Cashmere clothing company Dawson International has been forced to put more than 400 workers on a three-day week after a fall in demand for its luxury knitwear. It is the first time in five years that production has been downscaled.

Dawson has already said that it expects to make a loss in 2002 after a profit of £900,000 last year.

The affected workers are based at the Ballantyne cashmere mill in Innerleithen and the Barrie knitwear factory in Hawick. They have not been told when full-scale production will resume.