The loss of 60 jobs in Benalla due to delays with the West Gate tunnel project in Melbourne is the result of poor planning by the Victorian government, the city's state MP says.
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LS Precast has been making sections of the tunnel and this week moved to lay off workers because of ground contamination.
In a letter to employees outlining the job cuts, the company's human resources and training chief Brendan Duncombe writes that the discovery of PFAS in soil at the tunnel site was to blame.
"Employees will be well aware of the current PFAS situation on the West Gate Tunnel Project, and the associated delays in the tunnelling works," he wrote.
"Regrettably, these ongoing delays, when coupled with our current storage challenges, have resulted in a requirement to significantly reduce our production of tunnel segments."
The factory is going from three crews to one with operating hours reduced to 6am to 4.30pm Monday to Friday and 6am to 1pm every second Saturday.
About 300 work at the plant which was built in 2018 specifically for the tunnel precasting.
Member for Euroa Steph Ryan said the lay offs were "devastating for the workers who have made decisions based on having secure long term jobs".
"We always had concerns the government rushed to the project without the necessary due diligence and these issues are now coming to the fore," the Nationals Opposition MP said.
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"I think the Andrews government has stuffed the project up by rushing into it before resolving contamination issues."
Transport Infrastructure Minister Jacinta Allan has not responded to questions from The Border Mail.
After The Border Mail contacted LS Precast owner Ashley Day, a tunnel project bureaucrat phoned back to say there would be no comment from the parties involved in the matter.
Benalla mayor Danny Claridge believed work would continue on sound walls and bridge girders, but there was no longer space to stockpile tunnel sections.
"No-one likes to see redundancies - 60 jobs is a big loss out of the workforce but luckily at Benalla we've got a bit of activity happening," Cr Claridge said.
"We've got two new solar farms starting building and they're looking for 200 people in the construction phase."
It is the second jobs blow for Benalla in the past week, with the city's Target store among those being closed in a nationwide shake-up announced by its parent company Wesfarmers.
Cr Claridge has written to Wesfarmers to protest the decision, which he says will leave a big hole in Bridge Street, the city's main shopping strip.
