Employees at the mill, owned by Japanese giant Sumitomo Corporation, were told the news at a meeting yesterday. One employee told the Otago Daily Times staff were ''gobsmacked''.
The mill had been part of the town for 130 years and the redundancies were devastating for both staff and the community, which relied ''so heavily'' on those jobs, EPMU organiser John Gardner said.
Canterbury Spinners Ltd, a subsidiary of Godfrey Hirst, has entered into a conditional agreement to buy the mill's assets, and would assess whether it was ''going to be viable going forward'', Godfrey Hirst general manager Tania Pauling said when contacted.
While Summit had made all 192 workers redundant, Godfrey Hirst would hire core staff to allow it to make that assessment. Those numbers were not known yet.
The sale was subject to consultation with employees and their unions. Staff would be hired once that process was completed. Staffing would not be at the same levels as now. The business had been ''struggling for years'' and losing a lot of money, Ms Pauling said.
''If we can make it work, obviously that's in our best interests. It's not going to be an easy fix,'' she said.
An employee, who did not want to be named, said staff did not expect everybody would be made redundant. They went to yesterday's meeting thinking Godfrey Hirst would take over the mill ''and we'll just carry on''.
One hundred and ninety-two people looking for work would have a big impact on the town, the staff member said. Some workers made redundant last year had still not found jobs.
The worker believed the mill would start up again under Canterbury Spinners.
Summit, which is New Zealand's largest independent spinner, produces wool yarn for use in the manufacturing of wool carpets. The mill had been struggling in recent years as a result of the high New Zealand dollar, a weakening local market for wool carpets and the impact of the global financial crisis on offshore markets for woollen carpet yarn.
Last year, the equivalent of 49 and a-half full-time jobs were lost at the mill, leading to a call from unions for the Government to take action to protect jobs in the manufacturing sector. Those job losses were announced in June, in the wake of a downturn in orders. About 250 people were employed at the plant before that announcement.
In 2009, the company announced restructuring plans, which led to 60 staff taking voluntary redundancy, reduced shifts and the introduction of the Government's nine-day fortnight scheme at the plant.
Summit managing director Harry Ogawa said in a statement that from Sumitomo Corporation's perspective, Summit was becoming isolated from the parent's overall global textile business.
''Summit employs loyal and skilled people and produces top-quality yarn. Unfortunately, demand for good wool yarn to be used in carpet and rugs has fallen, resulting in a difficult trading time,'' he said.
Ms Pauling said part of the company's rationale for looking at Summit was risk management.
It had spinning plants in Lower Hutt and Dannevirke, but the company's Christchurch plant was closed in 2011 because of irreparable earthquake damage. Its 220 employees were offered a choice of redundancy or transfer to other Godfrey Hirst plants.
Godfrey Hirst is New Zealand's largest carpet manufacturer.
Wool carpet manufacturers had been struggling as a result of the high dollar and the ''huge number'' of imported synthetic carpets into New Zealand, which were supported by warranties which she said were ''probably misleading''.
Mr Gardner said Summit, like many other manufacturing companies, had been hit hard by the high New Zealand dollar.
It had been a good employer and did not want to make the redundancies, but the Government's refusal to act on the overvalued exchange rate or provide ''any kind of strategy'' for manufacturing meant it was left with few options, he said.
First Union textiles secretary Paul Watson said the textile industry faced difficult times. Summit's announcement followed the closure of a Norman Ellison Carpets factory in Onehunga last year, with 80 job losses.
''This must serve as an urgent wake-up call for the Government to be more proactive in its support for manufacturing. Manufacturers have been completely let down and workers have paid the price for this inaction through job losses,'' he said.
The announcement came as hearings started this week in a parliamentary inquiry into manufacturing. Manufacturing, New Zealand's third-largest employing industry, had lost 40,000 jobs in the past four years, unions said.
