"It's on a big pile of sawdust that's outside the building," she said.
Thick smoke was crossing the Invercargill Bluff Highway nearby, which was currently blocked to traffic.
Diversions were in place off State Highway 1 at Awarua, at Tiwai Rd, Awarua School Rd and Colyer Rd.
These diversions were not suitable for heavy vehicles.
Police were at the cordons and were urging motorists to avoid the area if possible.
Vargas said while the other employees had left the building she had stayed inside to co-ordinate with her boss, who was outside the country.
She did not believe there was any immediate danger to her spot inside the building.
Fire and Emergency NZ said rising winds and dry conditions had created an extreme fire risk across the region.
Fire crews and helicopters across the Southland and Otago area had been on standby in case of emergency.