Bond St sneezes and Rotherham gets a bad case of flu

Burberry is the latest luxury goods firm to axe workers as sales shrink across the world

It was cigarette-break at the Burberry sewing factory in Eastwood on the outskirts of Rotherham yesterday and the women who have spent their recent working lives turning out £700-a-time trench coats and jackets for well-heeled shoppers were ruminating on an uncertain future.

To paraphrase the old saying: when Bond Street sneezes, Rotherham catches a cold. "They are not in trouble are they? They are just getting out before the trouble starts," said Susan Parker-Smith, 50, a skilled machinist who was due to mark 33 years employment at the low-rise plant next week. Instead, she is among 170 staff given 90 days' notice from their £5.73-an-hour job by the designer goods maker now ceasing operations in this corner of South Yorkshire to help "position" itself through the economic storm.

The piece workers puffing away in the January sunshine were agreed that they were being penalised for being too good at their job, able to produce large numbers of high-quality jackets but unable to compete with cheaper workers elsewhere in the world. To add insult to injury, the predominantly female workforce only learnt of their impending redundancy from television and radio reports after Burberry's early-morning announcement to the Stock Exchange that it was slashing 290 jobs at three of its UK sites, part of a £30m cost-saving.

Having ridden the back of the designer brand boom of the 1990s, with high-profile endorsements from the "face of Burberry" Kate Moss and even a discreet, trademark dog-toothed edging once spotted by a keen-eyed photographer on one of Tony Blair's casual shirts, the company has fought hard to recover from its tarnishing as "chav chic".

It has hired the waif-like model Rosie Huntington-Whiteley and the British actor Sam Riley for a glamorous Mario Testino-shot promotional campaign. But it is really the working women at places such as the sewing factory at Eastwood who are behind the rise of Burberry, with the company reporting profits of £135m last year.

"We are all completely gutted," said Kelly Parsons, 29, who has one child. "There are hardly any other sewing jobs in Rotherham so it is either cleaning work or a supermarket job now. The ones I feel sorry for are the couples – there are four or five married couples here – and they have all lost their jobs. One couple have just had a baby and got a mortgage. It is really hard for them."

For Patricia Turner, 52, who has been operating a sewing machine here since leaving school in 1973, the future was decidedly bleak with the women still waiting to learn the terms of their proposed redundancy. "I don't know what will happen but the prospects are not very good," she said.

Founded on the twin pillars of coal and steel, Rotherham was hit hard by the recession of the 1980s and the collapse of traditional industries. At the peak of Thatcher-era unemployment in May 1986, 20,500 people were claiming benefit in Rotherham. Today that is 6,000 though the claimant rate has risen from 3.2 per cent in March to 4 per cent in the latest figures. But the outlook for the town in general is better, says Clark Herron, of Rotherham Metropolitan Borough Council's environment and development services. "Our view is that we are not any worse or better off than other places which have taken hits like this," he said. "Nobody knows what is round the corner but we think our local economy is strong."

Rotherham's sole coalmine at Maltby is extending its working life to 2015 and now employs 500. Old pits have been replaced by new industrial parks and workers are still employed albeit on a much reduced scale at the hi-tech Corus works next to Burberry. Some £2bn of investment is earmarked for the town centre and an advanced manufacturing project that brought together the University of Sheffield, Boeing and Rolls-Royce is a point of civic pride. In fact, traditional manufacturing of the unglamorous variety practised in South Yorkshire could emerge in better shape from the recession than the global luxury goods trade.

The Burberry seamstresses of Rotherham are the latest victims of a sharp downturn in demand for high-end accessories. That has already struck Chanel in Paris. Cosmetics giant Estée Lauder also announced a fall in sales as the beauty industry feels the effects of consumers shying from expensive or non-essential purchases.

Richemont, the second-largest luxury goods group whose brands include Cartier and Montblanc, has issued a doom-laden warning about the prospects for the trade in expensive watches, jewellery and pens after a 12 per cent fall in sales over Christmas. Revenue from the Americas, where the Swiss-based company sells most of its products, fell by 28 per cent.

LMVH, the world's largest luxury group, scrapped plans for a 12-storey Louis Vuitton flagship store in Tokyo after its share price fell by 44 per cent in 2008. Tiffany, the American jeweller, and Coach, the handbag company, also had poorer sales figures. Alain Nemarq, chairman of the high-cachet jewellery firm Mauboussin, said: "The pursuit of exclusive trophies is finished. We will now return to reason, decency and discretion." Little consolation to the seamstresses of Rotherham; the only trophy they will be seeking in 2009 is a new job.