Arnott's will make 120 workers redundant at the Adelaide bakery that makes Iced VoVos and Honey Jumbles in another blow for the state's manufacturing sector.
The company says about 30 per cent of biscuit production at its Marleston bakery will be moved to larger sites in Sydney and Brisbane.
Arnott's will initially seek volunteers for a proposed 120 redundancies over the next 18 months as the work is progressively transferred to the other sites.
About 200 workers will remain at Marleston, which makes Arnott's most intricate biscuits.
Supply Chain vice president Craig Funnell said Marleston still had an important role, being the only site equipped to produce Iced VoVo, Venetian, Honey Jumbles and Caramel Crowns.
The company would offer career counselling and interview coaching for affected workers, who were told of the job losses on Tuesday morning, Mr Funnell said.
"Clearly, (it was) a bit of a shock," he told reporters.
"They're a very, very dedicated workforce here and they've done some amazing things at this plant."
Upgrades to "super sites" in Sydney and Brisbane had enabled more efficient manufacturing of large scale biscuit lines at those plants.
But the Marleston site's "landlocked" residential location meant it was not possible to increase production to levels achieved at other sites, Mr Funnell said.
"The cost of manufacturing a mainstream product here would be up to twice the cost of what it costs to make in Sydney and Brisbane," he said.
"This site is around a quarter of the scale of (those) sites."
Mr Funnell said the company remained committed to manufacturing in Australia despite a decline in sales and pressure from offshore competitors.
Arnott's is the latest manufacturer to scale back operations in South Australia, with car maker Holden's planned closure in 2017 set to cost at least 1600 SA jobs.
National Union of Workers lead organiser Tony Snelson called on Premier Jay Weatherill to meet Arnott's employees to discuss the state's future jobs market.
"The NUW will work closely with Arnotts and the Weatherill government to ensure workers who are made redundant have support and transferable skills to take into new employment," he said in a statement.
"But the jobs have to be there."
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