Specialist firm, Plaswire is set to vacate its site on the Newry Road within the next few months.
The recycling business is moving outside South Down after efforts to find a bigger site for the expanding business were unfruitful.
South Down DUP MLA Jim Wells had a mixed reaction to the news.
“From a Rathfriland point of view, it is sad that it is leaving the town. It was just a pity that there was nowhere in the area to accommodate them. An exhaustive search was carried out in the area but no suitable site large enough could be found,” said Mr Wells.
The site on the Newry Road, which was formerly occupied by MJM before its move to Newry, is now up for sale or rent.
Plaswire says it was set up to fit the “needs of the modern recycling and plastic extrusion industry with a focus on individual customer requirements”.
The Polymer recycling company offers a comprehensive waste recovery service to industry. It has been based in Rathfriland for the past five years.
Mr Wells says it is sad that its continued expansion “will not benefit Rathfriland” and its job market.
“I fully understand why they are moving. They are moving for two reasons as they firstly need a bigger site. It is a very successful business and they have grown considerably over the past five years.
“They deal with the upper end of recycling material offering local companies ways to recycle.
“Its growth is a testament to Mr Andrew Billingsly who formed the company after he saw a gap in the market,” said Mr Wells, who added that an arson attack on the site in December is also another reason.
A fire deliberately sparked on the site caused spread causing devastating damage to a family home in the adjoined housing development of Kiltarriff Drive back in December.
“It is a loss to the Rathfriland area in terms of its economy, especially as other areas of business have closed in the town recently.
“It is just a pity that there was no site for this elsewhere within the Rathfriland area,” said Mr Wells.
According to the agent behind the sale or lease, the warehouse extends to 36,869 sq ft and includes two large warehouse bays and internal office space. It sits on a site of 1.43 acres and is described as being “suitable for a wide variety of commercial uses (subject of planning).”