190 workers at the Comer Yarns factory in the Gweedore industrial estate in Donegal are to be put on short-time working.
The company has said it will have to close for one week for each of the months of October, November and December.
Comer produces yarn for the clothing industry. The decision to cut back on production is due to a downturn in the market which was exacerbated by the events of September 11 in the US.
The MD of the company, Barry Richardson, said he is optimistic that things would improve.