A major Tadcaster-based company is to close with the loss of 170 jobs, it was announced today.

Bosses at the loss-making Stora Enso paper mill at Newton Kyme said their products were no longer commercially viable.

They said the factory would be closed early next year and all its employees would be offered redundancy payments.

Staff were said to be "totally devastated" when the news was broken to them today.

The mill, which is part of the multi-national Swedish-Finnish group Stora Enso, produces 40,000 tonnes of packaging boards a year.

Mill manager Jim Smith said they had been losing money since 1994, but the tragedy was they had made significant improvements since 1998 in cost reductions and efficiency as well as investing money to improve output.

He said: "We would have wiped out all our losses but unfortunately we had to severely reduce our prices because of the strength of sterling.

"We would have made a profit last year but our European competitors came in and reduced their prices. Our basic raw material, pulp, has also nearly doubled in price and we haven't been able to pass that increase on.

"This mill has never been as efficient but the strength of sterling was just too big a hurdle.

"The company has been at Newton Kyme since 1936 and it's a very sad day."

Mr Smith said members of the same family worked at the mill, some of them for many years, and it had been a very bitter pill for them to swallow.

"The feeling among staff is one of complete devastation," he said.

Selby MP John Grogan said it was a massive blow for Tadcaster area. He would be setting up a task force, which would meet for the first time next Monday to try to find alternative employment for the Stora Enso employees.

He said the task force would also be looking for companies interested in buying out the mill.

One employee told the Evening Press today: "The closure has come as a great shock. It's very much a family firm and everybody is extremely upset."