Kawerau Intermediate School principal Daryl Aim says the halving of production at the town's pulp and paper mill will have a big impact on the Eastern Bay of Plenty town.
Norske Skog says it will close down one of its two newsprint machines at the Tasman Mill early next year, but the number of jobs to go is still not clear.
Mr Aim says the town has a large Maori population and the partial closure of its biggest employer is very serious.
He says that when a mill town's major employer closes processing capacity, such as in the 1982 closure of the Patea meatworks, the local people tend to be heavily affected.
Mr Aim says Kawerau has seen its share of job losses over the years as the Tasman Mill has downsized, but its economy is still strongly reliant on workers buying goods and services locally.
Redundnacies at the mill will also affect the regional as some of the workers commute from places like Whakatane and Rotorua.