A crisp factory employing 300 people in the Black Country could close after its owner lost one of its biggest contracts.

Workers are facing redundancy at Red Mill Snack Foods Ltd in Globe Street, Wednesbury, which makes Transformers crisps and Mr Porky pork scratchings.

The factory is owned by Tayto Golden Wonder, which is carrying out a three-month review of its future following the cancellation of a lucrative Pringles Minis contract at a sister plant in Corby, Northants, which also employs 300.

Spokeswoman Gwynneth Cockcroft said the business was planning to halve its 600-strong workforce by next year and bosses were also considering moving production from Wednesbury to Corby.

Ms Cockcroft said: “When Tayto took over Red Mill, it was always the plan to carry out a review – the cancellation of the Pringles Minis contract has acted as a catalyst.

“It is a genuine review and we are looking at many possibilities for the future. There are 600 employees and there are expected to be 300 job losses over the two sites.

“It is still business as usual today at Wednesbury.”

Red Mill was taken over by Tayto in March.

The two sites produce more than half a billion bags of snacks every year. Production may be moved from Wednesbury to Corby as there has been more investment in the factory, described as having “state-of-the-art facilities”.

Wednesbury councillor Bill Archer said losing Red Mill would be “a devastating blow.” He added: “They employ so many people from the area. We are now seeing the effects of the Government’s problems and it is reflecting back on to local industry,” he said.