Up to 250 workers will lose their jobs when the US technology group Quantum closes its plant in Dundalk, Co Louth.
Staff have been told that the operations are likely to be transferred to eastern Europe.
Quantum's managing director in Dundalk, Kevin Devlin, was not available yesterday to respond to media queries about the closure.
However, a notice circulated to staff said that all eligible workers will receive severance "benefits" and other assistance.
"This was a difficult decision, particularly because of the impact on our 250 employees in Dundalk, who have greatly contributed to Quantum over the years," it said.
"The decision to outsource our operations in Dundalk will result in the closure of the facility, which will occur in phases and be completed in the second-half of calendar year 2006." Quantum makes digital tape drives in Dundalk, which are used to store information on computer files.
Staff were told last Friday that the group now plans to outsource these operations "most likely to a global partner with a facility in eastern Europe".
The group aimed to "better align" the operations in Dundalk with its business needs and improve its cost structure, it said.
"Quantum must make every effort to operate as cost-effectively as possible in the highly-competitive storage industry."
The group signalled its intention to leave Dundalk last month when it said the plant was under review.
Mr Devlin said then that Ireland was no longer a low-cost location for the electronics industry.
Quantum has had an operation in Dundalk since 1991. It had plans three years ago to create 120 new jobs at the plant, which then employed 280 people.
An IDA Ireland spokeswoman expressed regret at the group's decision.
"We are committed to promoting the area for further high-level investment."
Fine Gael claimed the Government's policy of attracting high-end jobs to Ireland had been completely discredited by the Quantum closure and by the decision on Tuesday to shut the Hospira plant in Donegal.
"The Government is actually undermining its own policy by imposing stealth taxes on businesses. At the same time, costs are rocketing in numerous sheltered sections of the economy because no-one in Fianna Fáil or the PDs has the guts to tackle vested interests," said Fine Gael's enterprise spokesman Phil Hogan.
"Production in the manufacturing sector slumped by 5.4 per cent earlier this year, while other sectors of the economy continue to grow.
"Cheaper economies are becoming an ever-greater threat to Ireland," Mr Hogan said.
Green Party Cllr Mark Deary, a member of Dundalk Town Council, blamed Government policies for the increase in business costs to industry.
Cllr Deary called for moves to lower energy costs for industrial companies.