Managing director Steve Mulqueen said the closure was due to an unreliable yarn supply which had caused a loss of sales and cashflow problems.
When staff were informed of the closure on Monday, ''we were all crying'', he said.
Staff said they knew the business was trading poorly, but news of the closure was still a shock, especially for those who would lose two jobs in one family.
Mr Mulqueen and his wife Marlene had worked at the Studholme St factory since 1997, the year Postie Plus bought the assets from previous owner Contraknits.
In 2010, Postie Plus decided to withdraw from manufacturing to concentrate on its core business, which led to the Mulqueens buying the business.
No plans had been made on the future of the factory beyond next month, but Waimate Knitwear retail outlets in Waimate and Milton would remain trading as long as stock was available, Mr Mulqueen said.
Waimate Knitwear was a strong supporter of the Bruce Woollen Mill factory in Milton when its future was uncertain after former owner QualitYarns issued redundancy notices to its 28 staff in November 2011.
A consortium of New Zealand businesses bought the Milton factory in April 2012, saving it from closure.
Bruce Woollen Mill managing director John Stevens said Waimate Knitwear was a ''reasonably significant customer'' when the mill was re-established but declined to give a figure.
The Waimate closure was expected to have little impact on the Milton operation, he said. Waimate Mayor Craig Rowley said yesterday it was ''obviously never good for the town'' when a business was forced to close.
He hoped the staff who were being made redundant would be able to pick up alternative work.
One employment possibility was the new milk-processing factory being built near Glenavy for Chinese company Inner Mongolia Yili Industrial Group.
The plant is scheduled to start handling milk in August, employing about 70 permanent staff, with the majority expected to be recruited locally.
- The Courier/North Otago Times
