The loss of more than 800 jobs from one town would be "devastating", a leading businessman said.
Ready meals manufacturer Oscar Mayer said on Thursday it may close its factories in Chard, Somerset.
Local chamber of commerce chief executive Stephen Henagulph said he feared the knock-on effect the closure could have.
Yeovil MP Marcus Fysh said he was working with the company to try and reduce the job losses.
Mr Henagulph said the impact of 860 redundancies at Oscar Mayer's three sites in Chard would spread across the area.
The company said it had not made a final decision but had started a 12-month consultation with staff.
"Most people who work there will be settled in the community and putting their pound into the local economy," said Mr Henagulph.
"That's the knock-on effect, it's not only the 860 jobs that we're obviously very sorry to hear about, but it's the supply chain as well."
'Shock' closure news
Managers at Oscar Mayer said on Thursday beginning the consultation had been "a desperately difficult decision" but that demand for ready meals had shrunk, partly due to the coronavirus pandemic.
Esther Compton, from the GMB Union which represents many staff, said she had been aware of falling sales but that the closure news was a shock.
She said: "There will be loss of income, loss of jobs and loss of career paths for young people.
"It's devastating for everyone."
"We need to speak to the key players in the community to see what we can do to help keep manufacturing in Somerset."
Conservative MP Mr Fysh said he had sympathy for Oscar Mayer's management due to the drop in demand, but that the news was "gutting for everyone".
"We need to work really hard to try to make sure people get through this one way or another," he said.
"There are some other good manufacturing businesses in Chard who have been finding there is a shortage of skilled labour and I'm hopeful that we'll be able to place people in some of those if it comes to it."