Waverley Mill, Launceston's oldest industrial institution, is set for a $16.5 million expansion that will boost worker numbers five-fold by 2027, making it among the largest employers in the city, and set the company on a course to cash in on soaring demand for recycled fabrics.

Executive director, David Farley, said he expected to grow annual revenues from the current $6.5 million up to $36 million over five years, as the 147-year-old mill taps demand from millennials for carbon-neutral clothing and fabrics.

"It's an operation that won't be the major employer in Northern Tasmania, but it's going to be a substantial employer," Mr Farley said.

He expects to grow his workforce from 26 employees at present to 90 within 18 months, and up to 130 by 2027.

The company raised about $6 million from investors last year, and has applied for another $6.5 million in federal government grants, as well as a state grant of $500,000.

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The major investments under the expansion include nearly $6 million to buy and refurbish textile, carding and other equipment, $1.4 million to overhaul the site's electricity and establish carbon-neutral off-grid hydro and solar generation, and another $4.5 million to construct a major conference centre on the site.

Also planned is a restaurant, a retail shop to sell the company's boutique products, and a tour service - part of what Mr Farley called "industrial tourism".

"Our package will be, come to the site, enjoy the store, if you're interested in how the products are made, there's a tour available, they'll get a chance to walk through with the machines running," he said.

"When they come back, then we have a food service offer ... so they can sit in the gardens and enjoy a sandwich or a cup of tea," he said.

The mill is set on about 32 acres of land between Waverley and Ravenswood, and the proposed conference centre could overlook parts of Distillery Creek or Waverley Lake, according to Penny Rundle, operations manager at the company.

The run of the creek was once used in a small hydro scheme that powered the lights and the mill, as well as the mill owner's nearby house.

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"It was one of Australia's first industrial hydro schemes, and the generator is now sitting in the museum in Invermay," Mr Farley said.

The mill, which began operations 147 years ago, was among the first industrial sites in Australia powered with hydro electricity, and Mr Farley is now seeking to revive that operation with modern technology.

"We're really having an extensive look at our management of electricity, we think with hydro and solar backed up by battery, we should be able to operate as a closed unit off the grid on the power we need," he said.

The power overhaul should save some money - electricity is among the company's biggest costs - as well as help to boost its credentials as a carbon-neutral manufacturer.

Mr Farley said one of the mill's biggest opportunities is the expected growth in demand for "ethical" and carbon-neutral and recycled fabrics.

"People are demonstrating it in their consumer preferences, and it is the millennial generation who is buying the recycled items and wanting to make a statement that 'I'm part of recycling, this is my effort to improve the world,'" Mr Farley said.

"The millennial generation is at the cutting edge of it, and you can see it in political systems, why the Greens are developing more power, why the Teals got voted in [in the last Federal election].

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"That's why we feel that Waverley, with these investments in recycling, now has a very big life in front of it."

The mill is also seeing rising demand from its contract manufacturing business, where companies seek to satisfy government requirements for ecologically sound business by recycling fabrics like blankets and sheets.

"A lot of major clients who come to us are looking for solutions to lighten their carbon footprint. And with recycling of textiles, we can do it for hotels if they have woolen blankets, we can break them down, and then blend them into something new."

Australian consumers buy about 48kg of textiles per year and throw out 36kg of it, Mr Farley said.

The company needs to perfect its recycling operations, and this involves substantial investment in new machines, he said.

"A lot of our equipment now is undersized compared to the market - king size beds have got bigger, larger items. We've spent a lot of money ... in perfecting the art of recycling textiles," he said.

The expansion comes as the company emerges from a difficult period during the pandemic.

The mill was forced to shut during the pandemic and place staff on furlough for a time, because it couldn't secure the wool supplies to keep operating.

"Right in the middle of COVID when the world went pear-shaped, the scouring operations in Melbourne and Geelong closed down, and we couldn't bring in wool or yarn to be processed," he said.

But a serendipitous trip to Italy to buy new mill equipment led Mr Farley to hear about a company about to condemn a large load of wool fabric to landfill.

"We ended up rescuing that and getting it shipped back to here, and it allowed us to keep operating," he said.

Another part of the expansion is opening new retail shops around Tasmania.

Ms Rundle said the expansion plan could eventually involve the opening of a network of retail shops to sell the company's products. She said most sales are presently over the company website.

"But until two years ago, we had a presence down in George Street in the city, so when COVID occurred, we were doing all of our fulfillment from down in the old store and that became very difficult for us to do it from the store. And so we transitioned to online sales only," Ms Rundle said.

The expansion plan will see the retail store reopened at the mill site, and possibly in other locations as well.

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