Textured yarn producer Unifi Inc has announced plans to cut about 400 jobs and shut down production facilities in an aggressive cost-cutting exercise.

The North Carolina-based company said the move, a response to "competitive challenges in the textile industry", would bring about an improvement in pre-tax earnings through cost reductions of up to $24 million in the next fiscal year.

It will affect about 10 per cent of the company's 4100-person workforce and will result in the downsizing or total shutdown of its facilities in Greensboro, Altamahaw, Letterkenny in Ireland and Manchester in the United Kingdom.

"Our industry faces considerable challenges, including excess capacity in the US market, rising raw material prices, and continued pressure from imports," CEO Brian Parke explained.

"By purchasing some of our raw materials in the open market in our European operations, exiting declining non-core businesses, and consolidating yarn production, Unifi can reduce its fixed cost substantially without material impact to our top-line sales or disruption in service to our customers.

"Although these are difficult decisions that affect the livelihood of many people, they are necessary steps if Unifi is to return to profitability."

Employees were notified of the job cuts and closures at meetings held at each of the facilities on Tuesday.