Britain lost another major piece of its manufacturing base yesterday as Raymarine, the marine electronics company, confirmed it would move work to Hungary.
It has agreed an outsourcing deal with US-based Flextronics International in a move that will result in the closure of its factory in Portsmouth and the loss of 250 jobs.
Raymarine is well-known to the vast majority of boating enthusiasts.
The group makes gadgets such as fish finders, navigation systems, radar consoles, autopilots and global positioning systems.
The outsourcing move was originally flagged back in July, but the name of the manufacturing partner and new location were not disclosed.
Raymarine's affected employees have been fully consulted about the move, but group chief executive Malcolm Miller said staff were " obviously upset".
"It's been a tough decision to take, but I think staff understand why we've had to do it," he said.
"Flextronics is an important tier one supplier of electronics and Raymarine will be able to plug in to its expertise and get the benefit of its global purchasing power. The outsourcing of our UK manufacturing operations is essential for Raymarine to remain competitive. It's not just about cutting jobs and the wages bill."
The group said the outsourcing move would save it £5 million in 2007; £10 million in
2008; £10.5 million in 2009; and £11 million from 2010 onwards. The cost of implementing the move will be £15 million this year and a further £6 million in 2006. About a third of the costs will be redundancy charges.
The decision to outsource the UK manufacturing operations comes less than a year after Raymarine enjoyed a successful stock market debut. Its shares were floated at 152p each in December 2004 and went on to touch a high of 232p in March.
Private equity house HG Capital sold off around 43 per cent of the equity at the time of the float and in March it disposed of another 12 per cent leaving it with a 14.9 per cent holding.
Mr Miller said there was "no connection" between the timing of the outsourcing decision and HG Capital's move to sell down its stake.
"HG Capital always had the intention of selling down its stake and was in fact encouraged to do so when demand for the shares resulted in a lot of pent-up demand," he said. "While we considered outsourcing the UK operation before the flotation, the timing and the work associated with the listing meant we could not do it all. However, the move has been well flagged and was in our prospectus - it shouldn't come as a huge surprise."
His comments followed the release of Raymarine's maiden set of interim results for the six months to June 2005.
These showed a 25.9 per cent increase in pretax profits to £15.9 million on sales 10.7 per cent ahead at £74.4 million. The group is also paying a first interim dividend of 2p.
For the full year to December 2005, analysts are currently looking for profits - before the £15 million exceptional charge - of about £18.5-18.6 million and sales of £120 million.
Mr Miller said that while the first six months of the year were the strongest trading period, a number of new products were underpinning momentum going forward.
The group said its new range of E-Series products - designed for larger boats - had been well received with sales ahead of budget and at the expected margin. And there had been a positive response to products such as an autopilot system for smaller boats.
Shares closed up 14.7 at 227p.