Its cessation will carve a void in Dennington, a town that was by and large built around the factory.

Dennington General Store proprietor Tom Bertrand, who has owned and run the store for 15 years, said the closure is a blow for the Dennington business community.

"It's sad, no one around here would ever remember it not being here, the oldest residents of Dennington can't remember it not being here," he said.

"Most of Dennington used to work there but those days are gone, they don't rely on the factory like they used to.

"It used to be that if you lived in Dennington you were almost guaranteed a job there, but with globalisation of everything that's no longer the go.

"It was a bit of a shock when they announced it, I don't think they expected it. It's always been talked about but nobody expected it to happen."

The general store has stood where it is in Dennington for over 100 years, before the Fonterra factory was built.

Mr Bertrand has a photo of the store with the Fonterra factory under construction in the background.

"It's sad but we'll keep going hopefully. It won't affect us greatly," he said.

"When it goes something's got to happen with the land.

"The shop's been here longer than the factory, 100-plus years, we will survive."

Timber manufacturer Warrnambool Timber Industries has operated out of Dennington since the late '80s.

Owner Edwina Goodall said she isn't surprised that drought has contributed to the closure.

"We own a hobby farm in between Cobden and Port Campbell and it has been a fairly dry for a while, there's been nothing over summer," she said.

"Everyone's been hurting for a while, it's been dry two years in a row.

"While the closure won't directly affect our business it really is unfortunate for Dennington, I was quite sad when I found out on Wednesday about the closure."

Kardinia Childcare and Kindergarten early childhood workers Maddi Bennett and Caddie Hill fear that a number of their families who have children in kinder will be directly affected.

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"We don't yet know the effect it will have on our families, but it's definitely going to be a big impact on the town with the job losses," Ms Bennett said.

"The extent of the impact is probably a still a bit unknown but we can only imagine it's going to be a big one."

Working closely with Dennington families day in an day out, they believe the ripple effects will be felt on all levels of the community.

"I personally have a friend who has been there since he was 18 and he's 40-something now," Ms Hill said.

"He's an electrician there and that's all he's known, he's known nothing else, how can he then go out and find new work?

"It's massive, and while there's another factory at Cobden but that's a 45 minute drive.

"I can't imagine having to come home and tell your wife or your husband that you've lost your job, especially if you've worked there for many years."

FOR almost 50 years Wally McDowell made the short walk to his place of work, located just around the corner from where he lives.

The 87-year-old retired in the late `90s but still took great comfort in the sight of the Fonterra factory from his front lawn.

On Thursday, he was shocked to read in The Standard the factory would close.

"It's a sad day for Dennington," Mr McDowell said.

"The closure certainly won't do us any good."

Mr McDowell said it was news he did not see coming.

"I was overwhelmed, I didn't think they would do it actually."

Mr McDowell said he was concerned about the impact on the community, with Fonterra contributing funds to a number of events and organisations.

He is also concerned about the future of the town's museum, which pays homage to Nestle.

"What will happen to that?" he asked.

A Fonterra employee, who asked not to be named, said he believed Fonterra's decision to claw back milk payments from farmers was the beginning of the end.

"At the time I had a crack at a director and told him it was a bad decision, but who am I?

"I said 'you can't screw the farmers over, they'll remember this."

The employee said the low milk price was also a factor.

"When you've got no milk, you can't process air," he said.

The employee said he feared if the milk price didn't increase, more farmers would exit the industry.

"The milk price is just not there and they can't sustain it," he said.

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