The Cottonsoft production plant in Timaru St — which has manufactured products for brands including Tuffy, Paseo and KiwiSoft — is expected to shut its doors late next year.
In a statement yesterday, Cottonsoft announced it was investing in a new long-term lease in Christchurch along with more than $10million in plant and equipment.
The new site, a factory and warehouse located in Hornby, was expected to open in the third quarter of next year.
It was located near customer sites that generated 85% of its South Island revenue and would replace a network of five company and third-party sites.
The investment and move reflected Cottonsoft’s success and growth as a business, while also recognising the distance from its customers and labour supply constraints in Dunedin, the statement said.
"Unfortunately, as part of these changes to consolidate our business, we will be closing our Dunedin factory and warehouse.
"We are working hard to support our highly capable Dunedin team who will be impacted by the move and are working with them to enable redeployment or transfers wherever possible.
"We are grateful for their contribution in the last 36 years."
Cottonsoft started operating in South Dunedin in 1988, before moving to the Timaru St site in 1999.
The company also operates two other production facilities in Auckland.
Cottonsoft country manager Kim Calvert said the company’s business had grown and the Dunedin site could no longer provide what it needed.
It expanded as much as it possibly could and reached the point where the most logical step was to relocate to where their customers were.
The Dunedin factory’s 26 staff were told of the closure at a meeting on Wednesday, and it had been proposed they relocate to Christchurch.
"It’s an outcome of a successful business growth story, but it is hard on the team."
The Christchurch facility had the ability for a 25%-30% increase in production output and was within 2km of major distributions centres.
Cottonsoft had felt it important to maintain a base of production to its customers in the South Island, he said.
The new factory would enable a more efficient and responsive operation for customers, significantly reduce delivery times and travel distances, and deliver a substantial reduction in its carbon footprint, the statement said.
