Chief executive Keith Cooper said the South Island was forecast to have 2 million fewer lambs in the next 12 to 18 months, a much more severe decline than was expected in the North Island, which had led to the proposal to close Oringi and cut 466 jobs.
All meat companies would have to grapple with a 15% to 20% decline in South Island lamb numbers due to land-use change and low profitability, Mr Cooper said in an interview.
"Inevitably, there will be additional proposals in the South Island with various plants in the near future," he said.
New Zealand Meat Workers Union general secretary Dave Eastlake told NZPA the union expected more plant closures around the country because of falling stock numbers.
PPCS said the proposal to close its Oringi sheep and lamb processing plant was in part caused by the creation of new processing capacity in the district by Alliance Group and Anzco.
Mr Cooper said, in the next three years, the North Island lamb kill was expected to fall by 500,000 and ewes by 200,000, but in the past two years, capacity in the island had increased by 2 million, as Alliance reopened a Dannevirke plant and Anzco built a plant at Marton.
The announcement continued PPCS' right-size project, which has meant the sale of the Brooks processing facility in the United Kingdom and the closure of offices in France and the United States, a Waikato deer plant, and Windward skins in South Otago.
Mr Cooper said PPCS was about halfway through the changes it proposed to make to align processing capacity with supply, and to reposition and strengthen the company.
The decision to close Oringi followed a review of industry trends.
"This is an industry that is suffering from poor returns and the threat of alternative land uses, and PPCS must and will continue to make hard decisions to give security to the business and its farmer-shareholders."
The decision was influenced by constraints on waste disposal and water use, and Mr Cooper said production costs at the site were not competitive or sustainable.
Redundancies would cost about $14 million to $15 million and there would be gains from lower operational costs, which Mr Cooper said would help the company turn around the $48 million loss of the past financial year.
A consultation process with workers started yesterday, and a decision on the plant's future was expected in two weeks.
If Oringi closed, Mr Cooper said the company would assist employees through the change and, where possible, offer alternative employment at its other processing plants, including jobs for about 100 people at Takapau near Waipukurau.
Closing and decommissioning the plant would take six months and, Mr Cooper said, from October, Oringi's workload would be picked up by Takapau, which could process 1.6 million sheep a year, and Waitotara in southern Taranaki which processed 322,000 a year.
Oringi processed 850,000 sheep a year.
Agriculture Minister Jim Anderton said the industry needed a strategy to avoid "ad hoc closures and rationalisations".
Combined Trade Unions secretary Carol Beaumont urged the industry to renew discussions for a meat merger in light of the Oringi closure.
Meat Worker Union delegates recently voted to support industry restructuring similar to the failed plan to create a meat mega company.
"This would deliver a more co-ordinated meat sector and some much-needed security to the meat workforce in New Zealand," she said.
