Seventeen workers have been made redundant at Greerton manufacturer Opco following the loss of its contract to manufacture Design Mobel beds.

The award-winning high end furniture brand was established by Tauranga businessman Dave MacFarlane in 1988, growing to become a Western Bay of Plenty business icon employing more than 120 staff at its peak.

Furniture manufacturer Opco is shifting out of its Maleme Street premises to merge with Mastercraft Kitchens. The move follows 17 redundancies after the loss of its Design Mobel contract.

But Design Mobel brand owner Sleepyhead Group, which bought the company off founder Dave MacFarlane in 2008, blames a drop in demand and low priced competition for the changes.

Sleepyhead, which is now part of the Comfort Group, has had the Design Mobel beds made under contract by Opco, owned by Dave, in its Maleme Street factory.

The Design Mobel brand's unique Your Bodyfit Sleep System, a Swiss-inspired slat bed system made from sustainable plantings of native rimu timber, has earned many awards for design and sustainability.

Comfort Group general manager Chris Taylor says he had worked closely with Opco over the past year to look at ways to cut costs, alter the design and lower the price point to compete more strongly but had 'exhausted all options” when it decided to terminate the contract in late-February.

Chris says the pinnacle of the furniture market, where Design Mobel sat, had shrunk significantly since the recession, while new competitors in the high-end sector had come in at a lower price.

'It's been swimming against a very strong tide of low cost import products and reducing prices in the market. It's very sad for us all.”

Chris says the Design Mobel brand would be retained because of its high-quality reputation – with top mattresses continuing to be branded under the label.

But he says the company is looking for lower price alternatives in the high-end bed category, which will be manufactured overseas if they go ahead.

Dave says the redundancies, which took effect last month, followed the loss of the contract in February. Opco's remaining 13 staff will amalgamate and relocate to Mastercraft Kitchens' Glasgow Street premises.

Opco general manager Colin Campbell says the merger will build on the company's experience working with timber and Mastercraft's complementary experience with panels to open up more options.

Opco also contract manufactures furniture for a range of brands including Formway, Simon Jones Furniture and Neal Smith Design, along with designer burial caskets for Return to Sender.