Mabey Bridge has begun a consultation on the planned closure of its business in Station Road where 150 people work.
It is also looking for a buyer for its renewables section in Mathern, Chepstow, which employs 180 people.
A company spokesman said it anticipated a buyer would be found to support that area of the business.
"We have not made these decisions lightly and we understand that this is a very difficult time for our people." the spokesman added.
BBC Wales understands the firm is now looking for employees to apply for voluntary redundancy.
One employee said: "Everyone's absolutely stunned, some people guessed what was going to happen but the majority had no idea at all.
"The announcement today is that the infrastructure side is gone, that it will finish. It was just shock, complete and utter shock; very few could believe that they have taken such as drastic decision."
The company's infrastructure section makes highway bridges, railway bridges, footbridges and sign gantries while its renewables division builds wind turbine towers and carries out work in offshore renewable energy.
Analysis, Brian Meechan BBC Wales business correspondent
Mabey Bridge is a big name in construction. As specialists in bridges, it is one firm that would have been expected to weather the difficult economic times the sector has been through.
In recent years, it has branched out into renewable energy including the towers for wind turbines.
The construction industry is expected to grow by three percent a year until 2018 so the future might have been considered promising.
But the Mabey Bridge site in central Chepstow has been up for sale for months and may prove appealing for redevelopment for housing rather than further industrial uses.
An engineering firm has announced the proposed closure of one site in Chepstow and the sale of another, putting 330 jobs at risk.