Up to 250 redundancies have been announced at a textiles manufacturing plant in Letterkenny.
Unifi Textured Yarns (Europe) Limited said this afternoon it was laying off more than a third of its 700 strong workforce in the Co Donegal town.
The company will now enter into a 30-day consultation period with union representatives to discuss redundancies.
The American-owned company blamed Irish inflation, Asian imports and risingcosts for the job cuts. It employs over 6,000 people in 18 plants worldwide.
The lay-offs represent another major blow to the textile industry in Donegal where there have been significant job losses in recent years, notably at Fruit of the Loom and, in the past 12 months, at Nena Models and Comer Yarns.
The Tánaiste and Minister for Enterprise, Trade and Employment, Ms Harney said she was "very disappointed" at the "dreadful news for the workers and the wider community"
She insisted that both her Department and IDA had worked closely with the management of Unifi to ensure that everything possible be done "to protect and maintain the maximum number of jobs".
The Labour Party spokesman on Enterprise, Trade and Employment, Mr BrendanHowlin, said it was a "devastating blow to the local community".
"The Government mustensure that the haemorrhaging of jobs that has emerged during the first fourmonths of 2003 ends immediately," he said.