Waitaki Mayor Alex Familton says plans for a new cement plant near Oamaru are more important than ever following the announcement that 192 jobs will be lost at the Summit Wool mill.
Summit Wool Spinners is being sold to carpet maker Godfrey Hirst, and a skeleton staff may be re-hired.
Mr Familton said the redundancies have highlighted the importance of new development in the area, such as plans for a $400 million cement plant at Weston.
But these plans were put on hold by Holcim in 2011 because of economic uncertainty.
Mr Familton believes the plant will go ahead, although it will probably be at least a year before work begins.
He hopes it will be sooner, but says in the meantime, expansion of the North Otago irrigation scheme will stimulate the economy.
The Otago Chamber of Commerce's chief executive, John Christie, says the wool mill redunandancies will affect more than just the workers and their families.
He says many smaller businesses relied on Summit Wool Spinners for work, so there could be job losses for them too.
Mr Christie says it's likely some of the 192 people made redundant will have to leave Oamaru to find employment.