Parent company Imperial Tobacco Group is moving its Woodstock operations to North Carolina. (CBC)A Woodstock factory that makes cigarette tubes will close its doors early next year and head south, putting nearly 50 employees out of work.

A drop in demand caused by a boom in discount and contraband cigarettes is to blame, according to the factory owner, Van Nelle Canada Ltd.

The worth of the Canadian market has decreased by 75 per cent during the past three years, from about $1.9 billion to an estimated $440 million, said manager Ted King.

"At the same time, the U.S. market grew to around $2.5 billion this year, an increase of 50 per cent," he said.

Van Nelle's U.K.-based parent company, Imperial Tobacco Group, plans to shut down the plant in March and ship the equipment to its operations in Reidsville, N.C., in April.

'Some may be moving away. Some may be going to school. They're not really sure. They're just all still in shock, I think.'— Marilyn McHatten, employee of Van Nelle Canada

"There are obvious costs and logistic advantages to producing tubes in the market in which they're intended for," said King, who had to deliver the news to the 47 employees.

"To me, it was an emotional thing because these people I've worked with for 21 years," he said. "Our children go to school together. And you know, you could see the shock in their face. And it's affecting their income and their potential lifestyles. So, it hurt."

Employee Louise Canam doesn't know what she's going to do.

"I'm the only one that works," she said. "My husband is on disability, so, I'm the major breadwinner. So, I have to find a job with benefits — like, soon. I can't afford to take time off. So, it's very hard. It's very hard for this town of Woodstock and all the people who work here," she said.

Employee Louise Canam, left, the sole breadwinner in her family, fights back tears discussing the pending closure of the factory. (CBC)"And at the end of January, they're laying off some [people], and at the end of February, they're laying off some, and we have to say goodbye to people we have known for 20 years. So, it's not easy, for any of us."

Everyone is worried, said fellow employee Marilyn McHatten.

"Everything's up in the air right now," she said. "Some may be moving away. Some may be going to school. They're not really sure. They're just all still in shock, I think."

Woodstock Mayor Art Slipp says he is disappointed by the decision to close the plant.

It's devastating for the families involved, but it's also a blow to the town to lose 47 well-paying jobs with benefits, he said.

"It's a multimillion dollar payroll, but I think, more importantly, the transition and the impact on the local economy is going to be substantial," Slipp said.