T-shirt and sweatshirt maker Gildan is to lay off 540 workers as part of an ongoing programme to move production offshore.

The lay offs constitute 4% if the company's global workforce and will be accompanied by plant closures and shrinkages.

Gildan will shut its textile manufacturing facility in Valleyfield, Quebec, in December 2006 and subsequently downsize its Montreal, Quebec knitting facility.

It will also shut and downsize its sock facilities in Mount Airy, North Carolina and Hillsville, Virginia, over the next three to four months,

About 155 employees at the Valleyfield facility and about 50 employees at the Montreal knitting facility will be affected. About 335 US positions will be eliminated at present.

The company said it "sincerely regrets" the impact on its workers and their families and said it will strive to help alleviate the effects for all affected employees.

"…the relocation of production capacity to the company's offshore manufacturing hubs in Central America and the Caribbean Basin is required in order to continue to be cost-competitive against Asian imports and other global producers in the intensely competitive North American apparel industry", said the company.

Gildan has recently made significant capital investments in production operations in Honduras and the Dominican Republic.

The company will also close its Canadian distribution centre in Montreal at the end of October 2006. Distribution operations in Canada will be handled by a third party logistics partner, in order to provide greater flexibility in meeting the needs of Gildan's wholesale distributors and retail customers in Canada. Six employees will be affected by the closure.

Gildan already announced earlier this year it would reduce operations at facilities in Valleyfield and Bombay, New York.
 
The moves are partly designed to help ramp up T-shirt capacity from 32m dozen to 100m dozen within five years.

The company expects a restructuring charge of about US$0.28 per share in the fourth quarter.

Gildan is the leading active wear supplier for the US and Canadian wholesale markets and is also a top supplier to the European market.

The company sells T-shirts, sport shirts and sweatshirts to wholesale distributors as undecorated 'blanks', which are subsequently decorated by screen printers with designs and logos. It is also implementing a major new growth initiative to sell athletic socks, underwear and active wear to mass-market retailers in North America.