THE troubled textile industry received yet another body blow yesterday with the decision by Coats Viyella to pull out of the contract clothing sector.

The firm is cutting 1,900 jobs nationwide to focus on the global thread business, with the group's two North-East factories escaping the redundancy programme.

A spokeswoman for Coats confirmed the 300 jobs at the firm's zip factory, Coats Optilon, in Peterlee, and more than 100 staff at Coats Paint, in Darlington, formed part of the core thread business, and would be unaffected by yesterday's announcement.

In March last year the Viyella division's factory at Langley Moor, near Durham, closed with the loss of around 200 jobs.

Yesterday's decision comes after Viyella carried out an in-depth review of the future prospects for its contract clothing business, which exclusively supplies Marks and Spencer.

The review said the potential for the business to prosper would be best achieved under other ownership.

The closures would leave it to concentrate on building its world-leading position in the sewing-thread sector. The job losses will occur mainly across the group's factories in and around the East Midlands.

The group has announced the "full closure" of its knitwear and underwear factories at Shepshed, in Leicestershire, Ollerton and Worksop, in Nottinghamshire, and Scunthorpe, in Lincolnshire, with the loss of more than 1,400 jobs.

Mike Hartley, Viyella division chief executive, said: "This is a desperately sad day for the clothing division and its employees, but we have to face the economic truth."

Union leaders called for government action with secretary of the GMB, John Edmonds, claiming the textile industry faced "annihilation".

"What we are witnessing is nothing less than the annihilation of the UK textile industry," he said.

"The Government must act to prevent textile manufactures plunging from Savile Row to Skid Row."

The company revealed its half-year profits had tumbled to £35.6m in the six months to June 30, down from £51.8m a year earlier.

A large part of the fall came from a loss of £8.5m before exceptional costs in the contract clothing division.

The group said its performance had been affected by poor high street trading with "destocking" at Marks and Spencer, and the high level of sterling affecting margins