Thomas Equipment in Centreville has filed for bankruptcy protection and delivered layoff notices to 141 workers.
The machinery fabrication plant in western New Brunswick handed out the notices late Tuesday.
The firm has shut down operations while it attempts to restructure its finances, Business New Brunswick Minister Kirk MacDonald said.
The New Brunswick government has provided at least $8 million in loan guarantees to the firm in the past.
It specializes in manufacturing farm and construction machinery.
Centreville Mayor Gary Thomas said the layoffs will devastate the village's economy and the workers.
"Well, it's going to be tough on a lot of families, like, I know I have a brother-in-law and a sister-in-law that both work there," he said.
No one at Thomas was available for comment Wednesday morning.