The company has, however, stated the lines could be reopened in the future if market conditions change.
Many in the Rose City will know the site as D&R Henderson. It was acquired by ForestOne in early 2024.
A current employee, who asked to remain anonymous, said staff were told that there would be 140 redundancies at the Benalla site in the coming weeks.
ForestOne has since told media outlets the number won’t be that high, but has not confirmed to the Ensign how many jobs will be lost.
ForestOne managing director Ian Fankhanel said it had been forced into the decision.
“Increased manufacturing costs, combined with increased external costs, have made it unviable at the present time to continue making particleboard and drying timber,” he said.
“Additionally, we face ever-increasing governmental and compliance costs to do business.
“Regretfully, this closure will likely mean that we will need to make a significant reduction in the number of roles on-site as we restructure our operations over the coming weeks.
“We will continue to run our green sawmill manufacturing and our lamination line.
“We continue to face weak market conditions and, unfortunately, the outlook is still very poor.
“The prices being sold at in the market are some of the lowest we have seen in 20 years, with no significant lift in demand on the horizon.
“ForestOne has distribution warehouses in all capital cities of Australia, selling products manufactured at the Benalla site and other products imported from overseas.
“Approximately 80 per cent of Benalla product is sold into Victoria due to high freight costs to transport interstate.
“Victoria is by far the worst performing state in the country with weak demand and, as a result, has the biggest impact on Benalla.
“We hope that, in the future, if and when demand returns, we can recommence full production again.
“We find ourselves in unprecedented, challenging times and facing very weak demand, particularly in Victoria.”
State Member for Euroa Annabelle Cleeland said the news was devastating.
“This decision is placing hundreds of local jobs at risk,” she said.
“Over recent weeks, I’ve met with local businesses across our region who are battling to stay afloat in an increasingly hostile environment for Victorian industry.
“The closure of ForestOne is a heartbreaking example of these pressures in action.
“Small and medium-sized businesses are the backbone of our local economy. They need a government that listens, lowers costs and gives them a fair go.
“I will continue to fight for the people of Benalla and for every worker affected by this decision.
“They deserve certainty, support.”
A Victorian Government spokesperson said it understood that it was a difficult time for the workers and their families.
“Our thoughts are with them,” the spokesperson said.
"We continue to support businesses across Victoria, we have cut or abolished taxes 65 times — including concessions and exemptions on stamp duty for first home buyers and abolishing the upfront cost of stamp duty on commercial and industrial buildings.
"We also know that manufacturing is thriving in Victoria.
“Over the two years to the end of 2024, employment in Victoria’s manufacturing industry grew over 10 per cent or 27,000 jobs.”
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