Car components manufacturer Autodom Limited has stood down 400 workers after shutting down factory sites in Victoria and South Australia.
The company informed workers at its South Australian aiAutomotive and Victorian Dair facilities they would be stood down on Thursday, an Autodom spokeswoman said.
The workers will be stood down indefinitely as the company negotiates a restructure proposal with automotive stakeholders to try to reopen the facilities, Autodom Limited chief executive Calvin Stead said.
"Autodom Limited has been forced to make this difficult decision following a failure, after several months of negotiations, to come to an agreement with the key automotive stakeholders that would see the company be sustainable and allow it to diversify into new markets," Mr Stead said in a statement.
Mr Stead said the Australian automotive industry could not be sustainable without co-operation between car companies, the component sector and the federal government.
"Unfortunately we have no choice but to make this very difficult decision whilst we work together with all stakeholders in the hope that a solution can be found," he said.
The Victorian sites are in Dandenong and New Gisborne, and the South Australian site is in Woodville.
The Australian Manufacturing Workers Union (AMWU) said workers were given no notice of the company's difficulties and were stood down indefinitely at a 7am (AEDT) meeting.
"We were surprised," AMWU assistant Victorian state secretary Leigh Diehm told reporters in Melbourne.
The next 24 to 48 hours would be crucial in saving the company and many jobs, he said.
"We're not 100 per cent sure of how much difficulty the company is in at the moment.
"We understand that it's significant, but we are pretty confident they will be able to work their way through it."
Mr Diehm said worker entitlements should be secure after a new bargaining agreement had been signed in August.
He also praised the Victorian government for past efforts to help the manufacturing industry.
"I'm not specifically requesting Ted Baillieu or the Baillieu government to do anything, but if they could do something, I'm sure they should be getting involved," he said.
The union will meet with the company later, probably next week.