Ledbury's biggest employer, Amcor Flexibles, has confirmed that it is transferring one of its production lines to Bristol.
Up to 40 local jobs will be affected by the move, which is due to take place in the first half of 2005.
Brent Nicholls, the company's business director for produce, bakery and frozen foods, said: "We're committed to achieving the necessary changes with the absolute minimum of compulsory job losses. We will be working hard to ensure all options for redeployment are explored."
Amcor plans to redeploy around 40 workers either within its flexible packaging conversion business in Ledbury or by relocating them to a new production line at AF Winterbourne, Bristol.
It has already opened talks with those members of the workforce who will be affected.
The move will lead to the Ledbury plant, which currently has around 345 employees, focusing on packaging for produce and bakery, but not cast films for the food industry.
The company believes that the changes will benefit both operations.
The news of the shake-up follows a period of high investment by Amcor in the Ledbury plant, off the Lower Road.
Last year, a massive new printing press, 3.6 metres wide and costing millions of pounds, arrived at the site under police escort, having completed a 555-mile lorry journey from Germany.
The business recently upgraded its office block into an open-plan design on the first floor.
More than 60 new employees were taken on by the Ledbury company last year.
The Mayor of Ledbury, Coun Keith Francis said he intended to hold talks with Amcor management about the shake-up.
He said: "Let's hope Amcor will be able to redeploy the workers affected within the current workforce.
"All employees in the town are important, and employers on this scale are very important to the economic health of Ledbury."
Amcor took over the former Rexam Viking site in April 2002 and immediately announced a programme of expansion. Then, around 20 workers transferred to Ledbury from part of its operation in Bristol.
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