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Manufacturing in Victoria is being choked by the high dollar, rising costs and strong competition from cheaper foreign rivals, as employment in the sector has fallen to its lowest since records began almost 30 years ago.

There are now 271,383 Victorians working in manufacturing, down almost a third since August 1988, when employment in the sector peaked at more than 383,000.

Figures released by the Bureau of Statistics last week show that in the three months to the end of November 12,808 manufacturing jobs were lost in Victoria. The drop would have been larger were it not for a shift from full-time to part-time positions for thousands of workers.

News of the decline follows Holden's shock announcement two weeks ago that it will stop making cars in Australia from 2017, casting a cloud over the vehicle sector, which employs about 45,000 workers and generates about $5.4 billion in economic activity.

Australian Industry Group Victorian director Tim Piper warned manufacturing was in for a tough period. Metals and food production were under particular pressure.

Mr Piper said the high dollar was the not the only problem - high wages, a lack of investment to improve efficiency and high construction costs contributed.

''We've seen a number of companies move to New Zealand because they find it cheaper to manufacture there,'' he said. ''Companies are exporting foods from here to be processed overseas, which are then re-exported to Australia. This sort of thing costs jobs.''

Treasurer Michael O'Brien said the sector had been going through structural change since the 1980s.

But Mr O'Brien said job losses had been offset by gains elsewhere, including in construction, agriculture forestry and fishing, mining and business services. Victoria was well placed to benefit from new opportunities in international education, gas, wealth management, agribusiness and tourism.

"Of course, not all jobs in these sectors are transferable, which is why the Coalition government's record investment in infrastructure projects is so important, creating more opportunities in construction and its supply chain.

''On that note, it's just dumbfounding that the Labor Party is opposing the east-west link and Port of Hastings developments. Two projects that will enhance the freight and export capacity of this state, and our ability to create jobs,'' he said.

Opposition manufacturing spokesman Adem Somyurek said 38,083 manufacturing jobs had been lost since the 2010 election, with one of every eight workers

losing their position since the Coalition came to office.

''While Denis Napthine does nothing to provide business confidence or invest in Victoria, jobs have been lost over many manufacturing businesses including Shell, Ford, Holden and Alcoa,'' Mr Somyurek said.

Treasury predicts Victoria's jobless rate will average 6 per cent this financial year, before falling slightly to average 5.75 per cent in 2014-15. But these forecasts are unlikely to have included job losses linked to Holden's decision to end production or the possibility that Toyota, which has been warning of difficulties, could follow.

Mr Piper said the full impact of Holden's decision was yet to be understood. Measures were needed to ensure Toyota stayed as a producer and to protect the component sector.