West Otago's biggest employer, Blue Mountain Lumber, which has endured several restructurings in recent years, will close its doors permanently tomorrow, with 45 staff out of work and fears dozens of other jobs linked to the plant could also go.
The soaring value of the New Zealand dollar and a dramatic fall-off in domestic timber orders were to blame, mill management said.
Staff were told at a closed meeting at 11.30am yesterday their jobs would go by the end of the week.
"I think we kind of all expected this would happen one day but it still feels like a kick in the guts," one of the mill workers said. Winstone Pulp International managing director David Anderson expressed regret at the closure.
"It was not an easy day for us [management] but way more difficult for the staff."
Mill managers and others in the district predict other jobs, such as logging crews, transport operators and associated services, are now also on the line.
The closure will be a body-blow to the Gore and Clutha economies, which were hit hard last March when the company shed 65 staff in a major restructuring process managers hoped would keep the company afloat.
Community leaders said they were surprised and disappointed.
"There will be a significant impact on Tapanui. Signs the economy is turning around may well be a false dawn," West Otago Community Board chairman Lindsay Alderton said.
The sawmill, once the biggest South Island producer of Douglas fir timber, recently refocused its energies into its new Blue Mountain Oregon brand.
At the time of the March downsizing, Mr Anderson said he could not guarantee the mill's long-term viability.
He said yesterday those words had come back to haunt him.
"We had hoped the measures we put in place last March would have worked, but the trading conditions out there in the marketplace just made it impossible to continue any longer."
Orders had fallen by more than one-third and targets set as part of the new-look plant were not met in August, prompting crisis talks.
The decision to shut the mill was made late last week, he said.
A skeleton crew of about 12 would be retained to dismantle equipment and help "mothball" the plant.
A decision on whether to sell the site was some time off, he said.
All staff will receive four weeks' pay in lieu of notice, full redundancy payouts, annual and long-service leave and any other entitlements, he said.
Clutha-Southland MP Bill English said he hoped workers would find other jobs, and that government agencies were available to help out.
"The owners and workers at Blue Mountain Lumber have tried for a long time to keep this business going. There is really nothing more they could have done," he said.
National Distribution Union spokesman Ken Young could not be reached for comment.
Blue Mountain Lumber
Location: Conical Hill, 9km east of Tapanui.
Built in 1949 for the New Zealand Forest Service.
Malaysian company Ernslaw One bought the plant from the Government in November 1990.
Now owned by an Ernslaw subsidiary, Winstone Pulp International.
Workforce at high of 210 in mid-2003.
