Clutha Mayor Juno Hayes says international conditions are laying waste to the timber industry.
Winstone Pulp International announced on Monday it will cut nearly two-thirds of the 105 workers at the Blue Mountain Lumber mill in the Otago town of Tapanui.
The company says the redundancies are needed to keep the plant viable.
Mr Hayes says the lay-offs aren't surprising given the state of the industry, but they will hit the area hard.
Mr Hayes, who also owns a sawmill, says the job losses won't be the last and he too is considering redundancies.
He says he knows of exporters who have had timber orders cancelled when the ship delivering them was half-way to its destination, forcing producers to dump the timber at low prices.