A synthetic rubber company, Polimeri Europa is to close its plant at Hythe with the loss of up to 300 jobs at the start of 2014.
The closure is due to weakening demand for replacement car tyres, as well as weakening exports as competition in Asia increases.
For 50 years, its Hythe plant has manufactured synthetic rubber for tyres and moulded foams.
In a statement the company said: “The Hythe site has been successful in making significant improvements to its performance over the last few years however, unfortunately, without a sustainable market for its products it is unable to benefit from the progress made.”
It said consultations with trade unions would begin in the next few weeks.
New Forest East MP Dr Julian Lewis described the closure announcement as “a hammer blow”.
“As always in these cases there will be knock-on effects further down the supply chain.
“It really is bad news and one must have huge sympathy for the workers involved,” he said.
Hundreds of people work at the plant in Hythe, the company says 130 staff would go, with many more contractors also at risk of losing their job, making its figure towards 300.