A union says 40 jobs will be cut at the Army's Trentham base in Upper Hutt when a United States defence company takes up a 10-year maintenance contract in July.
The $145 million deal with Lockheed Martin replaces one held with the Australian company SPEL, which covers the maintenance and warehousing of army equipment and vehicles at Trentham.
A lead organiser for the Engineering, Printing and Manufacturing Union, George Collins, says 40 of the 103 employees affected are not being re-employed by Lockheed Martin.
He says SPEL was one of the biggest employers in Upper Hutt, and the change will be a huge blow to the local economy.
People will find it difficult to get new jobs in the struggling manufacturing industry, Mr Collins says.
The Defence Force has declined to comment.