HIV/AIDS has become a full-blown development crisis affecting all sectors of the economy. The industrial sector is one of the severely hit sectors in Africa. AIDSrelated illnesses and deaths of employees affect an enterprise by both decreasing production (e.g., absenteeism, decrease of production while at work) and increasing expenditures (e.g., health care costs, burial fees and training and recruitment of replacement employees). This is a report of a study that attempted to estimate the changes in worker’s output and attendance associated with advancing HIV infection, and to determine direct costs incurred by a fibre products factory due to illness and death related to HIV/AIDS. The study subjects were factory workers enrolled in a cohort study of HIV incidence and progression in Akaki since February 1997. Laboratory data (HIV serological status, CD4, viral load) at enrolment were matched with factory records on individual worker’s productivity (as measured by incentive payments) and sick leaves taken during the study period. Among a total of 797 workers in job category with incentive payment, 676 participants were included for the study. Of these, 86 (12.7%) were HIV infected with a mean age of 36 years. The mean incentive earnings have no significant difference between HIV positives and negatives at baseline (in 1997). However, in the following years (1998,1999 and 2000) the incentive earnings of HIV positives were significantly lower than the incentive earnings of HIV negatives. In 2000 HIV infected workers earned significantly less incentive (mean = 51.77 Eth. Birr) than those who are not infected (mean =79.77 Eth. Birr). In addition the mean sick leave days per year were significantly greater in HIV positives than HIV negatives both at baseline and after four years. HIV positives were given 64% and 8 81% more sick leaves than HIV negatives in 1997 and 2000 respectively. In conclusion, this study has shown that there is a direct negative impact of HIV infection on the productivity of factory workers.