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Pacific Brands set to sack 2,000 workers -

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ELEANOR HALL: The Australian clothing manufacturer, Pacific Brands, has stunned both the Federal
Government and the unions by announcing that it will shut down seven factories across eastern
Australia and sack almost 2,000 workers.

The company's big-name brands include Bonds, Holeproof and King Gee and it says it's taken the
decision because of falling demand and a half year profit loss of nearly $150-million.

We'll hear from the Federal Industry Minster shortly about attempts to save the company's workforce
and we'll also cross to one of those manufacturing sites in Victoria.

But first Finance Reporter Sue Lannin reports on what has driven the company to take this action.

SUE LANNIN: Pacific Brands is one of the country's largest clothing manufacturers. It kept its
factories open here when many others have moved to China.

But the maker of iconic brands like Bonds and King Gee says it needs to stop making some smaller
labels which are not selling.

The chief executive, Sue Morphet, says that means it has to close seven factories in Australia.

SUE MORPHET: This is not easy from within Pacific Brands; it will be hard to understand from
outside. The reality is that manufacturing for us is no longer a sustainable, competitive advantage
and we have to manage that process.

SUE LANNIN: One-thousand-eight-hundred-fifty jobs will go, with 1200 jobs to be shed in
manufacturing over the next year and a half.

That includes factories in Victoria, New South Wales and Queensland.

The company made a net loss of $150-million for the half year to December.

And shareholders will get no interim dividend payout.

Sue Morphett says trading conditions are difficult.

SUE MORPHET: The current economic climate remains uncertain and therefore we cannot provide an
earnings guidance. Clearly these are unprecedented times.

Consumer confidence is at record lows, there is a greater discounting in retail, there has been a
shift from consumer wants to needs.

SUE LANNIN: Michele O'Neil the head of the Textile, Clothing and Footwear Union, says the news
comes as a shock.

MICHELE O'NEIL: This company has gone ahead and made an announcement without seriously discussing
with the union and the Federal Government what can be done to save jobs.

Some of these businesses within the Pacific Brands group are actually profitable businesses, we
know that, we know that from the company themselves.

To announce a wholesale pulling out of manufacturing in Australia, without any genuine attempt to
see if anything can be done to save these businesses, we think is disgraceful.

SUE LANNIN: The union says Pacific Brands has received millions of dollars in Government subsidies
to help it stay afloat.

MICHELE O'NEIL: The harsh reality is that most workers that lose a job out of this industry don't
find another one and then you add to that the current economic climate and you're really talking
about workers being left on the scrap heap.

SUE LANNIN: But the chief executive, Sue Morphett, says after a 12 month review of its operations
it had no other choice.

SUE MORPHET: It has been a very tough decision to make. Many of these people have been with us for
decades and they've been a very important part of Pacific Brands' growth.

However we have a responsibility to the other employees of Pacific Brands and to the shareholders
who have put their trust in us.

This has been uncomfortable but it is the tough and it is the right thing for us to do, and is the
one that will reposition Pacific Brands for growth in the future.

SUE LANNIN: Sue Morphett says the company will now increase its manufacturing in China.

It's the latest Australian company to announce layoffs; others include Virgin Blue, BHP Billiton,
Rio Tinto and Brambles.

ELEANOR HALL: Finance reported Sue Lannin; and Pacific Brands shares fell by more than four per
cent in response to the company's announcement.