The announcement from Whakatane Board Mill's Swiss owner, SIG, about the proposed closure of its BOP facility is being labelled a significant blow to the local economy.

General manager Juha Verajankorva says the plant has lost its biggest customer and is no longer economic.

'We have begun consultation with staff on a proposal to wind up the business and close the mill,” he says.

The mill has 210 employees and has produced paper and packaging products, latterly mostly for export, for more than 80 years.

Under the proposal, all staff at the mill would be made redundant, the plant decommissioned, and the site remediated.

Verajankorva says the business has been in a challenging position for a number of years, and had been exploring options to remain viable, including seeking a new owner, but no other option had emerged.

'This is a hard proposal to put forward, given how much a part of the Bay of Plenty community this company has become. Should closure proceed, we will do everything we can to support our people and all our stakeholders.”

Verajankorva says it will take a number of weeks to consider feedback from staff and all its information before coming to a decision.

John Galbraith, chair of economic development agency Toi EDA, is confident that with the right support and leadership, the Board Mill can be repositioned and looks forward to working alongside the Mill team and government to explore all possible alternatives.

The Prime Minister recently acknowledged the leadership role that the Mill plays in this world leading packaging type.

'Toi EDA is requesting assistance from central government to find solutions that will allow for the continued operations of the facility,” says Galbraith.

'The recent strategic review of the Norske Skogg Mill in Kawerau shows that the entire wood fibre processing sector is facing continued challenges and a proactive and coordinated approach to supporting this sector needs to be undertaken.

'Today New Zealand's forests are being exported in their log form to China and other markets, rather than having the value added to them locally.

'This remains a risk as China have declared their intent of becoming self-sufficient in lumber within 20 years.

'In many cases, the wood processing sectors receive significant subsidies from their governments which makes competitive production in New Zealand a significant challenge.

'This is despite New Zealand's competitive advantage of having one of the world's largest sustainable plantation forests and renewable energy.”

Toi EDA encourages cross-sector collaboration with government to invest in technologies to produce highly relevant products, such as compostable coffee cups.

'Today cardboard coffee cups have plastic coatings that prevent them from being recycled and therefore the majority end up in landfill.

'The Whakatane Board Mill is an important part of the wood processing value chain in the Eastern Bay, where many of the Mills and wood processors provide raw materials and share overheads.

'Removing the Whakatane Board Mill from the matrix will likely reduce the efficiency of the other Mills in the region, which is a significant concern, and create further head winds.”

Galbraith encourages the government to invest in the region to ensure that the maximum value of the wood processing sector is retained in New Zealand, while retaining the high value jobs locally.

-Additional reporting by Stuff.co.nz