Mr Gutwein said that Gunns Ltd chief executive Greg L'Estrange had told him late yesterday that it would be difficult for the mill to remain competitive.

The mill has between 120 and 130 employees and is one of the last processing plants left in the region after more than seven years of industry shutdowns.

Mr L'Estrange confirmed that Gunns was trying to keep the mill going on a day-to-day basis.

"The employees at the mill have done a terrific job over a number of years but it's very hard to compete from Tasmania with such a small resource," he said.

Mr Gutwein contacted the Gunns chief to clarify speculation in the region that Gunns might buy Forest Enterprises Australia's Bell Bay-based operation and then close the former Auspine mill at Scottsdale.

Dorset Mayor Barry Jarvis said that there was a great deal of concern that Gunns would not need two mills if it bought FEA and it would opt for the more modern, automated Bell Bay operation.

But Mr Gutwein said that Mr L'Estrange had revealed that the company would reviewing the future of the Scottsdale mill regardless of the speculaton about FEA.

"He said that the company would look at other options for the site but that, long-term, it couldn't compete," Mr Gutwein said.

"This is a very serious moment for the North-East community and what has to happen is that the council and the state government need to immediately consider the options for the region in the short, medium and long- term."

Mr Jarvis said that the flow-on effect from any potential mill closure would be huge in the Scottsdale area.

"The timber industry doesn't seem to have any friends in political circles federally," he said.

"What worries me is that those who will get hurt have no voice."