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A town of less than 800 people is set to lose 99 jobs, after a sawmilling company announced yesterday it would close.
News of the closure of the Bright Wood mill in Otautau has shocked the small Southland town, which had a population of 753 at the 2006 census.
Bright Wood stopped buying raw materials yesterday, and staff will be laid-off in stages, until mid-March when the mill will be put up for sale.
Bright Wood president Kevin Stovall told The Otago Daily Times the strong Kiwi dollar, as well as "aggressive" tactics by the Reserve Bank to curb consumer spending, were hurting the export sector.
"The Reserve Bank's inflation-fighting strategies will continue to put significant pressure on the New Zealand dollar to continue to strengthen relative to the US dollar," Mr Stovall said.
The United States-owned mill focuses on producing housing materials for the American market.
In the past few months the New Zealand dollar has hovered around the US70c mark.
The costs of doing business had also risen significant, the company said.
When it bought the mill in 1996 electricity cost three to four cents per kilowatt; now it costs 13 to 14 cents.
The introduction of a fourth week of compulsory leave this year would also have cost Bright Wood an extra $100,000 a year.
Mill site manager John Crane said the company's hand had been forced.
"It is just a fact that the market has caved in, in the States, and the higher dollar has translated to lower US dollar receipts," he said.
The Otautau staff were good people, and it had been a difficult decision to close, Mr Crane said.
- NZPA
