The government must act to prevent textile manufacturers plunging from Saville Row to Skid Row

John Edmonds, GMB

GMB general secretary John Edmonds said: "The government must act to prevent textile manufacturers plunging from Saville Row to Skid Row."

John Wilson, chief executive of the British Apparel & Textile Confederation and member of a government advisory group, blamed the decline on tight high street trading conditions and overseas competition.

"It is not altogether surprising we are seeing this announcement today," he told BBC News 24. "There has got to be some restructuring in the industry."

The sector should play to its strengths of design, technical textiles and branded clothes, he said.

Profits slump

The shake-up at Coats Viyella follows the release on Wednesday of results showing profits declined to �35.6m in the first months of 2000.

Factories closed

Shepshed, Leics. Ollerton, Notts. Scunthorpe, Lincs. Cost: 1,544 jobs. Posts also to go from offices in Sutton-in-Ashfield, Notts, and a finishing plant near Belper, Derbys.

Profits for the rest of the year will be held back by the weakness of the euro. "Most raw materials tend to be US dollar based," the company said.

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

Coats Viyella executives have opened negotiations with the retail giant over the sale of this division, a disposal they believe will cost up to �150m in charges such as contract withdrawal.

"Economic truth"

"We have to face economic truth," said Mike Hartley, the division's chief executive.

The V&A: Sourced for design ideas

"The whole team has done everything conceivable to create a viable business. But the scale and pace of change requires levels of investment which... do not make financial sense."

Coats Viyella's fashion business, which includes the Peter England, Jaeger and Van Heusen brands, recorded profits of �0.7m in the six months to 30 June, compared with a loss of the same amount in the same period last year.

The home furnishings division, which manufactures household textiles for Laura Ashley and under its own Dorma brand, reported profits of �0.6m, down from �2.0m.

Coats had hoped to revive the fortunes of the division, which last year negotiated access to London's Victoria & Albert museum in an attempt to create "original design opportunities". But the Lancashire-based subsidiary is included in the sale portfolio.

Core business

The closures will allow Coats Viyella to focus on its thread business, in which it is a global leader, and which alone recorded profits of �46.8m between January and June.

"Reshaping the group will allow resources to be concentrated on the Coats (thread] business which has consistently delivered profits and cash flow," finance director Kazia Kantor said.

While the company also intends to retain its key Jaeger and Viyella brands, Ms Kantor admitted this strategy may be shortlived.

"If someone came along and offered us a price that we think is in shareholders' best interest then we would look at it seriously," she said .

Internal inquiry

The shake-up follows an internal investigation of the contracts clothing division, where trade was "severely affected" by poor sales among its customers.

The inquiry concluded that "the amount of investment and time required to achieve a business generating acceptable returns would not be in our shareholders' best interests."

The 200-year-old firm also closed a knitwear factory, sold an engineering subsidiary and enacted a boardroom reshuffle in an attempt to restore fortunes.

Shares in Coats Viyella stood at 48p, down 1.75p, in early afternoon trading in London.