The closure would result in the loss of approximately 150 jobs, and comes after the Welsh Government had invested £500,000 in helping the company expand its operations.

The packaging factory is based in Newport and the news could see the facility close as early as the end of this year. The consultation was announced alongside the company revealing that it was operating at a loss of £3.4 million from January to June alone. It also suggested that long-term profitability of the site was unlikely to improve, leading it to consider ceasing operations.

Chief Executive of Essentra, Paul Forman, said: "It is clearly with regret that we are entering into consultation on this proposal, and I and the project management team are committed to undertaking this process in an open, honest and respectful way.

"The possible closure of the IP5 site in Newport is in no way a reflection on the quality or commitment of our employees.

"Rather, the proposed closure of the facility will help to underpin the company's strategic objective of becoming the leading supplier of innovative packaging solutions and services, from a cost effective and operationally efficient site footprint."

The company stressed that it would not change operations at another of its facilities in Newport, with IP4, a label production facility, expected to remain in operation.

The decision will come as a blow to the Welsh Government that, only in February of last year, had supported the company with a £400,000 investment with the promise of a 170 jobs created in return.

Any closure could hit Essentra equally hard, with an exceptional charge of up to £35 million associated with the termination of operations.