Staff at Axiam Metals in Wanganui have been told that about 16 of them face redundancy.
The company and unions confirmed yesterday that talks between the parties had started and it could take about a week before a clear picture emerges.
While the Manufacturing and Construction Workers Union says 12 production staff and four in management would be made redundant, company principal John Oskam said it was too early to be that exact.
Union secretary George Larkins said Axiam was saying this decision was not related to the high value of the kiwi dollar but more about the global economy and the fact its usual customer base was not spending.
"As a result of that reduced spending there was a reduction in orders," Mr Larkins said.
"Axiam has a very good name nationally and internationally as a manufacturer and there's no issues with its products or indeed its cost. It's all about people not spending and this is affecting Axiam Metals."
He said while the decision was not a shock to most of the staff, it was still devastating for those who will be immediately affected and concerning for those remaining in the business.
"The collective agreement contains a small compensation package plus a four to six weeks notice period depending on the levels of service. The parties are currently working through the process and selection criteria," he said.
The company made about 40 staff redundant in August last year but that directly affected casual staff and was the result of a one-off order striking problems.
Mr Oskam said in that instance the company had a large contract Metals firm staff facing redundancy signed up earlier in the year and Axiam Metals took on about another 40 workers.
He said they were told at the time that the job was temporary and that there could be no long-term employment guarantees once that contract was filled.
Mr Larkins said Wanganui was not flush with employment opportunities at the moment either so it was going to be tough for those made redundant to find work.
"They are a good company to work for but the problem is people they deal with are just not spending money at the moment."
He said the union had told the company that it believed deciding on redundancies should be a matter of last on-first off.
"If they have to retain somebody because of their skill set then that's different," he said.
Axiam Metals, like its sister company Axiam Plastics, is a niche manufacturer, producing high value and highly technical metal products.
He said the decision to "reconfigure" staffing numbers came at a time when Axiam Metals needs to "reset its business".
"Local and overseas demand has been slow and we don't see that improving hugely in the immediate future," Mr Oskam said.
"As our business adapts we need a new business set in place so this is a restructuring and adaptation to the business environment."
He said they remained upbeat about the future for the business and continued to seek new contracts in a highly competitive market.
The other union represented in the negotiations is the Engineering, Printers and Manufacturers Union.
Mr Larkins said Axiam has asked that the current collective agreement, which the parties were in the process of renewing, be rolled over for a further six months with no changes to terms and conditions. Union members voted to accept that yesterday.