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It is a scandal that Hillside's engineering workshops are being bypassed for the contract to build 300 flat-bed wagons, work which would have secured its ongoing future as one of the few heavy manufacturing entities left in the country - and certainly in the south.
But the success of Fisher and Paykel Appliances' Dunedin operation, which is expanding its staff numbers, is an example of the ways in which modern flexible businesses can reinvent themselves - in moving from the more traditional practices and technologies into the modern, more service-based support arenas.
In April 2008, the whiteware manufacturer closed its North Taieri plant, with the resultant redundancy of 430 people.
Its appliance range, including dishdrawers, would be made offshore, taking advantage of lower labour costs and closer proximity to markets.
It was a sad end to a long presence and tradition of appliance manufacture in Dunedin.
This began when Henry Ely Shacklock established an iron foundry in Princes St in 1871.
In 1873, Mr Shacklock designed and built the first of thousands of cast iron coal ranges.
The company he founded, H. E. Shacklock Ltd, produced the first electric range in New Zealand in 1925.
In 1955, the company was acquired by Fisher & Paykel Industries Ltd - which had been established in 1934 by Sir Woolf Fisher and Maurice Paykel.
In 1938, it had begun manufacturing Kelvinator washing machines under licence and with the later acquisition of Shacklock expanded its range of manufacturing operations and consolidated its market dominance in New Zealand.
It began exporting within Australasia and East Asia around 1968.
The company entered the European market in 1992, and by 1994 was exporting to more than 80 countries.
Today, it has plants in Auckland, Thailand, Mexico, Italy and the United States servicing a competitive international market with an innovative and technologically advanced range of whiteware.
Much of that innovation is based on dedicated research and development and design functions that continue to be housed in Dunedin.
The company moved to its Wall Street mall office in central Dunedin in June 2009 with 138 employees - consisting of 95 production designers, 27 call centre staff and a range of support personnel.
This week's news is that by June 2011, those numbers are expected to have grown to 180, an almost 30% rise in staff numbers.
F&P now has more than 100 production designers and engineers working on designs for cooking and dishwashing appliances sold around the world - including some positions that came with the acquisition of a US stove brand.
The new year is expected to see a further seven design production staff joining the Dunedin team.
So although the manufacturing element has been lost, research and design in Dunedin continues to grow.
As such, the company fits the much-touted, though seldom realised, evolutionary profile of a business moving from manufacturing into design and service.
F&P is one company that is developing its intellectual property here in this city and selling it to the world.
To do so, it employs top designers and engineers from numerous countries, all of whom doubtless add to the economy and social ecology of the city.
Thus from the ashes of manufacturing rises the phoenix of design and innovation.
F&P is to be applauded for the vision that has enabled it to remain competitive in its field with the best in the world.
Not all entities are quite so suited to such a transition, however, and Hillside fits into this category.
Its core business is heavy engineering work and, with projections of the increased importance that rail will come to play in post-peak oil society, it is critical that there remains here a facility to build, service and repair rolling stock.
The New Zealand economy never was, and never will be, biased towards heavy industry, but there are infrastructural elements it is critical to maintain.
Dunedin has a proud history in engineering and has shown - particularly with F&P's continued success and development - it has the flexibility and labour market to supply technologically advanced adjunct industries.
It can and should do both.