The Dairy Workers Union is dismayed that a Waikato cheese factory is restructuring staff levels while union members remain locked out during a bitter pay dispute.

Workers at Open Country Cheese factory's Waharoa plant have been locked out on full pay for more than two weeks.

The company on Friday won an Employment Court hearing to use replacement workers from other Open Country factories to keep the plant running.

Staff members, non-union and union, were issued consultation packs suggesting the company change the shift work, from four shifts a day down to three.

Open Country chairman Laurie Margrain said the company wanted to align the plant's operations with its Wanganui and Awarua factories.

Mr Margrain said the proposed restructure was a result of the company investing in new technology and automation systems to improve productivity, which would change the operation from four shifts to three, the way its other plants operate.

The consultation process was expected to take about two weeks.

The Dairy Workers Union last night said it was disappointed by the proposal.

"That Open Country now has a proposal on the table to significantly reduce the permanent workforce in the powder and whey plants at Waharoa, can only be seen as the latest moves in a dirty campaign to prevent workers from joining a union and getting a collective agreement," national secretary James Ritchie said.

"The proposal sees the company wanting to make more use of seasonal workers and strip back permanent jobs, precisely one of the reasons why our members want the security of having their work covered by a collective employment agreement."

On Friday the union removed its strike notice, due to come into effect yesterday, as a gesture of good faith ahead of further mediation talks this Thursday, Mr Ritchie said.

He said that while they remained hopeful of getting somewhere at mediation, a strike notice had been issued to take effect in 14 days if talks were not successful.

"It's quite simple really. All these workers want is to have their jobs protected through a collective agreement," Mr Ritchie said.

"Almost all employers in New Zealand accept that this is a choice workers have. The sooner Open Country can come to terms with this also, the sooner this dispute will be over."

The locked out workers remain suspended pending the results of investigations into alleged industrial sabotage -- loosened fittings, turned-off valves and altered pressure gauges.

Police were also investigating the discharge of sludge from the plant.

Union members have said untrained workers hired for the strike released the sludge into nearby the Waitoa River.

At 11am the locked out workers plan to picket Open Country's head office in Ellerslie, Auckland.