Plan for Plant Closure Success

Many automotive manufacturers will eventually face the challenge of closing a production facility. This is no small task, as it usually involves redeploying, selling, or disposing of millions of dollars of real estate, manufacturing equipment, systems and other surplus assets. Additionally, there could be countless potential personnel management, logistics, inventory, budget, timeline, and safety challenges.

A successful facility closure starts with the team you put in place to plan and execute the shutdown. This article will explain what you need to consider in your plan to close a facility, as well as some tips on building a team to manage the closure.

plant-closure success

Closing an automotive manufacturing plant involves an extensive surplus asset management process.

What You Need to Plan for
There’s a lot that goes into any facility closure. You must handle the legal and financial aspects of transferring the property and buildings to another party. All scheduled jobs must be completed before your deadline. Strict environmental standards surrounding the disposal of equipment, materials, and chemicals must be met.

But perhaps one of the biggest challenges comes with finding a way to remove the surplus assets in the closing facility. Any comprehensive closure plan should help you determine the budget and timeline for the management, valuation, redeployment, sale, and removal of all assets housed within the facility

Some of the questions your plan must answer are:

  • What potential legal, environmental and safety risks exist? All harmful chemicals need to be disposed of according to regulatory guidelines. Additionally, if the land surrounding the facility has been polluted, that could lead to legal trouble or difficulty finding a willing buyer. Failure to properly dispose of environmentally hazardous materials could result in steep fines and damage to your organization’s public image.1
  • What is the last job scheduled and when must the plant be vacated? Knowing this will help you set a firm deadline for your closure. Without a solid, immovable deadline, your closure could carry on longer than expected, costing you valuable time and making the project come in over budget.
  • What assets can be sold and which ones can be redeployed elsewhere? Managing surplus assets is arguably the largest task related to plant closures. To do this properly, you’ll need to know exactly what assets you own, where they are located, what condition they’re in and what you can do with them. Find out which assets will be sold for recovery, which ones can be moved to other facilities in your operation, and which ones need to be disposed of or scrapped.
  • Do you have the resources in-house to manage your assets, or do you need a provider? Most companies have the internal resources to manage the legal and financial side of a plant closure, but few have the ability to adequately handle surplus asset management. Managing your surplus effectively can have a major impact on the recovery you gain from your plant closure, so it’s worth finding a trusted provider to undertake everything related to the sale or redeployment of your assets.

Building Your Project Management Team
Your plan is important, but just as critical to a successful plant closure is the team you build to execute on the project. Closing a facility impacts everyone in the business, regardless of their functional area, so your team will most likely include personnel from your company’s Information Technology, Human Resources, Legal, Finance, Supply Chain Management, and Engineering departments.

You’ll want the people most familiar with all areas of your business to be on the project management team. These employees will have a deep understanding of all of the assets – tangible and intangible – in your company’s purview and be able to help make the best decisions regarding the fate of those assets.

A plant closure is a massive undertaking, but by having a thorough plan for your assets and a stellar team to steer the project, you can make the most of the opportunity to recover value on your old assets or redeploy them to where they will be most useful to your operations.