Hornepayne, Ont.,  is on edge this week after the local lumber mill was put on a three-week shutdown which leaves 146 people out of work.

The Olav Haavaldsrud Timber Company announced, in late November, it would lay off employees until it resolves an issue around selling power to the provincial grid from its co-generation plant. 

Iif the mill stays closed it will mean "some very bleak times" for the township of about 1,000 people, said Morley Forster, the mayor of Hornepayne.

Hornepayne Mayor Morley Forster

Hornepayne Mayor Morley Forster says permanent closure of the township's lumber mill would affect about 200 workers. (LinkedIn)

​"When you take that much, that number of people, which is about 40 per cent of the workforce in Hornepayne out of the mix, then everything suffers," he said.

Forster said a shutdown would also impact around 50 secondary jobs.

The other major employer in the community is CN Rail. 

Forster said he's confident the mill and province will negotiate how much power the co-generation plant can produce.

He said he has been in contact with the province to get the best settlement possible.

But Serge Trudel, who worked at the mill and is a steward for the steelworkers union, says portable milling equipment is already being moved out of the community.

He said workers were told Friday the company will lose $9 million a year if the plant doesn't sell enough power to the grid.

According to Trudel, employees were told the mill needs to sell 17 megawatts of power, but are only allowed to sell 10, and that when it produced 12 megawatts for a month, Hydro One stopped it.

Employees were told they'd be laid off for three weeks while negotiations with the province continue. 

"They're also telling us if the government doesn't respond within three weeks, it will no longer be a temporary layoff, it will be a permanent layoff. Everybody's devastated," Trudel said.