Bermuda Bakery is closing its bread making operations and will make a third of its staff redundant by the end of the year, blaming shrinking markets and rising costs for the demise of its business.

In what the 80-year-old company called a "restructuring", Bermuda Bakery announced yesterday that between 14 and 15 staff will lose their jobs.

The average length of service of the employees who are to be made redundant is 18 years, according to John Massa, general manager of the business.

"It is the end of an era," said Mr. Massa yesterday. "There is nothing the staff could have done differently. There are more bakeries, tighter competition and a smaller market."

The company's profits plummeted by 56 percent for the first six months of the year, Bermuda Bakery said in a release, and the division has been making a loss for some time - according to Mr. Massa the bread-making division had in the past 10 years lost about 30 percent of its market share.

Mr. Massa explained that the bakery was originally designed for production when there were two bases, a thriving tourism industry and few bakeries. And recently he said that a whole host of smaller bakeries had come on the scene, cutting away at the company's profits and adding that it was just not practicable to keep the bakery open.

"It is not one company that has come on as competition, but more a slow combination of factors," he said yesterday.

The company will keep on between 27 and 30 staff and will continue to bake pastries and snacks and run its profitable real estate division.

Mr. Massa would not be drawn on what plans there were for the Pitts Bay Road factory site - which is in a prime location opposite Waterloo House and in the heart of the new insurance buildings that have sprung up over the past few years.

"We have to look at whether this is the best locale for doing what we are doing," he said. "We have to look at all sides of the operation."

The press release said the move would enable them to "evaluate the long term requirements of the bakery operations and the opportunities for the future utilisation of the Pitts Bay Road property.

When asked if the company would further diversify, Mr. Massa said: "We are diversified in that we do have an office building and we invest in that real estate."

But he said that before making any new plans on what to do with the site, the company would hope to establish the remaining bakery site as profitable and to maximise the delivery routes used by the fleet of bakery drivers.

Mr. Massa was keen to say to customers that the best-selling bread products such as Roman Meal bread would continue to be sold through Bermuda Bakery, but the bread would now either be baked elsewhere on the Island or would be flown in already baked.

In a press release yesterday the company said it was restructuring because it was "faced with shrinking markets and escalating costs".

"After a comprehensive review of the bread products market, and the unsatisfactory earnings and losses of the bakery operations over many years, the company's directors are moving forward with a restructuring plan that includes the discontinuation of breads and dinner rolls," said board vice chairman David White in a written statement. "This is part of a planned restructuring of the bakery operations and is designed to protect shareholder interests while balancing commitment to employees, customers and other stakeholders."

Mr. Massa said that the company had been working with the unions and with the Department of Labour to help the staff with the transition.

"We will do all we can to assist them at this time," said Mr. Massa, who became general manager of the company four years ago after working abroad for 40 years.

But he said that the closure of the plant had come as no surprise to the staff, who had always been kept abreast of the company's financial state.

"It is a sad day," he said. "There are people who have worked here for years, whose fathers and uncles worked here before them. We are very proud of the work they have done over the years."