The Hollandia factory, operating out of Sderot's industrial area, announced Sunday it will be leaving the rocket-ridden city.
Hollandia, which manufactures sleeping systems, has been operating out of the Sderot for the past 11 years and employs 86 workers.
Following last Thursday's Qassamsalvo, in which the factory was hit, its management announced that it would be relocating its production line.
"We've been considering relocating the factory for the fast few months," Avi Bersast, the factory manager, told Ynet. "After the factory was hit, we decided it was time… this was a joint decision of both the management and the workers and we intend to suggest to all our workers that they should relocate (their families) to a rocket-free zone.
"We can offer them several options," added Bersast. "We have options mainly in central Israel, but also some in it south."
Hollandia's factory in Sderot, he said, has suffered considerable financial losses in the past few months: "We've lost millions of shekels in man-hours and merchandise; not to mention the decline in productivity.
"We have export orders for Russia, Iceland, Spain and Sweden and we can employee 30 new workers right now," he added, "but we have a severe personnel shortage… no one wants to come and work here."
Shmulik Hadad contributed to this report