More than 200 jobs are on the line after the Whakatāne Mill announced plans to shut down its operations.
It comes after the tourism industry there was crushed by the eruption of Whakaari/White Island in December 2019, and then the ongoing impacts of the COVID-19 pandemic.
On Tuesday night, Swiss owner SIG announced it is planning to close the 80-year-old Whakatāne Mill. With it, 220 workers would lose their jobs.
"Most of the people were sad, obviously it's a sad thing and some people were devastated and many people were surprised," general manager Juha Verajankorva said on Wednesday.
The mill, which was visited by the Prime Minister during her election campaign, produces paper and packaging products for export.
Its management said the decision to close came after they lost their largest customer.
"Our internal customer, our parent company, they have decided to transfer the volume, our volume to another supplier and that's the ultimate reason why we have to consider closing," Verajankorva said.
Mill staff members that Newshub spoke to outside the mill were in shock.
"I've been working here for 15 years and a lot of people in there have been working for longer than that. It's a sad day to see the end of this mill," worker Jarod McGregor said.
The proposal would see all staff made redundant, the plant decommissioned and the site remediated.
Whakatāne Mayor Judy Turner said it's a huge blow for the town's economy, with tourism struggling following the Whakaari/White Island disaster and the impacts of COVID-19.
"You have to work with the cards you are dealt - and we have been probably dealt more than our fair share," she said.
"However, I'm always very proud of Whakatāne; we're quite a resilient community - we've had to be - and we've developed some good resilient skills along the way.
"So can we get through this? Yes we can."
Local MP Kiri Allan is planning on meeting with mill management and workers in the coming days.
"The discussions will be focussed on can that company pivot to something else that will become economically viable and be able to create a sustainable way forward in terms of jobs and employment for those in the region," she said.
The final decision is due at the end of March.