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Every day, 200,000 toilet rolls are made at the Timaru St factory for distribution around the South Island.
The factory produces toilet paper and kitchen towels under brand names Cottonsoft, Tuffy, Paseo, and Kiwisoft.
It also makes Homebrand for Progressive Enterprises.
Cottonsoft national operations manager Chris Batchelor, who is based in Dunedin, said the factory received about 40 applications for the five new roles.
Applications close at the end of this week.
At present, the factory has 17 workers.
Mr Batchelor said the paper products were high volume and low value, meaning it was not worthwhile to service the South Island market using the company's Auckland factory.
Dunedin was well placed to service the South Island market.
The factory runs for 76 hours a week now, which would increase to 120 hours a week when the third shift starts.
The extra production could be absorbed without the need for extra equipment.
A large storage area at the factory acts as distribution centre and orders are dispatched from there to clients.
The factory had had to re-lease space it previously relinquished when it was in a contraction phase.
''I guess our growth path has been more aggressive than anticipated,'' Mr Batchelor said.
In 2013 and 2015, Cottonsoft expanded the Dunedin factory after years of uncertainty about its long-term prospects.
The Cottonsoft plant was established in Dunedin in the mid-1980s and was sold to Indonesian conglomerate Asia Pulp and Paper in 2007.
The company's Auckland factory was set up due to the cost of transporting product around the country, and at one stage, the company planned to eventually leave Dunedin.
The factory buys paper from internationally certified suppliers that use sustainably managed forests.