Construction of a new renewable energy plant has been temporarily suspended, affecting 700 workers.
Air Products said it had decided to temporarily halt building a second energy-from-waste plant in Tees Valley.
The company said that as with many ground breaking projects, improvements were identified as construction advances.
The GMB union said it was "devastating news" for the workers, especially so close to Christmas.A company statement said: "After careful consideration we have made a decision to temporarily suspend construction of our second energy-from-waste project (TV2) in Tees Valley, UK.
"This decision does not reflect on the performance of our 700 highly-professional contractor colleagues currently working on the TV2 project, who will sadly be impacted by the suspension in work.
"The duration of the suspension is yet to be determined but we remain committed to completing both facilities as soon as possible. We will work with our contactors to wind down TV2 construction activity in a controlled way.
"As with many ground breaking projects, improvements are identified as construction advances and new solutions put in place. This is the case for our first renewable energy facility currently being built (TV1).
"The learnings we are making here will be applicable to our second plant. By deferring construction we will be able to ensure any modifications are applied to TV2 in a cost-effective way when activity is resumed.
"Work on our first renewable energy project will not be interrupted. Our team remains focused on safe construction of this plant, as we continue progression through to its operation.
"Although not part of our original plan, in the long-term, this decision will aid the overall operational success and future of both our renewable energy facilities at Teesside."
Phil Whitehurst, national officer of the GMB union, said: "This is devastating news for these construction workers just seven weeks before Christmas.
"GMB will seek talks with Air Products to find out what has gone so badly wrong on this project where there has been no industrial relations trouble."
The company said workers will be paid "as per their contracts".
The plant is close to the SSI steelworks at Redcar, which closed last month with the loss of 2,200 jobs.
Michael Blench, the GMB's regional officer for construction, said: "This is yet another crushing blow for the workers on Teesside."
Thousands of job losses have been announced in the steel industry in recent weeks, with firms blaming high energy prices and business rates as well as cheap imports from China.