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      Many industrial companies are currently faced with the difficult decision of how to deal with sites that have become unproductive or unprofitable.

      Selling a plant, for example, is made more difficult by overcapacity, changes in demand, high fixed costs and a selective buyer market. Closing a plant is costly and operationally complex. Companies also risk reputational damage and the loss of knowledge and expertise if they abandon a site entirely. 

      When choosing the right option for the future use of a production site – plant sale, plant optimisation, repurposing or plant closure – it is therefore essential to proceed in a structured and forward-looking manner. After all, site decisions are strategic decisions that determine the direction of the business. Each option has different implications for value, risk and feasibility.

      1. Factory sale

      A factory sale makes sense if a site no longer fits a company’s strategic direction but is of marketable asset quality. This step requires a realistic valuation, a thorough understanding of the buyer and careful preparation.

      2. Plant optimisation

      If the site is fundamentally viable but requires structural adjustments, plant optimisation is a suitable option. Factors such as capacity adjustments, product mix and cost structure should be taken into account.

      3. Repurposing

      An alternative use should be considered if industrial operation is no longer viable but the site still has potential. Possible new uses include alternative industrial production, a logistics centre or third-party utilisation.

      4. Plant closure

      A plant closure is usually the last option to be considered. It is complex, sensitive and involves significant follow-on costs. The necessary structured planning requires expertise in both HR and property, as well as strong communication skills.

      Our approach: A ‘one-stop’ solution for location decisions

      We provide comprehensive support for location decisions throughout their entire lifecycle, focusing on the following areas:

      • Location‑ and feasibility assessment
      • M&A‑Consultancy and factory outlets
      • Property‑ and repurposing concepts
      • Restructuring, HR and transformation
      • Governance, communication and implementation

      Start your site selection process with a discussion. 

      Interested in our services?

      Submit RFP now

      What to consider when making strategic location decisions

      A structured, multidisciplinary approach helps to assess options realistically and make well-informed decisions.

      Key question:

      Do we need this site in future – and if so, for what exactly?

      • Is the location compatible with the company’s strategy in the long term?
      • Is the site relevant to the future product‑ and market portfolio?
      • Is it a core‑, support or phase-out site?
      • Are there any strategic alternatives (such as consolidation or relocation)?
      • What role does the site play in the global production footprint?

      Key question:

      Is the site economically viable – both at present and in the longer term?

      • Has current and future capacity utilisation been assessed realistically?
      • Is the fixed-cost structure presented transparently (staff, energy, maintenance)?
      • Are the capital expenditure (Capex) requirements for maintenance or further development known?
      • How do productivity and competitiveness compare with other plants?
      • Has sensitivity to fluctuations in demand been analysed?

      Key question:

      Can the site actually be sold – or is this only theoretical?

      • Is there a realistic pool of potential buyers for the site?
      • Is the current usage concept marketable – or does it only make sense internally?
      • Are there any dependencies (customers, suppliers, group functions)?
      • Is the site suitable for a ‘carve-out’ (legally, operationally, IT-wise)?
      • Have alternative utilisation concepts been examined to increase its attractiveness?

      Key question:

      What economic potential does the site have beyond its current use?

      • Have alternative industrial or commercial uses been identified?
      • Are the location, infrastructure and site layout suitable for other uses?
      • Are there any known restrictions (development plans, contaminated sites, environmental regulations)?
      • Has the economic viability of an alternative use been thoroughly assessed?
      • Are external partners and/or investors a possibility?

      Key question:

      Have the personnel implications been realistically planned and managed in a responsible manner?

      • Has the workforce structure (age, qualifications, retention) been analysed?
      • Have issues relating to collective agreements, employment law and co-determination been clarified?
      • Have social plans, redeployment or upskilling measures been taken into account?
      • Have the implications for the employer brand and staff retention been assessed?
      • Has internal communication been prepared?

      Key question:

      Is the decision manageable in financial, operational and reputational terms?

      • Have one-off costs (restructuring, closure, transaction) been quantified?
      • Have the ongoing effects on profit and cash flow been assessed?
      • Have reputational and communication risks been assessed?
      • Has a realistic timeline for implementation been planned?
      • Are governance, decision-making processes and project responsibility clearly defined?

      Key question:

      Are we capable of making decisions – or are we postponing them due to uncertainty?

      • Have clear decision options been formulated (including a ‘do nothing’ scenario)?
      • Has a decision-making proposal been prepared for the board and/or senior management?
      • Has external expertise been brought in at an early stage (M&A, property, HR)?
      • Has a confidential discussion taken place prior to internal and/or public communication?

      Talk to us about your location options.

      Your contact

      Jens Schmoll
      Jens Schmoll

      Partner, Deal Advisory - Valuation

      KPMG AG Wirtschaftsprüfungsgesellschaft