About 110 employees and 60 contractors from a workforce of 740 were expected to lose their jobs at the Western Port facility at Hastings over the next few months.

BlueScope chief executive Mark Vassella said the decision was part of the steelmaker's "intention to reconfigure its Australian cold rolling, metal coated and painted steel production".

He said the company would keep its operating lines and assets at Western Port open to allow for increased output when demand improves.

The reported cuts would be the second round of job losses to hit the Hastings facility, after more than 200 positions were shed in August 2011 as part of a restructure.

The firm had closed one of its two operational blast furnaces at Port Kembla, on the east coast of NSW, and its hot-strip mill operations at Western Port when it quit the export market in tough economic conditions.

BlueScope, the biggest employer on the Mornington Peninsula, said that it would offer voluntary redundancies to workers and set up a job substitution and outplacement services process.

Billy Hassan, who has worked at the Hastings plant since the early 1980s, said workers were given a presentation by management this morning.

"They said that we will be asked to put up our hands for [voluntary] redundancy. And if they don't get enough, they will tap us on the shoulder," said Mr Hassan, a union delegate at the plant.

Mr Hassan said this round of redundancies played out in a similar way as the August 2011 cuts. "We didn't know much about it until it happened," he said.

The steel production plan produces some flat sheeting for car manufacturing, but predominantly supplies to the housing market, including corrugated sheeting.

Australian Workers' Union Victorian Secretary Cesar Melhem was briefed by BlueScope this morning. 

"This looks like a heart-breaking start to the New Year for our members at Western Port," Mr Melhem said in a statement.

Macquarie analyst Liam Farlow said market conditions in Australian residential activity have remained weak, forcing the steel manufacturer to continue its cost-cutting measures.

''This is more of a reorientation of Australian production,'' Mr Farlow said.

Mr Farlow said BlueScope recently upgraded its metal-coating facilities at Port Kembla to run its next-generation Zincalume steel product.

''The upgrade was completed in late 2012 and it is looking to fully load and utilise the operational facilities at Port Kembla as opposed to the Western Port ones," he said.