Summit Wool Spinners' Oamaru plant is to close with the loss of 193 jobs after its parent company sold the business.
Japan's Sumitomo Corp confirmed today that it has sold Summit Wool Spinners plant to Australia's Godfrey Hirst, leading to the closure of the Oamaru plant.
Summit is New Zealand's largest independent spinner, supplying carpet and rug yarn for the domestic and international markets.
Members of the EPMU and FIRST Union were told of the decision at a site meeting this afternoon.
EPMU organiser John Gardner said Summit - Oamaru's second biggest employer - had been hit hard by the high New Zealand dollar.
"These redundancies are devastating for staff and for the whole community of Oamaru which relies so heavily on these jobs," he said in a statement.
Sumitomo said the decision to sell was driven by a number of factors affecting trading results, including an unfavourable exchange rate and less local demand for wool carpets.
International demand for woollen carpet yarn had also been affected by the global financial crisis, Summit's managing director Harry Ogawa said.
From Sumitomo's perspective, Summit was becoming isolated from the parent's global textile business, he said.
The acquisition is expected to become effective from the end of February.
The plant was sold to the Godfrey Hirst subsidiary Canterbury Spinners, which operates plants in Lower Hutt and Dannevirke.
Sumitomo is one of Japan's largest listed companies.