Residents in Kitimat, B.C., said Wednesday night that they were floored by news one of their town's biggest employers was shutting down.

West Fraser Timber Co. Ltd. announced it will permanently close its Eurocan paper mill on Jan. 31.

Despite years of reducing operating costs and attempts to improve results, the operation remained unprofitable, said Hank Ketcham, West Fraser's chairman, president and CEO, in a statement.

"We deeply regret the impact the mill closure will have on our 535 employees, their families and the community and we will ensure those who are affected are treated with fairness and respect," he said.

Bill Mcenhill, 57, a superintendent at the mill, told ctvbc.ca the news came as a shock.

"It was a pretty big shot to the gut," he said by phone from The Ol' Keg pub, where he and other mill employees gathered.

Mcenhill said employees figured the plant might shut down for a month or two - at most.

Bar manager Melissa Mitchell said her brother, who works at the mill, is a single father, has a mortgage and just bought a new truck and car.

"I've never seen this town so depressed," Mitchell said. "There was no warning. Nothing."

Kitimat is a 9,000-population coastal city in northwestern B.C. The other major employer in town is the Alcan aluminum smelter.

The 40-year-old Eurocan paper mill, which produces linerboard and kraft paper, has struggled with high costs and negative returns, the company said.

Since December 2008, Eurocan has seen a 40 percent drop in the net selling price of its products.

This decline was driven by the global economic slowdown, the rise of the Canadian dollar and severe competition from low-cost paper producers in other countries, according to the company.

Permanent closure was "the only reasonable alternative," Ketcham said.

Bartender Catherine Denman said the company had given people in the town and from all over the country an opportunity to work, buy homes, and raise a family in a nice area.

Denman said her father is just days away from retiring from the mill after working there for almost 40 years.

"He was definitely mad," Denman said. "A lot of people here are upset."