Around 70 workers will lose their jobs when an Auckland yarn spinning plant closes next month.
Workers at the Onehunga plant of Norman Ellison Carpets, a subsidiary Cavalier Corporation, were told on Wednesday that the factory would close on July 26.
In a statement to the Stock Exchange, Cavalier says the decision was made after a thorough review process involving all of its three woollen yarn spinning plants.
"This decision is about reducing over-capacity in the yarn spinning operations that support the group's broadloom carpet manufacturing operations," it said.
The company, which said in April it was likely to lose up to $3 million this financial year, says the closure of the plant will help it reduce operating costs and was part of a plan to post an after-tax profit of $10m-$12m for the the 2012-13 year.
It says eight staff would transfer to its Onehunga tufting plant and it was hoped that at least 12 would relocate to other plants, leaving around 70 facing redundancy.
Cavalier said the Norman Ellison Carpets business and brand itself would not be affected by the move.
The FIRST union said the closure would hit the South Auckland community hard after the company had made 44 redundant in October and April and some of the remaining workers had agreed to shift changes.
"The closure will be a severe blow on top of that, and workers will struggle to find alternative employment that matches former income levels," general secretary Robert Reid said.
He said the company had agreed to fund a training allowance for affected workers and a redundancy support co-ordinator to help them find new jobs.