The chairman of a wool industry group says a rise in the popularity of synthetic material is hurting wool carpet manufacturing.
Textile factory Christchurch Yarns has gone into receivership and 85 jobs are at risk.
The First Union says are about 660 carpet manufacturing jobs to have been cut in the past few years.
Primary Wool Co-operative chairman Bay de Latour said traditional wool carpet is falling out of favour with buyers who are instead opting for floor coverings made with cheaper, synthetic fibres.
Mr de Latour said while wool carpet is generally more expensive than synthetic, wool is a much higher quality product.
First Union general secretary Robert Reid said the industry is caught between a high wool price and a high New Zealand dollar affecting sales prices overseas.
Mr Reid says companies often lose money when selling New Zealand-made carpet abroad.