent think it could lead to long term damage to the company's reputation and finances.
Many companies were unaware of some of the basic environmental rules.
Over a third did not know that washing paint brushes in sinks that drain into the waste water supply was illegal.
Over ten per cent did not know that disposing of industrial oil down the sink is against the law. One in ten employees also felt that their managers would sometimes turn a blind eye to such breaches.
Lynne Oliver, manufacturing working practices special-ist at City & Guilds, who conducted the survey, said: "According to the Environment Agency, the SME manufacturing sector accounts for 80 per cent of pollution incidents in England and Wales.
"But is only through continued training that companies will keep a competitive edge and improve their efficiency within the global marketplace.
"This makes in-depth training vital for both managers and employees."
