A South Otago yarn factory laying off its staff has criticised both the Government and the wool industry for making the business uneconomical.
Qualityarns, which operates in an historic woollen mill at Milton, is making its 28 workers redundant on Thursday, although it hopes to re-employ some of the workforce casually.
Managing director Mike Barra says it has become impossible to compete with imported yarns, because of Government policies including the free trade agreement with China and the emissions trading scheme.
He says there's also been a lack of support from wool suppliers, who are currently enjoying good returns.
Mr Barra says the original mill had employed up to 400 people at its peak.