The rail workers' union says talks between it and KiwiRail over the future of 40 jobs at Hillside Workshops in Dunedin have broken down.
KiwiRail is consulting workers about its plan to cut its workforce in Dunedin and Lower Hutt by 70, because there is insufficient work.
The Rail and Maritime Transport Union says talks broke down after it suggested KiwiRail was engaging in sham consultation.
General secretary Wayne Butson says the union challenges KiwiRail claims that building trains in New Zealand is not economic.
A Chinese company has been contracted by the state-owned enterprise to build 300 wagons for $29 million.
KiwiRail has indicated that it will need 4000 new wagons in the next few years and will be looking for the best-value deals.
The company says a meeting on Tuesday was the second briefing for union delegates about the Hillside consultation process, and it will continue to include the union in regular briefings. It says the longer the consultation process goes on, the harder it is for those affected.
A public meeting on the matter will be held in Dunedin on Wednesday night.