One of Oxford's oldest engineering firms is closing its flagship foundry in Thame with the loss of 130 jobs - just five years after a large part of its workforce was relocated there.

Lucy Castings, based in a modern 8,000sq m foundry in Howland Road, Thame, is axing its entire workforce before the end of the year.

The firm manufactures cast-iron components for 80 different engineering companies, including car companies.

It is a division of W. Lucy and Company Ltd, which has been based in Oxford since 1812.

W. Lucy completed a transfer of staff from its canal-side foundry in Jericho, Oxford, to the new location in 1997.

But managing director Richard Dick said the new venture had been losing vast amounts of money and the company's board had reluctantly decided to close it.

He would not put an exact figure on the losses, but said it was "more than £1m a year".

The announcement came 24 hours after Unipart announced it was axing 300 of its 2,000 jobs at Cowley.

A spokesman for the Transport and General Workers Union, which represents many of the staff at Lucy's, said: "We are extremely concerned about this development.

"We will be meeting urgently with senior managers at Lucy Castings to discuss the announcement and see what can be done."

W. Lucy will continue to operate and employ its 400 Oxford-based staff. The firm, in Walton Well Road, makes electrical switch gear, which is mostly bought by large electrical utility companies.

Mr Dick, the grandson of the man who took over the company at the turn of the century, said some staff may be able to relocate to Oxford. The last staff will leave some time later this year.

He added: "Many millions have been invested in it, along with a great deal of effort on behalf of all the staff. It's a tragedy we haven't been able to keep it open. We are all very sorry about it and for the impact it will have on a number of employees."