The company on Wednesday notified its Illinois employees, according to a filing with the U.S. Securities and Exchange Commission.
Oil-Dri has two facilities in Tippah County. As of last year, the company had 150 employees in Blue Mountain and Ripley.
The company last year finished a $9 million expansion and upgrade at the Blue Mountain plant.
The company makes Cat's Pride cat litter. It began manufacturing in Tippah County in 1963.
Oil-Dri said Wednesday it will shift its industrial floor absorbent and cat litter product manufacturing to Tippah County. The Mounds, Ill., location will continue to make the company's animal health and nutrition products.
"This decision was made due to the continued declines in the coarse cat litter market and after a comprehensive evaluation of the company's manufacturing operations and cost structure, including state regulatory requirements," the company's filing said.
Oil-Dri has 63 employees at the Mounds plant, according to a report from Kentucky TV station, WPSD. Oil-Dri said the production shift may mean that 40 Illinois employees will lose their jobs. The filing said some will be considered for a limited number of positions that will be created at the Mississippi locations.
The company did not disclose how many jobs would be created in Mississippi.
Officials at the Mississippi facilities on Thursday directed media inquires to Oil-Dri's corporate office in Chicago. Messages left with officials Thursday were not returned.
The company expects a pre-tax charge of about $1.7 million related to its decision. About $450,000 is for severance and employee-related costs and $50,000 will be used to transfer production work.
Oil-Dri expects the majority of the costs to occur in the fourth quarter of Fiscal Year 2012 and then to continue into the first quarter of FY 2013.