A £12.5 million investment in a Northern Ireland clothing manufacturer is expected to create 290 jobs. The firm, Desmond and Sons, is planning to expand production at five of its plants in Derry and Tyrone.

The investment, backed by the Industrial Development Board, was announced in Derry yesterday by Northern Ireland economy minister, Baroness Denton.

She said the company represented 14 per cent of manufacturing employment in the northern clothing sector.

Company chairman, Mr Denis Desmond, said the company needed to capitalise on its design and products and "become even more responsive to the ever changing needs of the market".

Desmond's has been a supplier to Marks & Spencer for over 50 years. It is the largest privately owned manufacturing company in Northern Ireland, and has a turnover of more than £100 million. It employs more than 3,500 people.

The company has been offered a £3.3 million IDB grant towards the expansion.

The expansion has provided further evidence of the stability of its relationship with its sole customer, Marks & Spencer. Business theory might question the wisdom of basing the future of an entire business, employing around 3,000 people, on the loyalty of a single high street retailer, but for entrepreneur Mr Desmond, the decision has paid off handsomely.

Mr Desmond took over the family company around 25 years ago. Since then it has be come one of Northern Ireland's biggest private sector employers and a major supplier of clothing to Marks & Spencer outlets throughout Britain and mainland Europe. In 1995, sales topped £100 million, and its newest factory at Magherafelt, opened less than four years ago, is to increase its workforce by one third to around 250 by the middle of this year.

Desmond's has 10 manufacturing sites in Northern Ireland, two warehouse distribution centres, and a design centre in London. The company employs a total of around 3,000 people.

Although Desmond's continues to expand its Northern Ireland operation, some garments, particularly those with a high labour content, will continue to be made overseas. A proportion of them will be made in a new factory which the company is planning to set up in Sri Lanka.

"Some of our children's and men's leisurewear is sourced in Sri Lanka already," Mr Desmond says. "The reason we've decided to set up our own operation there is he, cause it gives us more control.

But because success in the clothing business is more dependent than ever on a company's ability to respond quickly, both to changes in the market and to the demands of its customers, the emphasis remains on expanding the Northern Ireland operation.

"Around 15 per cent of our total output is made overseas, Mr Desmond says. "But that's down from more than 20 per cent five years ago.

The real growth is in leisurewear. This includes T shirts, track suits and a wide range of casual wear.

"The market for suits in the UK has fallen by 50 per cent in the past 10 years," said Mr Desmond.

The growth in leisurewear and outerwear has been mirrored by a decline in the nightwear market. Sales of pyjamas for men have declined steadily, while sales to women have increased, at the expense of the traditional nightdress.