Northcliffe Newspapers is launching an efficiency project focusing on ways to save at least £20m a year.

The two-year initiative will look at policies, processes and structures across all areas of the business.

The new programme has been devised to lead to greater profitability which will in turn maintain the company’s market position.

Group managing director Michael Pelosi wants to be able to compete for further investment funding – and create new market-led publications and websites.

He has not ruled out job cuts, warning employees that the emphasis on cost-reduction meant it was “very probable” that the number of staff would reduce – although staff turnover would account for a large element of that.

He told staff in a memo today: “This programme will challenge us in the way that we do things.

“It is very probable that the number of staff we employ will reduce. Where, when and by how many is too early to predict, although we do believe that staff turnover will account for a large element of any staff reduction. We will of course do all we responsibly can to mitigate the impact on any colleagues affected.

“Northcliffe has a history of investing in its newspapers in an attempt to make them amongst the most advanced in the UK.

“Our titles are now printed on newer presses, use more colour and fill more pages than ever before.

“Our aim has always been to be the first-choice news and information provider in each of the communities that we serve. This strategy will not change.”

The announcement follows five years of investment in plant and IT equipment totalling £150m and the planned investment of £100m over the next three years.

The biggest element of this new investment is expected to be a new press facility in North Lincolnshire, which is scheduled for completion by December 2007.

The programme includes the possible closure of older Northcliffe presses in Exeter, Hull, Grimsby and Lincoln as a result of these investments.

And in the current financial year, Northcliffe expects to incur exceptional costs of approximately £6.5m for the first phase of the programme.

Michael Pelosi said: “Over the last five years we have invested substantially in new presses and improved technology as part of our continued commitment to producing high quality regional newspapers with strong editorial content.

“We have consistently followed a strategy of publishing market-leading local newspapers and websites which cater for the needs of our readers and advertisers.

“These organisational and structural changes announced today will help us to continue this successful strategy in the highly competitive and rapidly changing local newspaper market.”