The company told workers that they would gradually scale down production and lay off staff in the coming years before shutting the Forest Hill factory entirely.

The news came as a shock to forklift driver Tony Smith, who had worked at the mill for over four years and had known colleagues who had worked there for decades.

"Some of the employees have been here for 35 years. It's a sad day to find out that somewhere in the foreseeable future you're going to lose a job you've been doing for a long time," Mr Smith said.

"It's been a good four years. I've enjoyed it here. They've been a fairly good company to work for."

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Mill hand David Fletcher said the announcement was a total shock to the workers, saying they were given no indication that their factory was on the verge of collapse.

"Someone from Grafton came down to pay us a visit, told us everything was great, that the company sailed through the COVID crisis," Mr Fletcher said.

"They gave us all a big pat on the back and congratulated us. We walked away feeling pumped, but fast forward five weeks and they're telling us we're not going to have jobs."

The company has promised "relocation opportunities" for some of the laid off Wagga workers, with around 20 positions opening up at the Grafton site off the back of a $10 million government bushfire package.

However, Mr Fletcher said that the suggestion was "laughable", saying that almost none of his colleagues were willing to leave their homes.

He said many of them were locals who been working at the company since high school, and had dug deep roots in the community.

"The vast majority of the people who work here have family, they have kids in school, they have loved ones, they have parents they need to look after," Mr Fletcher said.

"Moving to Grafton is ludicrous. There might be one or two that might think of it, but Grafton's a long way to Wagga. I can't see it happening."

Mr Fletcher said he would not be moving to Grafton, saying that he and most of the other factory workers had resigned themselves to finding work elsewhere in Wagga.

"Some people are really crestfallen. It's the camaraderie that everyone's going to miss the most. It's a hard place to work, it's hard yakka, but we all enjoy working.

"It came as an absolute shock. Couldn't believe it. Didn't see it coming."

He said the site manager Craig Dorward had taken it particularly hard, getting "close to tears" when he broke the bad news to the rest of the team on Tuesday morning.

Mr Dorward said he did not know when the company would begin the lay-offs, saying that those decisions were still being finalised.

He said they would continue to provide updates to workers and the general public once they had finished discussions with the government and Forestry Corporation NSW.

The workers will meet with their CFMEU union rep on Monday and Tuesday to discuss their rights and their remaining options.

Several workers voiced fears that the company would try to back out of paying redundancy payments, however CFMEU's Alison Rudman said their enterprise bargaining agreement was legally rock solid.

"Whilst I can certainly understood everyone's feeling very nervous - they've had the rug pulled out from them only yesterday - we will do whatever it takes to ensure those members receive what they shook hands with their employer over only a year ago."

"Their enterprise agreement reflects the fact they're a group of people who have chosen to come together so they do have the conditions to be able to support their families."

Ms Rudman said the bushfires would continue to threaten the region's timber industry, and that the government needed to step up to prevent more factories going the way of Big River.

"The bushfires led to a loss of between 20 and 30 per cent of the resource, and that's something that takes 30 years to replace," Ms Rudman said.

"This shutdown really is a timely reminder to all levels of government that they need to do what they're able to do, secure log supply, have a plan in place for the timber industry, and provide tangible support for manufacturing - if there's anything COVID-19 has taught us, it's the importance of making sure we're able to manufacture here at home."