The influence of plant profitability on plant closures in multi-locational firms

This paper explores the effect of plant profitability on the closure decision in multi-locational manufacturing firms where the firm is selecting between different sites undertaking similar production activities. The paper draws upon a new interview survey of large multi-locational manufacturing firms. Analysis of the interview data shows that plant profitability is the key to understanding only one-third to one-half of selective closures and that decisions taken by subsidiaries are more likely to rely on plant profitability measures than decisions taken at the corporate head office. in analyzing a regional economy, a poor level of plant profitability is indicative of a plant at risk of closure but the absence of such a characteristic is not necessarily an indication of an assured future for a plant.