The £78 million expansion announced by the US multinational Du Pont in its Lycra plant at Maydown in Derry brings to £478 million the total amount invested by the company since it first came to the city 40 years ago.

According to Secretary of State, Dr Mo Mowlam, it is evidence of the kind of investment benefits which the Northern Ireland economy can expect in the wake of the IRA ceasefire.

The investment is expected to lead to the creation of 100 new jobs over the next two years, in addition to the 200 jobs which will be sustained during the construction phase.

The company currently employs more than 900 people at its Maydown factory, which also manufactures Kevlar and Neophene. The new jobs will bring the size of the workforce to more than 1,000.

Announcing the investment, which is being supported by a grant of £12.5 million from the IDB, Dr Mowlam said that the project was "a clear signal" by a leading US company to American investors, and to the international business community, of the strength of the Northern Ireland economy.

The European regional director for Lycra, Mr Dieter Siegal, said one of the great assets of the Derry plant was the commitment of the local workforce. He said technicians at Maydown looked on the machinery as their own property, and took a great pride in their work.

"This expansion is a demonstration of our confidence in our operations here," Mr Siegal said. "It also demonstrates our belief and confidence in the growth of our European markets, and the growing potential in other areas such as central and eastern Europe, the Middle East, and Africa."

Local MP Mr John Hume said Du Pont was a major factor in the economic regeneration of the north-west.

"When I'm abroad," he said, "seeking further inward investment, the fact that Derry is already the European headquarters of Du Pont is a very powerful argument in convincing other companies to come here."

Lycra was developed by Du Pont in the 1950s, and is the basic fabric for leisurewear, swimwear, and lingerie. It is resistant to damage by sunlight, sea water, and chlorine, and its durability and stretch and recovery properties have made it a popular fabric with fashion designers.

The Lycra plant at Maydown, built in 1969, is one of four Lycra-producing factories within the Du Pont organisation, and manufactures products for export to more than 30 countries.