Plant closures in multiplant manufacturing firms: adding an international perspective

Abstract

Multinational firms sometimes have to choose between plants in different countries when selecting a plant for closure. This kind of decision is particularly characteristic of firms operating plants in the same industry but in different EU countries. An examination of a number of cross‐boundary closures in the EU illustrates the dominant role of plant economies of scale in encouraging the concentration of production on the largest pre‐existing site. National differences in labour characteristics can also be important. In making such closure decisions, managers need to be aware that they may be accused of misusing government subsidies, playing one group of workers or government against another group of workers and government, misjudging the political context of the environment in which the closed plant is set and, where the firms have their head offices in Europe, favouring their home country. Strategies are suggested for countering