Workers at the Mataura freezing works in Southland are being asked to take pay cuts of up to $400 a week to ensure the plant stays open.
Alliance Group, which owns the sheep and cattle processing factory, has said it will spend $13.1 million upgrading beef processing and invest a further $14 million in capital works.
However, it will only do this if the 800-strong workforce accepts new contracts which will result in lower wages and more productivity.
The Otago-Southland secretary of the New Zealand Meat Workers Union, Gary Davis, said that amounted to a pay cut of $300 to $400 a week for the highest paid beef workers and a 10% to 15% reduction for those processing sheep.
Alliance management told union officials that compared with its seven other plants, nearly every department at Mataura was the most expensive to run within the group.
Overheads, costs other than wages, were a third to a half greater than the company average.
Union leaders were told boners at Mataura's sister Southland plant at Lorneville could process lambs for between $1 and $1.50 a carcass less and clean-ups at Mataura were three times more expensive per lamb equivalent than other sites.
Alliance general manager of processing John Brader said the requested pay cuts "were not at the sharp end" of the size of pay cuts made in plants elsewhere around the country.
He defended the request.
"We're trying to invest in the Mataura plant to secure its future," he said.
The share size of the ageing Mataura plant, and its length of nearly 3km, made it Alliance's costliest plant.
As part of the overall $27.1 million to be spent during the next two years, Alliance "had to get a competitive wage contract" from its staff, he said.
Mr Davis said the ultimatum came at a time when wages were already strained.
Staff were not working full days or full weeks when traditionally at this time of the year they were working overtime.
Sheep numbers have been falling steadily and with it the number of lambs for slaughter, from 25.4 million in 2005-06 to an estimated 19.3 million this year.
A discussion document prepared by union officials and acquired by the Otago Daily Times reveals workers feel they have no choice but to accept the contract.
The union paper said Alliance was proposing wage rates in line with its other plants, and they warn to reject it could result in Mataura following Bluff and Patea, and becoming empty former freezing works' towns.
Mr Davis laid the blame for the situation at Mataura firmly at the feet of Alliance management who, during restructuring in 2000, closed a larger beef plant at Lorneville, expecting Mataura to pick up the slack.
Since then, the dairy boom has meant Mataura has insufficient capacity from October to early December when cattle are trucked from Southland to Alliance plants at Pukeuri near Oamaru, and Sockburn in Christchurch.
The plan in year 1 was to increase the number of cattle processed each day to 1120, a process that would take six to seven months.
Mr Brader said the second stage of development would reduce Mataura plant's sprawling footprint by drawing together aspects of the plant, for example, moving the pallet store close to the main plant.
"That [large footprint] is where all the overheads lie in these plants," he said.
It was important not to panic, Otago-Southland meatworkers union branch president Daryl Carran said last night.
Alliance wanted the workers to accept new contracts within a few days, but the union's board of control - the committee made up of representatives from each department - wanted time to work through the plant-upgrade proposal and to suggest alternatives if necessary.
"The paramount thing is not to be constrained by a time frame ... but to work through the details of what is a complex document."
Mr Carran said long experience in the industry had shown him agreements imposed by companies did not last.
"If you don't end up with an amicable agreement and it has to be imposed, the agreement will not live for long and issues won't be permanently resolved."
