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Oamaru's Summit Wool Spinners says it has received more than 45 applications for voluntary redundancy and that it will propose shorter shifts for staff in order to prevent further job losses.
The news comes after the company last month announced the planned redundancies of up to 80 staff because of the downturn in demand for its products.
"We have received over 45 voluntary redundancies which have enabled us, with the assistance of the staff and the unions, to look at ways we can progress," Summit spokesman Ricky Hammond-Tooke said.
Summit and the unions were putting a proposal to staff to move to nine-hour shifts, with employees agreeing to cooperate in terms of job flexibility and cross manning of jobs.
If accepted, the proposal would rely on Summit and the unions together securing the Government's nine-day fortnight job support subsidy, Mr Hammond-Tooke said.
The company was already in discussions with the Ministry of Social Development which, it said, were progressing well.
Last November, shifts were reduced from 12 hours to 10 hours in response to reduced demand.
The company supplies yarn to carpet and rug-makers in New Zealand, Australia, Southeast Asia and the United States.