Timber workers contemplate unemployment

Workers at Australia's largest hardwood mill are contemplating their future after being told they could be out of work in eight months.

Australian Sustainable Hardwoods told its 250 staff members at its Heyfield Mill to expect significant lay-offs by September if it can't reach an economically viable deal with its supplier.

It said state-owned logging company VicForests was not offering enough timber supply to keep the mill operating.

"The offer of 80,000 cubic metres is too far short of the minimum 130,000 cubic metres we need to operate a viable business," the company said.

VicForests says the level of supply needs to be reduced to help ensure the ongoing sustainability of the industry.

Regional Development Minister Jaala Pulford says negotiations between the two companies are continuing and she will meet with ASH in the coming weeks.

While about 250 workers at the Heyfield Mill face the prospect of unemployment, ASH says another 7000 jobs including small businesses and suppliers that use their products could also be at risk.