Not sure at all, but it might be a modification of Walsche/Welsche, which is still a derogatory term for Italians used by German speakers in the South Tyrol area - in opposition to true Germans (Walser) and Slavs (Windisch).
Sometimes the term is neutral, as in the place name Welschnofen, in South Tyrol. (These are from Wikipedia, I made a search with Walsche in the Italian section, and it does make sense).
The word ending with -er should be plural. It's very hard to convey its meaning in any other language, I am afraid.
