UP TO 40 workers are being laid off by pottery manufacturer Churchill China after demand was hit by falling consumer spending.

The Sandyford company is in talks with ceramic union Unity, and jobs will go on the shop floor and in its offices.

Chief executive Andrew Roper said demand has fallen as people tighten their purse strings because of the credit crunch, while the firm's utility bills are soaring.

He said: "There is not as much money around this year, so we are shaving back to make sure our cashflow is in line.

"We run our business as prudently as we can, and we need cash in the bank."

He added: "The worst thing about this is having to get rid of people who are very good at their jobs. It is very sad, but if we don't take the costs out now we would have to do double that amount in a year's time.

"We have to be mindful that we don't lose our ceramic skills because that is all we have got."

Churchill is currently drawing up budgets for the next financial year and Mr Roper said sales will be hit by global economic uncertainty.

Tough times on the high street were highlighted yesterday when retail giant Marks & Spencer revealed a seven per cent fall in like-for-like sales in the three months to the end of September.

Woolworths, which Churchill supplies, reported half-year losses of almost £100 million last month.

By the end of this year Churchill will have trimmed its workforce to about 550.

Mr Roper said the company will see a 43 per cent rise in its electricity bills next year, and spending on gas is rising despite investing in more efficient technology.

But he said there are no plans to outsource more manufacturing overseas. He said: "The reason that Steelite, Dudson and ourselves have survived is because the products we make are better than any other products made anywhere else in the world."

Proposals for job losses at Churchill come after Wedgwood announced 250 posts would go.

Sentinel Business reported last month how Churchill saw a £200,000 fall in pre-tax profits to £1.2 million in the first half of the year as sales fell from £22.2 million to £20.3 million.

Unity assistant general secretary Garry Oakes said: "The company's trading position is low and sales are down.

"Most companies are the same currently. To maintain or increase orders is difficult because in the current financial climate it is difficult to borrow and nobody wants to spend on pots and plates.

"We are working with the company to get the number of compulsory redundancies down. It is not an easy time for employees or companies at the moment."