The doors are expected to close next month, leaving 37 workers without a job.

The high Australian dollar and dearer wool that have driven customers to synthetic carpet, have been blamed by for closure of Benalla Spinners, which has been owned by Godfrey Hirst since 1993.

Godfrey Hirst Australia director of operations Tim Maishman said “the Australian carpet market is subdued and demand for woollen carpet has continued to decline”.

“The historically high Australian dollar presents an additional challenge impacting on our export markets, and yarns produced in other countries, such as New Zealand and China, can be landed in Australia at prices below local costs,” he said.

The Textile, Clothing and Footwear Union of Australia’s state and national secretary Michele O’Neil said one of her assistant secretaries had met company representatives yesterday and been told the factory would close by the end of next month.

She said workers were expected to be given formal notice of the timing of the shutdown tomorrow

She said there was expected to be a staged cut in numbers before the final day.

“It’s very bad news for the workers at Benalla Spinners and the Benalla community,” she said.

“They have been concerned about their job security for some time because the company has been gradually reducing the size of the site over the past 12 months.

“They’ve dropped shifts and made some workers redundant.”

Benalla Spinners employed 140 people at its peak and had about 60 employees at this time last year.

Member for Benalla Bill Sykes said the closure appeared to be inevitable with world trading conditions taking a toll.

He said it was the biggest employment hit to Benalla in several years.

He acknowledged that there was a need for the Victorian government — of which he’s a member — to help the community to develop new job opportunities.

Benalla mayor Peter Dunn said the closure was “a significant blow to the town’s economy and general community feeling about itself”.

Editorial — page 14