Around 60 jobs are set to be lost at ceramic colours and coatings specialist Johnson Matthey, which has a premises at Blythe Park in Cresswell.
The firm announced that it plans to shut down its North Staffordshire operations, which includes a premises in High Carr Business Park in Newcastle-Under-Lyme.
It is blaming the decline in business on a rise in demand for 'less ornate' pottery.
A 30-day consultation has now been launched among the 60 staff employed by the firm.
A company spokesman said: "Johnson Matthey has announced its decision to commence consultation with employees about the future of its ceramic colour products business.
"Demand for ceramic colour products, which are used in the decorative ceramics industry, has declined substantially in recent years as the trend towards less ornate tableware has continued. Despite efforts to make the business more viable through efficiency improvements, it continues to struggle in a declining market.
"The company's proposal is, subject to consultation, to exit the market for manufacture and supply of ceramic colour products.
"Regretfully, if implemented, this would result in the closure of the Cresswell and High Carr sites."
Johnson Matthey, a FTSE 100 company, employed about 700 people in North Staffordshire.
But in 2003 it announced it was re-focusing on its core activities in catalysis, precious metals and fine chemicals.
Divisions in Joiners Square and Kidsgrove were sold off by 2006, leaving just the Cresswell and High Carr bases.
Companies in the ceramics sector are now said to be urgently looking for new raw material suppliers to ensure production is not interrupted.
Harry Hockaday, general secretary of Unity, in Hanley, said the union was involved in the consultation.
He said: "It potentially affects 13 of our members across both sites.
"Johnson Matthey used to be a major employer in Stoke-on-Trent and over the years we have seen it reduce in size. It would be sad to see it close."
Jane Gratton, deputy chief executive of the Staffordshire Chambers of Commerce, said: "This is sad and disappointing news, particularly when we are now seeing significant growth, exports and investment in many other parts of the ceramics sector.
"At a local level, through the new Ceramics Skills Academy, the chamber is helping ceramics firms to attract and develop skilled and talented staff who will drive growth and jobs in the sector in the years ahead."