A manufacturing operation established in Taree in 1975 is set to close in October with over 130 job losses.

The U-G-L rail facility is on a 54 hectare site next to main north coast rail line.

It has produced rail and mining related products for companies like Xstrata and Railcorp and has exported to areas including China, South Africa and Egypt.

The closure is said to be largely in response to a slowdown in the manufacturing sector.

A huge hit to the local economy is how the Greater Taree City Council (GTCC) mayor Paul Hogan is describing the shutdown.

"It is a very sad day for our area with the proposed loss of so much employment," he said.

"It means we will lose between $12 million in wage earnings and spending that those people have.

"But also over the years that it's been in existence there's been countless number of tradesmen that have come out of that and moved on to other areas."

The mayor said the GTCC will work with government agencies to help those affected find other employment.

But he said it is a hear-breaking situation for many people.

"It just makes you want to sit down and feel for those affected," he said.

"Through the Economic Development Board of the Mid North Coast the council will be working to see if other manufacturers can be enticed.

"But was it a boardroom decision, with a new CEO of UGL?

"Did they decide well we'll just close Taree up and keep the other plants operating?"