Vegetable processor Simplot will keep its Devonport plant open - but only if it can reduce labour costs over the next three years.
However, the company will downsize operations at its New South Wales plant in Bathurst, with a loss of about 110 jobs.
The company said that a significantly lower ongoing cost base was needed to ensure both plants remained operational beyond the next three to five years.
Earlier this year, Simplot announced a review of its operations following what it described as an unsatisfactory financial performance.
Simplot Australia managing director Terry O'Brien said recently announced long-term supply contract offers from both Coles and Woolworths were both welcomed and appreciated, but that both retailers had still required produce to be supplied at sustainably competitive prices.
"Simplot Australia's parent company, US-based JR Simplot, has committed significant financial investment but it has done so only if the operations can be shown to be viable into the future," Mr O'Brien said.
"In the absence of a lower cost structure, neither plant has a strong business case long-term."
In the changes announced this morning, the Bathurst plant will produce only frozen and canned corn and Chiko rolls.
Mr O'Brien said that if the Bathurst plant can remain financially sound, it will continue until further notice.
"However, if costs escalate and other aspects do not prove financially viable, a total closure would then be necessary," he said.
Mr O'Brien said that for the Devonport plant to remain operational beyond the three-year mark, it would require considerable capital investment and labour cost reduction.
We expect that over a three-year period the capital programmes, together with improved management of our seasonal needs, will result in a gradual reduction of casual labour," he said.
"Our upcoming enterprise agreement negotiations with the AMWU and other unions will be critical to the establishment of a constrained cost base in the future.
"The looming trade waste upgrade at Devonport is of major concern and whilst TasWater has agreed to work with us to find a solution, it still represents a potential closure factor."
Mr O'Brien said that after three years, Simplot will either confirm the Devonport plant's viability or begin the process of closing it down.
Mr O'Brien said the outcome for both plants was not what the company had hoped for but it will factor any offers of subsequent financial support into the next review of the Bathurst and Devonport plants.