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Managing manufacturing plant closures to realise targeted benefits

Over the last decade, many companies have adjusted their manufacturing footprint continuously in response to changing patterns of global demand and to improve efficiency. However, PA’s analysis of 35 manufacturing plant closures globally found that up to 60% of network redesign projects involving plant closure did not deliver the benefits the business expected. 

Our experience shows that, to secure a successful outcome, manufacturing businesses need to apply rigorous project management as early as possible in the plant closure process. This approach should span the full scope of the project – from technical and commercial management to procurement and HR – and take account of a number of key principles.

Include all stakeholders affected by the plant closure

The wide range of stakeholders affected by a manufacturing plant closure will have different and often diverging interests, including business efficiency, corporate reputation, regulatory compliance, fair employee treatment, customer satisfaction and optimum value recovery. 

Use a phased process with clear stage gates

A plant closure process has six to seven phases. It starts with a manufacturing site being identified for possible or definite closure and ends with the full closure and review. The benefit of phasing is that it allows you to establish clearly defined points where there is a definite go/no-go or re-do decision and where all work streams and their dependencies are checked. 

Manage key dependencies within the plant closure project

A manufacturing plant closure project incorporates many dependencies: between retention and run-down, and run-down and build-up of capacity at receiving sites; between technology build-up and transfer; and between personnel retention and stakeholder communication.  

Appreciate the different closure types

There are five different types of manufacturing plant closure: product stop, volume transfer, technology transfer, continue plant with same purpose or continue plant with different purpose. They are not mutually exclusive but each comes with different considerations. Tailoring your approach to the type of closure you are dealing with maximises the chances of a successful outcome. 

Monitor project and business impact separately 

Make a clear distinction between project-related impact and ongoing business key performance indicators.

"A plant closure is much more than just discontinuing a business," says Harmen van Os, PA Manufacturing expert. "Project management must be applied from the very start, and should cover all relevant business functions."

Expert support for manufacturing businesses

PA provides expert support for businesses reassessing their manufacturing footprint. We work in a variety of roles, according to our clients’ needs. This includes auditing, developing the closure master plan, taking programme management responsibility, providing expertise for specific work streams and supplying project recovery services to get projects at risk back on track.

Through PA’s global network of offices, experts in our manufacturing practice work with clients to develop and implement their manufacturing strategy. We deliver lasting impact through our focus on cost and operational excellence, manufacturing footprint design and implementation, technology strategy and strategic decisions. 

To find out how to make the right decisions on your manufacturing footprint, contact us now.

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