Large Knowsley industrial occupier Sonae Industria UK has started consultation with staff and unions over the closure of its factory, after political pressure over safety and environmental concerns.
More than 200 people work at the chipboard manufacturing operation, which has been based at Knowsley Industrial Park for 12 years.
In a statement on Friday the company said: "The decision to commence consultation, taken by Sonae Industria Group, is as a result of the long delays to the reconstruction of the factory due to political and planning difficulties. This has resulted in reduced and unsustainable capacity levels which, in the challenging economic climate, have made it necessary to consider future options in relation to the plant.
Nigel Graham, managing director, Sonae Industria UK, said: "It is with great sadness and regret that after 12 years of operating in Knowsley, consultation will commence on the future of this factory.
"This will affect us all. It will be of little consolation, but at this difficult time, I would personally like to thank our loyal workforce for their ongoing hard work, loyalty and dedication. We will be focussing on talking to employee and union representatives, customers and suppliers regarding the next steps."
Three workers died at the factory in two separate incidents in 2010 and 2011. The plant also attracted criticism from residents who complained about poor air quality.
The plant contributes £700,000 a year to Knowsley's business rates and Sonae spent £15m a year with suppliers in the North West.