The 186 jobs to be cut at textile company Lane Walker Rudkin (LWR) may not be a result of the current economic recession, Prime Minister John Key says.
LWR was placed in receivership last month and several of the company's unprofitable sites around the country have been targeted for closure or mergers.
It was announced today 186 of the group's 470 staff were being made redundant -- 102 in Christchurch, 61 in Greytown, 19 in Pahiatua and four in Auckland. The receivers said there were no plans for redundancies at the Timaru plant.
Mr Key said LWR had a "very proud history in New Zealand" and it was sad people had to lose their jobs.
"I'm not actually convinced that it is recession that's caused the collapse at LWR -- there are other issues and other factors in play.
"Other issues in the fullness of time might present a different story," he said.
"It's a very difficult situation.
"We've made it clear that we'll work as best that we can but in the end this is fundamentally a matter for the receivers at this point."
Joint receiver Stephen Tubbs said initial investigation of LWR's affairs showed the group had not been profitable for years and the economic slump had made things worse.
"There is no realistic alternative to a programme of substantial change such as we have outlined today," he said.
"Even for the continuing businesses, the position remains difficult and no assurances can be given as to future profitability."
Mr Tubbs said if the company's financial issues were not immediately addressed, more jobs would be lost and any ability for the company to meet employees' preferential claim for unpaid wages, holiday pay and redundancy entitlements would also be lost.
National Distribution Union (NDU) secretary Laila Harre said the situation was a "new low point of business irresponsibility in New Zealand".
"Workers have been thrown out of work with no notice, and no money," she said.
Ms Harre said it was understood that wages for the week just worked may be put in workers' accounts next Tuesday, but there was no guarantee they would see any of the holiday or redundancy pay that was capped by receivership laws at $16,420.
She questioned why LWR's bank, Westpac, had allowed the company to continue to trade and build up so much debt for so long.
Ms Harre also said the Government needed to respond more effectively.
"John Key has said he wants to save iconic firms, and reminisced about his first job at LWR. But he has completely dropped the ball on requests made to him by the mayoral emergency meeting on the LWR receivership last week."
The Government had promised to "take the hard edge" off the recession and support communities trying to do things for themselves, but there was no sign of that happening, Ms Harre said.
"We need both the Government and Westpac to come up with a mechanism that will guarantee the holiday and redundancy pay owed to the workers.
"And the Government also needs to come to the party to fund a worker-led redundancy support service."
Receivers said they were working with representatives from Work and Income, the Ministry of Social Development, the NDU and budget advisory services.
They were working to identify and co-ordinate assistance for the employees made redundant. Assistance would be made available at the workplace where possible.
