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Nervous Summit Wool Spinners employees will find out on Friday whether - and how many of them - will lose their jobs.
A print-out of an email, pinned on a staff noticeboard at the factory, which is North Otago's second-largest single employer with 340 workers, referred to the "unfortunate need to restructure".
It said: "Unfortunately the company can no longer carry on the way we are and we have to make some changes."
It also said it was planned to have a staff meeting on Friday afternoon when staff would be formally informed "of the unfortunate need to restructure".
The email had "stirred up a bit of feeling" among staff at the factory, a Summit employee said.
Summit Wool Spinners director Ricky Hammond-Tooke did not return a call from the Otago Daily Times yesterday afternoon. He confirmed on Monday the company was talking to unions this week but would not comment further.
Engineering, Printing and Manufacturing Union lead organiser John Gardner said, when contacted, there was "no real information" to come from yesterday's meeting with the company.
A general staff announcement would be made on Friday and the union agreed to meet the company after that.
He said he did not know details of Friday's announcement and did not ask.
The company needed to make an announcement to staff. Staff could see what was happening in the factory and they wanted to know what was happening to their jobs, he said.
Asked about the mood at the factory, Mr Gardner said staff were nervous. The company reduced its shifts from 12 to 10 hours last November because of a dramatic drop in orders.
Another Summit employee said the mood was "quite sombre".
She believed management had been "really keeping their fingers crossed" the company could ride through the difficult time.
"Obviously, it hasn't come to that. Now, they've got Plan B," she said.
Summit Wool Spinners, owned by the Sumitomo Corporation, is New Zealand's largest independent spinner, supplying carpet and rug yarn for both domestic and international markets.
The woollen mill was started in 1881 by local farmers and businessmen. It was sold by Alliance Textiles to Summit Wool Spinners in 1992.
In 2003, shareholders approved a $10 million expansion which increased the company's capacity by about 25%.