The future of 192 employees of Summit Wool Spinners hangs in the balance after they were informed late yesterday afternoon that the company has entered into a conditional sale and purchase agreement with Canterbury Wool Spinners Ltd.
The sale is subject to consultation with employees and their unions, and the acquisition is targeted for the end of February.
Harry Ogawa, managing director of Summit Wool Spinners, which is owned by the Sumitomo Corporation of Japan, said Sumitomo has made a decision to sell Summit.
"This has been driven by a number of factors affecting trading results, including an unfavourable exchange rate and less local demand for wool carpets," he said.
"International demand for woollen carpet yarn has also been affected by the global financial crisis and, from Sumitomo's perspective, Summit was becoming isolated from the parent's overall global textile business.
"Summit employs loyal and skilled people and produces top quality yarn, unfortunately, demand for good yarn to be used in carpet and rugs has fallen in a difficult trading time."
Members of the EPMU and First Union were told at a site meeting at 3.30pm yesterday.
EPMU organiser John Gardner said Summit was the second largest employer in Oamaru and had been part of the town for 130 years.
"These [possible] redundancies are devastating for staff and the whole community of Oamaru, which relies so heavily on these jobs," he said.
"Summit has been a very good employer. Staff numbers have come down over the years, from about 350 to 192, and with the high dollar it [Summit] cannot compete."
Waitaki MP Jacqui Dean said she was concerned with the news.
"My first concern is for the welfare of the staff," Mrs Dean said.
"I will be meeting with senior management today to get some clarity for the future."
Waitaki Mayor Alex Familton said with the future of about 200 wage earners in the balance, it was a devastating time for the district.
"I am meeting with management today," he said.
The Oamaru Mail spoke to two employees of Summit Woollen Mills as they left the Weaver St site yesterday afternoon after hearing the news.
Both staff members requested anonymity but reflected the mood of workers when they heard the news.
"You could have heard a pin drop. We knew something was up.
"How it will affect us, we just don't know. It's really up to what the new people decide.
"We have no idea what they will do.
"We were told that Godfrey Hirst was taking over in February.
"Harry has given us a good deal over the years."
A second Summit worker commented: "I think there was a feeling that there was something going down.
"It was hard to take it all in. It will take a bit to digest it all and make sense of it.
"There will be a lot of stunned families tonight."
Canterbury Wool Spinners, which operates plants in Lower Hutt and Dannevirke, is a subsidiary of carpet manufacturer Godfrey Hirst New Zealand Ltd.
Summit Wool Spinners is New Zealand's largest independent spinner, supplying top quality carpet and rug yarn for both domestic and international markets.
The Sumitomo Corporation has owned Summit since 1992 and is one of Japan's largest listed companies.
Established in 1919, Sumitomo has offices in 65 countries and employs about 72,000 worldwide.