Digger producer JCB has cut 500 manufacturing jobs, following a "rapid decline" in orders.
Following a 20 per cent reduction in planned production, the company, which has offices in over 150 countries worldwide, said it was cutting back its work force.
A further 150 administrative posts will also go.
The news follows a sharp correction in construction levels, with UK homebuilders mirroring the global picture, cutting jobs as orders fall.
The move, however, is the first large-scale manufacturing job cut, with the impact of the credit crunch thus far restricted to the financial, construction and property sectors.
"Many JCB dealers around the world are experiencing lower sales rates because of reduced customer activity, mainly in the housebuilding and commercial property sectors," said JCB chief executive, Matthew Taylor.
Mr Taylor added no recovery was expected until 2009 at the earliest.
The job losses will be focused on UK production facilities, which are located mainly in the Midlands.
JCB is the third largest manufacturer of construction equipment; selling more than 72,000 machines last year, a record, with turnover reaching £2.25bn.
The Rocester, Staffordshire-based firm has 11 factories around the UK.
These job losses are regrettable but absolutely necessary to ensure that JCB remains competitive and well-positioned to benefit from any market upturn," concluded Mr Taylor.