The Huddersfield-based group said it plans to cut costs by axing 300 staff – about 20 per cent of its workforce – by the end of the year.

Heywood, which supplies products ranging from windows to door handles, has seen its core markets collapse due to the "unprecedented impact of the credit crunch" on house building and home improvement.

Last year it cut its North American workforce by 90. The latest wave of job cuts will be split between North America, Europe, the UK and China.

Yesterday's announcement adds to the gloom surrounding the property sector, with building materials supplier Wolseley to cut around 2,000 jobs and close more than 200 branches in the UK.

Heywood said in a statement: "The group is facing very difficult market conditions and these have been exacerbated by the further negative impact of the recent turbulence in the global banking industry on consumer confidence over the last two months.

"Despite the substantial contribution of the mitigation initiatives the board now expects the outcome for the full year to be below current market expectation."

In the four months to the end of October sales were down 17 per cent at £75m, with like-for-like sales down 18 per cent. Sales for the 10 months to the end of October were down 12 per cent at £192m, with like-for-like sales hit 14 per cent.

Shares in Heywood closed the day down 26.5 per cent at 2.63p – giving the group a market capitalisation of £2.25m.

Heywood said residential new build and home improvement markets in North America, the UK and Europe, which make up about 80 per cent of the group's sales, are facing "very tough trading conditions".

In the UK and Europe housebuilding is down about 50 per cent, the company said, and the home improvement market has slumped another 15 to 20 per cent.

In the US pre-fabricated housing market, production in September was down 12 per cent, and year-to-date trends show a drop of 10 per cent on last year.

The recreational vehicle market in the US – which supplies mobile homes – is in "major decline", with September shipments to retailers down 43 per cent on last year, with evidence of a further slump in sales and manufacturing cutbacks this year.

Heywood said it expects trading to continue to be tough for the rest of this year and throughout next year.

Key to Heywood's full-year performance, which ends in December, will be the extent to which its North American customers react this and next month, and how its European customers trade in December.

A spokesman said: "They are doing everything they can to mitigate the effect but depth of the downturn is such that they cannot completely mitigate it.

"When you are talking about new build down 50 per cent, that's a very significant decline."

To combat the slump, Heywood is also implementing a "comprehensive self-help programme", focusing on generating cash, optimising working capital and stock levels and increasing market share.

It has maintained margins and forced through selling price increases to claw back high materials and energy costs.

House broker Cazenove revised its forecasts and said it expects a £2.5m full-year loss.


The group's supply lines

Heywood Williams is split between design, development, marketing and distribution of branded building products. Its two divisions are hardware in the UK and Europe and North American specialist distribution.

Hardware, which makes up 52 per cent of group turnover, operates in the UK, Ireland, and the Scandinavian, Benelux and Baltic regions. Products are distributed under the brands of Carlisle Brass, Mila, Eurospec, Window Ware, Eurolite, Door Panels, Balmar and Locks & Hardware.

The US specialist distribution division, which makes up 48 per cent of group sales, supplies manufacturers of pre-fabricated housing, recreational vehicles and modular housing through its subsidiary LaSalle Bristol.