Timber products company Nelson Pine Industries is to lay off 60 staff.
The company says a slump in worldwide demand for its products means it is having to reduce plant capacity and it will have to shed more than 20% of its staff.
Nelson Pine Industries is the South Island's largest forestry processor, producing laminated veneer products and medium density fibreboard.
Managing director Murray Sturgeon says projects in Dubai requiring timber veneer have halted and Chinese furniture makers using MDF for the American market have been hit by a large fall in house building.
Workers have been given four weeks' notice and some will take voluntary redundancy.
Mr Sturgeon says Nelson Pine Industries is financially sound, but there is simply not enough work for everyone and it is a black day for the company.
Engineering, Printing and Manufacturing Union national timber industry organiser, Alan Clarence, says meetings will be held with affected staff over the coming weeks, to see what can be done to mitigate the effect of the job losses.
He says the redundancies have come as a blow to the Nelson region, already reeling from job losses at Sealord.
Earlier this week, Sealord announced it would lay off up to 180 of its staff in Nelson.