The loss of 80 jobs at Cadbury's Hobart factory is about keeping the plant open long term, the company says.
The federal government is under pressure to explain how it will support Tasmanian jobs after chocolate maker Cadbury said it would shed a fifth of its workforce at its Hobart factory.
Cadbury is slashing 80 jobs at its Claremont plant as part of a broader effort to keep the factory open in the long term.
It says the facility is not competitive on a global scale and the job cuts, alongside a $20 million capital expenditure program, are aimed at protecting the plant's remaining 320 workers.
Cadbury's parent company Mondelez has denied media reports a sales slump was to blame and also said the job cuts were not related to its decision to walk away from a grants deal that would have secured $16 million in federal funds.
Earlier this year, Cadbury said it could not stump up a $50 million co-payment required to secure the federal funds. The government is now under pressure to say how the $16 million that went begging will be used to support Tasmanian jobs.
Independent Tasmanian MP Andrew Wilkie, whose electorate covers Claremont, said the cuts would be keenly felt in the Glenorchy City area, which already had one of the highest unemployment rates in the state.
"The money must still be spent there," he said.
Glenorchy Mayor Kristie Johnston fears an exodus from the city, and has echoed calls for state and federal government help.
"We're calling on the state and federal governments to work with the local government and our community to address this issue and to create job opportunities for the future," she told the ABC.
Tasmania's Opposition Leader Bryan Green questioned why the grants deal was allowed to fall over after Prime Minister Tony Abbott visited Hobart before the last election, trumpeting the plan to prop up existing jobs and create new ones.
"The Prime Minister should be very embarrassed," he said.
Mr Abbott said the job cuts were disappointing but pointed to encouraging economic signs in the island state.
"The great thing about the Tasmanian economy right now is that there is ... a lot more confidence," he told reporters.
Affected workers have been told they can expect assistance from the Tasmanian government, with a specialist support team to head to the plant.