The steel construction and heavy engineering sector says overseas suppliers are under-cutting local businesses with low-quality products for big government projects.
The claims were made at a joint inquiry held in Auckland on Monday by Opposition parties into what they are calling the manufacturing crisis.
The Labour, Green, New Zealand First and Mana parties say 40,000 jobs have been cut from the sector in the past four years and change is needed to reverse the trend.
Steel Construction New Zealand manager Alistair Fussell said local businesses are being forced to operate more cheaply - or at no profit at all - to compete.
Mr Fussell said at least four New Zealand Transport Agency projects in the past 12 months have used Chinese products.
He said that shows the Government is failing to stick by its procurement principles when it comes to large-scale public projects.
First Union told the inquiry on Monday that exporters and manufacturers are being let down by the Government's refusal to tackle the high New Zealand dollar.
The union said more than 1500 jobs have been lost in the wood processing sector alone in the past four years due to Government inaction.
General secretary Robert Reid said failure to get on top of the high dollar is causing closures, layoffs and a lack of growth in the industry.
He said temporary job support schemes such as a nine-day fortnight should be brought back to allow companies facing redundancies due to the high currency to reduce hours with minimal loss of income to workers.
A report on the inquiry is due in March.