A sawmill is closing in the small town of Milburn, south of Dunedin.
City Forests, which is owned by the Dunedin City Council, has announced it plans to close the plant and make 31 people redundant.
The company built the mill only six years ago, with the aim of breaking into the American market for premium timber panels.
Chief executive Grant Dodson says the high New Zealand dollar and the downturn in housing in the United States have made the plant uneconomic.
Mr Dodson says the company will try to help the workers find other work, but cannot offer much itself in its other forestry operations.
He says possible interest by the Dunedin City Council in selling City Forests to reduce its debts had no part in the decision to close.
Clutha mayor, Bryan Cadogan, whose district the mill is in, says he did not know it was in trouble, and the news is terrible for the workers and the whole community.