World-renowed weavers Reid & Taylor of Langholm have closed suddenly and gone into administration with an expected loss of 37 jobs.
Workers were given the shock news by local bosses despite the fact business was said to be booming.
Local MP David Mundell said the factory had a full order book.
And administrators have also confirmed healthy orders and blame the situation on a lack of investment by its Indian owners.
Reid & Taylor – which dates from 1837 – is part of the S Kumpars group of India.
Mr Mundall commented: “The speed at which this situation has unravelled is unfortunate and we must now focus on ensuring that whatever happens to the existing business, that the site will be able to be put back into use and that a buyer can be found.”
He added: “This is devastating news for Langholm and a real blow for the whole community and the textiles industry based there.
“The news is particularly disappointing as the factory had a full order book, but was unable to continue financing operations.”