Britain’s biggest bus manufacturer is cutting a third of its Scottish workforce after seeing major operators slash orders for new vehicles.

Management at Alexander Dennis in Falkirk announced it was culling 260 posts yesterday after discussions with unions on moving to a three or four-day working week in order to weather the effects of the recession ran aground.

The company, which employs 2000 staff across the UK and 900 at its Falkirk factory specialising in double-decker buses, is one of three UK bus manufacturers to be hit by the downturn. Wright Group, which employs around 1000 staff in Northern Ireland, announced 235 jobs would go in February but later reduced the figure to 100 after landing an overseas order.

There are also concerns over the future of Optare, which has a 600-strong workforce in England and has seen a drop in the number of new vehicles being produced over the past two months.

The latest cuts come amid industry warnings that the slump in orders for new vehicles is threatening government targets to replace older, polluting vehicles with more efficient low-floor models that can be accessed by disabled people.

In order to hit the government targets to make all buses low-floor by 2017, the bus industry would need to receive around 3200 new vehicles a year – a figure that was achieved in 2008 but has dropped this year. There are fears that next year will see a much bigger drop off, with “hundreds fewer” buses produced and targets missed by more than a fifth.

The job cuts at Alexander Dennis are in addition to 200 posts being shed last year. Bill Simpson, spokesman for the company, said he was “disappointed” at the reaction of unions to proposals to introduce a shorter working week.

“We are facing a very difficult, unprecedented situation,” he said. “Management made clear they are keen to work on a process that could lead to a three or four-day working week in the first quarter of next year when there is an economic crisis in the bus sector. I have to say I am very disappointed in the response of the trade unions.”

No-one from Unite, the main trade union at the company, could be contacted last night for comment.

Alexander Dennis, which began life as Walter Alexander but was bought by Mayflower in 1995, almost folded in 2004 after Mayflower declared itself insolvent with a £20 million hole in its accounts and a £200m debt pile.

The Falkirk and Guildford operations of Mayflower were bought out of administration in 2005 for around £90m by Scots business heavyweights Sir David Murray, Brian Souter and Ann Gloag, as well as Edinburgh merchant bank Noble Grossart.

Mr Simpson said the cuts were especially bitter as the company had achieved growth in the midi-bus market, traditionally an area served by Optare, and grown to the point that it accounted for 50% of all double-decker bus sales.

In July it emerged that Alexander Dennis would receive the lion’s share of a £71m investment by Perth-based Stagecoach to build 434 buses.

Robin Dickenson, spokesman for the Society of Motor Manufacturers and Traders, said there was “widespread concern” in the industry. “I hear targets for reducing fleet age are going to be very hard to hit on present and anticipated delivery levels,” he said.