Nearly 90 jobs will be lost after the closure of a sheep skin processing plant near the lower North Island town of Shannon.
Silver Fern Farms on Monday announced it will sell the Shannon Fellmongery, the town's biggest employer, to the Lowe Corporation. It employs 86 people.
Silver Fern Farms says it had no choice but to sell, due to a long-term decline in sheep numbers, which has been exacerbated by this year's drought.
The meat cooperative will process its North Island pelts through Lowe Corporation's facilities in Hastings.
Silver Fern Farms chief executive Keith Cooper says lamb numbers have fallen and the move is necessary to create efficiencies in the industry.
He says while the sale is a positive from a business perspective it is hard on the 86 workers, whose futures are uncertain, and it will be tough on the local community.
One of the soon-to-be redundant fellmongerers, Kerry Moore, has worked in various roles at the site for more than 30 years and says it is unlikely there will be another employer like it in the town.
He says he was hoping to work a few more years before retiring, but now he'll have to reassess his options.
Mr Cooper says the company has a responsibility to help staff through the changeover and is providing support services to do that. Silver Fern Farms is offering preferential seasonal work at its other plants to those who have been made redundant.
Lowe Corporation managing director Andy Lowe says the two companies will work together to create a healthier sector.
Neither company has said how many of the jobs being lost in Shannon will move to Hastings.
A spokesperson for the Meat Worker's and Related Trades Union says the workers may have to move to find jobs. Roger Middlemass says Silver Fern Farms has handled the closure well and kept employees informed throughout the process.
Big blow for district - mayor
The Mayor of the Horowhenua District Council, Brendan Duffy, says the plant's workers live across the district, not only in Shannon, so the economic impact will be felt widely.
"Our latest statistics show that we've grown by 230 people and now we've got 80 people out of work all of a sudden. It's a serious hit and that mustn't be underestimated. Horowhenua has lost so many businesses over the years."
Mr Duffy says he will speak with Silver Fern Farms to determine what support the plant's workers will receive.
Horowhenua district councillor Ross Campbell says many of the workers could struggle to get new jobs, and some will have to consider moving away.