The mill that produces most of the country's Harris Tweed is shedding almost half of its workforce.

The Kenneth Mackenzie mill in Stornoway, Lewis, which produces 95 per cent of the famous fabric, is cutting 36 jobs from its staff of 78.

Industry representatives said that the redundancies were a severe blow not only for Harris Tweed, but also for Lewis's economy.

The news comes only six months after hopes of a revival in the declining industry's fortunes were prompted by the takeover of a previously closed mill on Lewis.

Brian Haggas, the Yorkshire-based owner of the mill, told The Times that the redundancies were part of plans to streamline the business and ensure that it remained competitive.

He said: “We've gone from a cottage industry to a production unit. We're investing in new equipment, but sadly, as a result, we need fewer people.”

Mr Haggas, who bought the mill from KM International in 2006, announced last year that he aimed to limit production to men's jackets, and cut dramatically the number of patterns from thousands to only four.

He revealed yesterday that the mill will embark on the new scheme by September, and declared that if it is a success the company will hire staff.

“We are at the stage of planning, preparing and organising, and we are full of hope, but we won't know until we actually begin selling the jackets: nobody wants to buy a jacket in the summer,” Mr Haggas said.

“If next season goes as well as we hope then we will start recruiting selectively.”

Only cloth that is woven by the islanders of Lewis, Harris, Uist and Barra in their homes, using pure wool that is dyed and spun in the Outer Hebrides, can call itself Harris tweed.

The industry employs approximately 120 weavers, and a further 80, excluding those who have been made redundant, in Lewis's three mills at Stornoway, Shawbost and Carloway. The mills dye and spin the yarn that is sent to weavers who then finish the resulting fabric.

Although Harris Tweed is a firm favourite with global brands from Ralph Lauren to Nike, the industry has suffered a downturn in recent years as the clothing industry has changed.

About one million metres of Harris Tweed is produced annually now, down from seven million a decade ago.

Despite the gloom, the industry believed that it had been thrown a lifeline last November when Ian Taylor, an oil businessman, revealed plans to reinstate the previously mothballed Shawbost mill. It has since begun production, but insiders said that the job cuts at the Kenneth Mackenzie mill would mean fresh uncertainty for the ailing industry.

Maureen Mackay, who runs Luskentyre Harris Tweed, which supplies cloth to Nike, on the Isle of Harris with her weaver husband, Donald John Mackay, said: “Harris tweed is a unique product. It was the main industry here along with fishing and both of them have been hit badly in recent years. If it hadn't been for Shawbost re-opening the industry would have collapsed. It would be very damaging if we lost Harris Tweed altogether.”

Mrs Mackay also condemned the prospect of seasonal work in the business: “I feel sorry for those at the Mackenzie mill because they were assured they would get work all year round.”

Donald Martin, the chairman of the Harris Tweed Authority, which regulates the industry, said of the staffing cutbacks at the Kenneth Mackenzie mill: “The loss of jobs is a huge blow to the Harris Tweed industry and to Lewis.

“As an authority we hope that things pick up later in the year. It's nothing unusual for mills to pay people off, then re-hire them when the new season begins.”