Conrad Groenewald, James Hardie Asia Pacific region general manager, has issued a statement indicating the company was talking to the staff and their union about the future.
Following a review of its operations in New Zealand, the company would change how it makes and supplies fibre cement building products for the New Zealand market, the statement said.
"As part of the proposed change, James Hardie will enter into consultations with 120 affected employees and their union E tū. The company will thoroughly and carefully undertake a consultation on this proposal over the next two weeks and will seek to confirm its final decision on this change on May 18," the statement said.
If these changes proceed, James Hardie will stop manufacturing at Penrose.
"The company remains committed to the New Zealand market and supporting the New Zealand building industry," the statement said.
Joe Gallagher, a negotiation specialist with E tū, said: "We have a collective agreement and we're going to enter into consultation. This is a poignant time in this country's history where we need local manufacturing to remain strong.
"They're shutting down a plant and potentially putting New Zealand workers out of work. They need to look at the bigger picture."
James Hardie also wants to expand outsourcing its freight and logistics management to a third-party.
The company had used that model in the South Island for about eight years and will use it to scale up and provide a more efficient and seamless supply chain, it said.
"After more than 80 years of manufacturing in New Zealand, this is a difficult decision to consider," Groenewald said.
"However, the company's local manufacturing operation has underperformed over a number of years, struggling with old facilities and equipment fragmented across multiple sites that would require significant ongoing investment to upgrade. Covid-19 has also negatively impacted performance. We believe this shift would provide a more sustainable, reliable supply of high-quality products to our customers."
The changes are part of a global review of James Hardie's operations, he said.
"New Zealand remains an important market for James Hardie. Our priorities are to continue uninterrupted supply and service to our customers while at the same time supporting employees through this transition. We are taking a phased approach to cease manufacture over the course of this year."
Sales, marketing, customer service and technical support teams would stay based locally, he said.
Two years ago, a Court of Appeal decision allowed more than 1000 owners of New Zealand homes and retirement villages to continue claiming $250m against James Hardie businesses over problems with their properties.
Appeals brought by James Hardie International Plc, James Hardie New Zealand Holdings and RCI Holdings Pty against a High Court decision for the alleged failure of fibre cement cladding products failed in 2018.
