Buncrana wants an answer to one question: what's going to happen to the Fruit of the Loom operation and the jobs of those employed there?

Locally, the company is now referred to as "Fruit of the doom and gloom" as workers and businesses brace themselves for the inevitable. Most accept that up to 700 jobs will be lost to Morocco and remain fearful that others may also be in jeopardy.

Mr Paul Bradley, who owns the Spar supermarket in the town, said that job losses of the scale being speculated about would be a severe blow to the area and would ultimately force some people to move away to find work. "It looks like two and three people from one family will be losing their jobs at the same time. The effects will be devastating and unless the Government can perform a miracle some will have to leave the area," Mr Bradley added.

Amid the continuing speculation surrounding the likely job losses, the announcement of a return to a three-day week later this month was further bad news. And while the company has reduced the working week on several occasions before, there is less certainty this time that full production will return. "The ending of local management at the upper level of the Irish operations has dented confidence and there will be greater uncertainty as the company is being run from Europe and the US," Mr Bradley said.

Mr Carl McGinley, who runs the post office in Buncrana, says the community has little confidence that the Government will be able to attract another major employer to the area, and certainly not in the textile sector.

Locally, the impact of the continuing uncertainty is already being felt with businesses reporting a noticeable tightening of belts.

Workers are putting off changing their cars or major home improvements, while others are said to be finding it difficult to secure mortgages.

"We have had many good years of Fruit of the Loom in this area but it now looks like cold economic decisions will be the order of the day. Hopefully the job losses will be at a minimum," according to one employee.

However, most expect that the T-shirt sewing operations will be moved to Fruit of the Loom's sister facility in Morocco sometime next year. Already some machinery from Donegal is being openly transferred to Morocco, where the company's operation is being upgraded.

The move to Africa would be highly attractive to the company because wages there are around £40 a week, compared with £200 a week in Donegal.

A task force which includes IDA Ireland and IBEC representatives will be established next week as a first-step measure to find fresh employment for those workers who will be let go.

It will be focusing on attracting new industries, particularly in the healthcare and telecall sectors, which have traditionally opted to set up outside the major cities.

IDA Ireland has conceded that Donegal is one of the most difficult areas to attract international investment into and is now offering 50 per cent extra grant aid, above the national average, to companies creating employment here.

IDA Ireland regional manager Mr Joe McHugh said a number of projects looked at Donegal in recent months, but no success has been achieved to date.

The task force will be concentrating on offering retraining to workers to help them benefit from any new industrial projects.