Transcal Engineering has blamed its decision on a failure to attract sales since taking over the former William A Lewis site 16 months ago, coupled with "persistent productivity issues" for its shock decision.
The company employs 51 people in Shrewsbury, and has said it plans to retain a "small specialised engineering team" in the area to support its main factory in Pershore in Worcestershire. It also plans to move some staff to Pershore. The company has not confirmed how many jobs will be lost.
The decision comes as a shock, as the company had outlined plans for expansion from its Shrewsbury base when it invested £100,000 in new machinery in August.
Managing director Trevor Clews said: "After 16 months trading Transcal has decided to close the Shrewsbury site operated by Transcal Engineering North Ltd, a wholly owned subsidiary of Transcal Engineering Ltd, based in Pershore.
"The Shrewsbury site, formerly operated by William A Lewis Engineering Ltd, has failed to attract sufficient sales orders and suffered from persistent productivity issues."
"On November 3 the company commenced consultation talks on the closure with its 51 employees. The plan is to retain a small specialised engineering team in the Shrewsbury area to operate a technical and sales hub.
"This team will be a key component in support the Pershore engineering operation. Pershore has a skilled workforce of 98 and continues to offer a full range of CNC cutting, punch pressing, brake pressing, folding, specialist welding, wet and dry painting and assembly operations, mostly to traction and defence sector customers.
"Consultation talks will also seek to arrange for the transfer of certain employees to the Transcal Engineering site at Pershore."
The 40,000 sq ft engineering operation in Shrewsbury makes parts for the the rail and defence sectors, including seating on trains, and mainly employed specialist metal workers.
Mr Clews added: "While Transcal Engineering is most disappointed with the closure, the company is satisfied that the rationalisation to one site, will allow continued growth with innovative and quality products.
"The Transcal Engineering directors are confident that the Pershore based company’s reputation for quality and value, together with recent investment in new rail seating designs and the highly innovative universal access toilet for rail, offer a substantial and sustainable future."
Transcal group’s engineering revenues have grown from £3 million in 2015, to £7 million in 2016 and £9 million in 2017. They had been expected to rise to £15 million next year.