How can plants be combined operationally (as opposed to merely on the balance sheet)?

First, let’s define our key term. A plant is a production operation at a defined physical location. It is usually envisioned in a manufacturing context. A plant’s major assets include real estate, structures (foundations, buildings, framework, and related improvements), equipment (for production, communication, control, and administration), distribution assets (such as piping, conveyers, and docks), wiring and instrumentation (for electrical supply, communications, and control of operations), and software programs, including those operating with artificial intelligence (AI). (For more on AI, see the discussion on technology later in this chapter, p. XXX.) In a service context, a plant may be a physical location in which services are performed. Examples of service plants include a computer processing facility, a branch bank facility, and a call center.

In both the manufacturing and the service sectors, plants can be consolidated in many different ways, ranging from plant closings to integration of plant operations through common, integrated systems.

What are the main costs associated with plant consolidation?

In consolidating plants, employers may incur costs associated with disposal of assets (including environmental aspects); relocation, termination, and/or recruitment of employees; investments in physical assets or software to support consolidation; and redesign of products and/or services to accommodate integration. In addition, acquirers may have to spend money on new marketing efforts to preserve goodwill if plant consolidation has involved layoffs. Finally, closing or relocating plant operations may cause the loss of a group of customers or increase transportation and distribution costs to a set of customers (see the final section in this chapter on fulfilling commitments to employees).