CASTLEMAINE could benefit from a blow to one of Victoria's largest smallgoods manufacturers, after Don KRC announced it would shift all smallgoods production there.Don KRC said yesterday it would close its 50-year-old Altona plant by September 2010 with the loss of 400 jobs.Another 220 jobs will go next year when its factory in the Perth suburb of Spearwood shuts.Parent company George Weston Foods bought the Castlemaine factory in February and now plans to make it the primary Australian manufacturing site for smallgoods. Don KRC chief executive Mel Sutton said yesterday the difficult decision was made after both Don and KR Castlemaine continued to run at a loss.Losses at Don had totalled almost $10 million a year for the last nine years. Difficult industry conditions meant new business models had to be found to make the industry competitive, Mr Sutton said.Concentrating production away from antiquated plants was part of the plan. Mr Sutton said the Castlemaine site would be expanded, but it was too early to calculate the number of jobs that might be added.The company would look at models for the transfer of production during the next three to six months."We chose Castlemaine because it is a very new facility, it has great infrastructure and there is room for expansion," he said."But at the same time it's a very sad day for Don and for the industry, and we are trying to do everything possible to provide support for the workers."Mr Sutton said George Weston foods would keep both brands and their respective ranges, which he believed were still assets valued by consumers.More than 900 workers were told the news at a meeting at the Castlemaine plant shortly before 2pm yesterday. Afterwards, many said they had mixed feelings about the announcement.While Castlemaine could gain jobs from an expansion, they felt sorry about the blow to fellow workers in other plants.Mount Alexander Shire deputy mayor, Cr Garry Rewell, said the transfer to Castlemaine showed the potential of regional facilities when older inner-city sites became valuable as real estate."Castlemaine will be the winner from this, for sure, and we could have as many as a couple of hundred jobs moving here," he said. "The next challenge will be to get the people, because not everyone can do this kind of work."Cr Rewell now wants the State Government to look at creating transport links and other incentives to help plan for more workers.Local state MP Bob Cameron said while the State Government would continue to help retrenched workers with skills programs, choosing Castlemaine for production vindicated the Government's support for regional operations."We have been advocating for the factory there for some time," he said. Castlemaine was the natural place to consolidate the business and had potential for future expansion.