ONE of Argyll's largest and oldest employers is to close with the loss of 80 jobs and the prospect of serious knock-on effects for the local economy.

Staff at the Kelco seaweed processing plant in Barcaldine, near Oban, were told yesterday that the factory, which has been a key employer for 50 years, will shut before the end of the year.

Councillors and the area's MP called for emergency funding to help deal with the consequences.

Councillor Allan McKie, who represents Oban, where many of the plant's employees come from, said that the area should now receive a similar financial package to Dunoon when the US Navy withdrew from there.

``We have to turn round to Highlands and Islands Enterprise and say that Oban is no longer what they deem to be a low priority area. We are as fragile as anywhere else. We have all our eggs in one basket, tourism. We must bring industry in.''

The closure is a result of a worldwide review of Kelco, whose headquarters are in San Diego and which also employs over 200 people at a seaweed processing factory in Girvan, Ayrshire. The factories produce algin which is used in a wide range of food, pharmaceutical and industrial products.

Barcaldine plant manager Hugh McLean said that the decision to close the plant - the company's smallest - had been taken against a background of a ``fiercely competitive'' global market.

``Our latest review has confirmed that we are able to meet the needs of our customers now and in the foreseeable future with the two main manufacturing facilities in Girvan and San Diego,'' he said.

Employees were reluctant to talk publicly about the decision yesterday. However, one said: ``The factory has been good to me and a lot of people around here. There is no doubt the ripples will spread out to bus drivers and local businesses.''

Representatives of the GMB union are to meet plant management today to discuss the closure. Mr Allan Cowan, the union's regional industrial officer, said the GMB was upset at the decision, particularly because it was an area where the company could be deemed to be a major employer.

Argyll and Bute MP Mrs Ray Michie, describing it as a ``very serious blow,'' said that she had already been in touch with Argyll's local enterprise company and would seek an urgent meeting with the Scottish Office Minister for the Highlands, Mr George Kynoch.

Kelco will put the factory onto a care-and-maintenance basis in case demand rises, but employment will drop to a handful. It has promised the workforce, whose average length of service is 18 years, above-average redundancy terms.