Consultation documents released in July showed the company planned to cut between 160 and 220.
KiwiRail held a series of consultation meetings held across the country deciding 181 jobs will be cut.
Mr Kerr said the "cost reduction" programme was really about contracting out members' jobs.
"Yesterday we were told by a local manager that KiwiRail may in the future get outside help, to do work that is required to keep the network up to standard, at the same time as they're proposing to make our members redundant.
"Experience of this in the United Kingdom demonstrated contracting out leads to casualisation, and compromises the health and safety of workers and the public,"said Mr Kerr.
The union is concerned at the direction the state-owned company is taking, saying that even under privatisation, core rail work had not been outsourced.
"Our members are incensed at what is going on, and called an immediate stop work meeting.
"Members voted unanimously to condemn KiwiRail's plan to axe jobs and put the company on notice that any attempt to contract out or privatise by stealth their work will be met with the strongest possible industrial response," said Mr Kerr.
Kiwi Rail Chief Executive Jim Quinn said KiwiRail had no intention of replacing staff with contractors.
"We are making these changes to reduce expenditure, using contractors to undertake day to day work on the network will not achieve savings."
"We have used contractors in the past to supplement our work force as required for example during large projects and when intensive work is required such as work needing to be done in between freight and passenger services running. We will continue to do this as we have always done."
"The proposed staff reductions are not about doing the same amount of work we have been doing with less staff. We are simply slowing down the work we will be doing on the network over the next three years."
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