More than half the employees at an Otago timber mill are to lose their jobs.
Winstone Pulp International outlined plans on Tuesday to downsize operations at Blue Mountain Lumber near Tapanui.
Managing director David Anderson says the company will consult employees over the next two days, but expects about 65 of 110 jobs will go.
Mr Anderson says the company has been trying to increase the mill's financial viability for some time, but the current economic climate has left it with no choice and timber sales have dropped markedly.
Mr Anderson says the only options were to downsize or close the mill and it was tough to tell staff.
He admits the redundancies are a huge blow for the small communities of Tapanui and Gore, given the sawmill is one of the area's large employers.
The company will try to improve the mill's prospects by focusing on products that have the potential to sell well in current markets.
Workers spoken to by Radio New Zealand on Tuesday were saddened by the announcement, but pleased that the sawmill will not close.
It follows news last week that 60 jobs would go at Nelson Pine Industries due to a slump in worldwide demand for its timber products.
