The management buyout team that is taking over Coats Viyella's contract clothing division, has told workers that up to 1,200 of them are to lose their jobs before the end of the year.

Marplace said two factories, at Alfreton, Derbyshire and Sutton in Ashfield, Nottinghamshire, would be closed because of a shortage of orders.

In a statement, Marplace said: "The new business regrets that this action has to be taken but hopes everyone will understand that in order to get into the best shape, and to give the business as viable a future as possible, such wide ranging reductions are both necessary and inevitable."

This is the second wave of redundancies at Coats Viyella or its former businesses since September, bringing the total number of UK job losses to 2,700, and has met with anger from union representatives.

Union anger

The GMB union's clothing and textile spokesman Des Farrell said the job losses were a "disaster" and the union would be seeking "urgent talks with the new company to see if we cannot find some way around this".

Clothing & Textile Association spokesman Jeff Scrivner said he was "shocked and annoyed" by the move. "The buyout only happened a week ago and now to say that two factories are to close and 1,200 jobs... are to go is terrible."

The Marplace statement added that the company hoped its "swift and decisive" action would "end the uncertainty" that had been hanging over the business and "provide a solid platform for future growth and performance".

About 800 staff would be retained at other sites, including 350 in Hinckley, Leicestershire, Marplace said.

Earlier this month, Coats had said it would get �12m in cash for the business from Marplace and additionally retain assets from the business worth �17m for disposal.

Harsh truth

The shake-up of the business had been announced in September when Coats, the world's largest sewing thread maker, said it had to "face economic truth".

The move, prompted by a 30% drop in profits, had been expected to result in up to 1,900 job losses in Coats' remaining divisions.

Two factories in the Midlands are already being closed with the loss of 1,500 jobs, and staffing levels at other sites reduced in a withdrawal from the contract clothing business, the company had said.

A further 5,700 jobs in the UK, Morocco, Sri Lanka and the Far East were thought to be threatened by the refocusing programme, prompted by a �16.2m profits slump in the first six months of the year.

M&S business lost

The Marplace deal included all UK and overseas contract clothing production currently in operation aside from those closures announced in September which are proceeding as scheduled.

The contract clothing arm, which supplied Marks & Spencer and BHS, reported a loss of �8.5m in the six months to 30 June, double that reported in the same period last year.

Coats had said its refocusing would allow it to concentrate on its thread business, in which it is a global leader, and which alone recorded profits of �46.8m between January and June.

The shake-up had followed an internal investigation of the contract clothing division, where trade was found to have been "severely affected" by poor sales recorded by its customers.

The division has since lost its Marks & Spencer business.