KiwiRail has failed to find a buyer for all of its Hillside manufacturing plant in Dunedin, but has sold the foundry.
The 115 staff at the south Dunedin site were this morning given the grim news that most will be losing their jobs.
''Despite a rigorous sales campaign there simply wasn't a buyer out there for the whole operation,'' KiwiRail chief executive Jim Quinn said.
The Hillside foundry has conditionally been sold to Australian manufacturing company Bradken, which will continue to operate at Hillside and supplying parts to KiwiRail as required. That sale was expected to be completed early next year, Mr Quinn said.
''KiwiRail's freight business will now operate the heavy lift facility and the rest of the site will be progressively closed down over the next few months as work is either completed or transferred to the Hutt Workshops near Wellington.''
Hillside has a long association with rail engineering. A plant was first built on its south Dunedin site in 1875, and the height of demand for its services around 1200 people worked at the 7ha complex.
In recent years KiwiRail has steadily decreased the amount of work it sends to the workshop, opting for overseas tenders to manufacture engines and rolling stock rather than accept bids from Hillside for such contracts.
In July last year 44 Hillside staff were made redundant, and in May this year KiwiRail put the complex up for sale.
That process has dragged on for six months, creating a great deal of anxiety for workers.
Mr Quinn briefed Hillside staff about the sale this morning. He said at this stage foundry staff would be offered employment by Bradken, some would continue to work for KiwiRail Freight in the heavy lift area, and there would be redeployment opportunities to Hutt Workshop in Wellington.
It is believed 90 jobs will be lost at Hillside.
''KiwiRail alone could not afford the future operating costs to keep Hillside open in the face of this decreasing work,'' Mr Quinn said in a statement.
''Hillside has made an important contribution to the development of rail in New Zealand since 1875 and this won't be forgotten. Many will be sad about its closure, however change is necessary as we continue to build a sustainable rail business for the challenges ahead.
''We will be working closely with the Hillside team and their representatives as we progress to the next stage and start to wind down operations.''
Australian-based Bradken, has 34 manufacturing facilities throughout the world, including Dunedin. The firm makes cast, fabricated and machined components, and offers maintenance and refurbishment services.
Dunedin South Labour MP Clare Curran - whose electorate office is across the road from Hillisde - has been at the forefront of the battle to keep the plant running.
She was furious at today's announcement, which she called ''economic sabotage''.
''The consequences will be felt not only by the workers and their families, but by the wider community and businesses as well,'' Ms Curran said.
''Many suppliers and sub-contractors will also lose work because of today's decision. This was another of the Government's 'done deals'. It has pushed KiwiRail to the brink and KiwiRail's board let it happen. Under this Government there will never be a train built in Dunedin again. This is terrible news for the city.''
- The Southland Times