Tenneco Australia is to close its Walker exhaust plant in Adelaide, axing 128 jobs, with the South Australian government blaming the Commonwealth for the plant's demise.
The company says the plant will shut when Holden and Toyota cease local car production in October.
It says it has been active very seeking to diversify the operations but has been unable to find a sustainable solution.
"We sincerely regret the impact of this decision on our Walker employees and their families," Walker plant manager Gavin Pelling said in a statement on Friday.
"We are extremely proud of our 30-year manufacturing history in O'Sullivan Beach and of our employees' commitment to continuing to supply our customers with the highest quality exhaust systems until vehicle production ends."
SA Manufacturing Minister Kyam Maher said the thoughts of the state government were with the workers and their families.
"What is so disappointing is it didn't have to be this way. It didn't have to end like this," Mr Maher said
The minister said Tenneco's decision was a direct result of the federal government move to stop financial assistance to the auto sector and "to chase the auto industry out of Australia".
Tenneco said it was working with its staff and the state and federal governments to assist workers to transition to new jobs.
The company did not expect any job losses at its Monroe plant at Clovelly Park in Adelaide or at its plant in Alexandria in NSW.
Both plants produce mainly aftermarket parts.
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