Hundreds of people lost their jobs when the Circatex plant in Eldon Street, South Shields, closed in March 2006.

The plant, which collapsed because of fierce foreign competition and rising costs, was unsuitable for other types of industries, because of its chemical processes.

Now the former circuit board plant is being demolished, to make way for the multi-million pound South Shields riverside transformation scheme.

The £500,000 demolition project is being developed by South Tyneside Council and One NorthEast, which is funding the demolition work.

Five new neighbourhoods will be created as part of the riverside project, which extends from South Shields town centre and along the river corridor.

Neil Graham, One NorthEast's head of regeneration north, said: "The removal of the former Circatex plant is a major milestone in this project.

"But, just as importantly, it removes a derelict building from the South Shields riverside.

"It has become a blot on the landscape since it closed down more than two years ago, and will turn it into an exciting development opportunity.

"The building demolition will be completed in November, 2008, and the site will then be levelled and seeded, pending future redevelopment.

"Residents can be assured that while it is a lengthy process, all efforts will be made to ensure demolition and decontamination work has the minimum amount of impact on them."

Extensive public consultation has taken place about the ambitious riverside project, and an outline planning application for the regeneration site will be submitted this autumn.

Coun Eddie McAtominey, South Tyneside Council's lead member for jobs, enterprise and regeneration, said: "This is a major physical regeneration project, which is expected to take up to 15 years to complete.

"The project has been ongoing since 2004, and seeks to regenerate 80 acres of brownfield land.

"This project will transform South Shields riverside into a new mixed use development, creating over 3,500 new jobs, providing sustainable new homes and improving the environment."