A sofa factory in Llantrisant in Rhondda Cynon Taf, south Wales is to close with the loss of 323 jobs.
The company said 2005 had been a difficult year
Its owner, the retailer MFI, has launched a 90-day consultation period, and hopes to find other work for staff.
A MFI spokesperson said it had decided it was a better commercial decision to use a number of suppliers rather than one owned by them.
The GMB union said it was "disappointed" and wants talks with MFI as well as local politicians.
The plant provides sofas for MFI and Sofa Workshop.
Earlier this year, the company unveiled a major restructuring plan aimed at reviving its fortunes.
An MFI spokeswoman said staff had been told more than a week ago about the changes and that consultation was already underway.
"We're trying to find other roles where possible for staff," she said.
Earlier this month, the furniture group announced that retail sales were 19% lower than the same period last year and that it would be looking at its stores and distribution network.
It is the second blow to manufacturing industry in south Wales in less than a week.
On Tuesday, 88 jobs were lost when the Vitafoam factory near Maesteg announced it would close in July.
The vice president of the furniture section of the GMB union, Don McGregor, said he was "disappointed" to hear of the MFI job losses.
He said the company had failed to officially inform the GMB of the redundancies and it wanted to begin talks with the firm, as well as local politicians, the council and the Welsh Assembly Govenment.
'Compete on quality'
Mr McGregor said the decline in British furniture manufacturing was partly because of overseas imports.
He said: "The UK certainly can't compete with the likes of £75 a month in these third world countries or eastern bloc countries, because that is where a lot of the furniture is coming from."
However, Mr McGregor still believed there was a future for British furniture, with the help of the British Furniture Confederation.
"I think they can make British furniture pay. I think we can compete on quality."