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Factory shutdown costs

Hello, what are the costs of a plant/factory shutdown?

I identified the following:

Sunk costs 

Penalties (for instance paying fees for suppliers)

Lay-offs costs

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Top answer
Deleted user
on Mar 21, 2021

Yes, I agree with your list. Cost must also include cost of disposing/recycling/ equipment and any other admin fee (legal, environmentatl).

15
Clara
Coach
on Mar 22, 2021
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

I would not consider sunk costs at this point tbh -they are precisely sunk-. 

Over that, all the admin cost of selling/removing the building, and the taxes paid on the sale if so

Hope it helps!

Cheers, 

Clara

Deleted user
on Mar 21, 2021

I'd add opportunity costs - revenue that you're ceasing if you're closing the factory.

8
Ian
Coach
on Mar 21, 2021
Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success

Hi there,

Agreed with your list and Adi's addition.

That said, I wouldn't put sunk costs here (by their definition, they are sunk).

Finally, I would add the biggest cost of them all: opportunity cost. I.e. lost revenues.

Gaurav
Coach
on Mar 22, 2021
#1 MBB Coach(Placed 750+ in MBBs & 1250+ in Tier2)| The Only 360° coach(Ex-McKinsey+Certified Coach+Active recruiter)

Agree with the colleagues' additions! Opportunity cost may be crucial here. 

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