BELMOND - Eaton Corp., one of Belmond's top employers, will cut 78 jobs representing about 20 percent of its workforce, company officials announced on Thursday.

The company, which produces engine machine valves, will provide "competitive severance packages" to the affected employees, said Jim Parks, communications manager for the company.

The layoffs will take place at the end of the month, he said.

A total of 360 employees worked at the plant before the cuts were announced.

Parks said the reduction reflects the nation's poor economy, which has resulted in a decline of customer orders.

Belmond City Manager Lee Ann Waltzing called the cutbacks "a blow" to the city and its residents. Eaton is among the top three employers in the community.

The city that suffered flooding this summer will now have to face another setback.

"We're going to have to reach out to the community, be understanding and respond in any way we can," she said.

Jean Alspach, co-owner of J & J Collectibles Antique Shop in Belmond, said the Eaton layoffs will certainly affect business on Main Street.

Alspach's husband, Jerry, took a buyout as part of a series of cuts at the Belmond Eaton plant more than 10 years ago. The couple used the money to start their business.

The dismal economy was already making things tough for the antiques business, she said.

Alspach said the Belmond shop isn't making enough to support the couple. They make most of their money by selling items at antique shows around the country. But even that business is tightening and gas prices are going up, making travel cost-prohibitive, Alspach said.

Eaton Corp. announced cutbacks of between 150 and 175 jobs in November 2006.

The move is part of a company-wide reduction in labor, Parks said.

Eaton Corp. produces electrical and fluid power systems in more than 200 operations worldwide. Its corporate offices are based in Ohio.

The Belmond plant began production in 1980, according to Globe Gazette files.

Reporter Peggy Senzarino contributed to this report.