Kraft Foods broke the news yesterday morning that it plans to close the 'El Caserío' cream cheese factory in Menorca and that it intends to transfer production to Belgium.

163 jobs will be lost as a direct result though the company is also planning to shed a further 25 jobs at its Hospital de Orbigo plant in León as well as 27 at the Montornés del Vallés factory in Cataluña.

Kraft Foods acquired the 'El Caserío' brand in 1992 for €180 million euros when annual turnover was €60 million.

At that time, the company's total workforce was 320 and it absorbed the output of 300 dairy farms, representing around a third of the island's total milk production.

Blaming its decision on "the economic downturn combined with surplus production capacity in its Spanish factories and in its European cream cheese production," it pointed out, that it had been unsuccessful in its attempts to find a buyer.

Local CCOO trade union leader, Ramón Carreras, denied that the factory was in crisis, and said that "the impact on the island is, proportionally, as serious as the loss of jobs at Nissan's plants in Cataluña."