The future of AE Harris, one of Birmingham's oldest metalbashing firms, hangs in the balance after planners rejected a scheme to redevelop the firm's Jewellery Quarter premises.
Members of the city council planning committee decided yesterday that a proposal to replace all existing buildings on the Northwood Street site with 210 apartments, 5,000 sqm of offices and 1,725 sqm of shops was out of keeping with the industrial heritage of the area.
The decision was described as a "bitter disappointment" by A E Harris chairman Russell Luckock, who maintains that the firm has to sell its site for redevelopment in order to generate enough money to move out of the city centre.
Mr Luckock said the firm could not be competitive if it had to remain in outdated, fragmented premises.
However, councillors supported the view of the Victorian Society that large-scale residential development should be resisted in the heart of the Jewellery Quarter.
Committee chairman David Roy said a small amount of housing might be permitted but the proposal being put forward by A E Harris was not acceptable. A proposed sevenstorey office block required a major re-think.
Coun Roy (Con Sutton Vesey) added: "The committee wish to see the retention of A E Harris on the same site."
He urged the firm to investigate other proposals for developing part of the site.
It was confirmed that Advantage West Midlands, the regional development agency, has been asked to work with A E Harris in an attempt to safeguard the company's future.
Mr Luckock said he could not understand the committee's decision because he had worked with the planning department in an attempt to devise an acceptable scheme.
He added: "We have spent three years discussing with the council what they were prepared to accept. It is certainly a surprise that they have now rejected our proposal.
"The committee obviously does not understand the circumstances under which manufacturing exists at the moment. If we cannot move to another site then we cannot cut our costs and overheads and we cannot be competitive.
"We shall have to very carefully consider our position."
At an earlier planning committee meeting, a spokesman for A E Harris said the firm, which employs 74 people, had been hit by economic factors beyond its control including the strong pound and competition from the Far East.
It would not be possible to consolidate the firm's activities on a smaller part of the site and there was a need to look at alternative locations on the city boundary or in the Black Country.