More than 100 jobs will be lost with a decision by motorcycle manufacturer Harley-Davidson to close its New Castalloy factory in Adelaide in 2019.
South Australian Manufacturing Minister Kyam Maher said the state government was advised of the decision on Tuesday night.
He said it was no reflection on the profitability of the Adelaide operations or the quality of the work.
"This is a decision based on consumer preferences," he told reporters.
"The large-style motorcycles aren't being bought in the numbers that they have been in the past and the need for what's produced here has diminished."
New Castalloy was bought by Harley-Davidson in 2006 to secure its supply of wheels and hubs for some of its range of motorcycles.
The plant was threatened with closure in 2011 when Harley-Davidson announced plans to move its manufacturing operations to China.
But the Milwaukee-based group reversed its decision in 2013 and signed a new lease deal with the state government, which owns the site, to keep the plant open.
Since then, government support for New Castalloy has been worth about $500,000 a year.
Mr Maher said the government would offer New Castalloy workers the same level of support offered to other auto sector workers who lost their jobs in recent years, including those at Holden.
The South Australian opposition said the closure of New Castalloy was the result of the state government's high-tax, high-cost regime which was stifling business investment.
"Small businesses are really struggling and the costs of doing business in South Australia are stopping many companies from expanding and employing more people," industry spokesman Corey Wingard said.
But Mr Maher said the decision taken by Harley-Davidson in the US was totally out of the control of the SA government.
The New Castalloy plant at North Plympton had also been in the news recently as the focus of renewed investigations into the 1966 disappearance of the Beaumont children.
Police were preparing to conduct an excavation on the site amid speculation it's where the three children were buried.
