It is the latest in a series of blows for the company's Tasmanian operations, after abandoning plans for a multimillion dollar visitor centre in March.

The chocolatier yesterday told staff at its Claremont plant its workforce would be slashed by 20 per cent, with factory production workers expected to make up the vast majority of job cuts.

Cadbury's parent company Mondolez International said the decision was not made lightly, but significant change was needed to better match production with demand.

The company has started consulting with staff and union representatives as it works through the cuts.

''We’re confident the majority of these will be attained via temporary contract conclusions and voluntary redundancies,'' managing director Amanda Banfield said.

''Support services will be made available to help people transition through what will obviously be an unsettling time.''

State Growth Minister Matthew Groom has dispatched a response unit to assist impacted workers.

Ms Banfield said the company remained committed to its Tasmanian plant.

''(We) will continue to invest in key technologies, people programs and efficiency improvements to set the site for a competitive future,'' she said.

Prime Minister Tony Abbott said he was confident the decision was not connected with the company pulling out of a federally-funded grant to upgrade its visitor centre.

Mr Abbott said while the Cadbury cuts were disappointing, job vacancies in Tasmania were strong.

''The great thing about the Tasmanian economy right now is there's a lot more dynamism, a lot more confidence than at any time in the recent past,'' he said.

Australian Manufacturing Workers Union state secretary John Short wants to see the $16 million Commonwealth cash forfeited by the company invested in Tasmanian industries to create new jobs.

''What we're calling on is for that $16 million to put towards helping Tasmanian manufacturing after what has been a sad day for staff and terrible day for the state,'' Mr Short said.

The state and federal opposition parties are now demanding to know where the $16 million - which is unallocated in the federal budget - will be spent.