How to Achieve a Successful Site Closure

January 20th, 2017 by Sue O'Reilly

Every year manufacturing, processing and other businesses are actively considering the closure of their sites or the need for partial asset sales of redundant equipment. On commencing this journey, they quickly realise the complexity of the activity they are commencing. When it comes to a site closure and the final goal of a completely cleared site ready for re assignment there is more than just machinery sales and removal by purchasers to consider to get to the desired outcome. Partial asset sales can add an extra complexity with operation activities still ongoing.

Typical sites are a combination of both newer equipment, aged equipment, large equipment, loose assets, inventory and special purchase machinery. Structural or built in assets are common within many sites. There are assets above the roof line and services throughout. There are pits and protrusions from the floor, walkways, platforms, buildings and wall coverings. There are dangerous goods on the site and the machinery can contain assorted oils and other fluids. All requiring special attention.

To undertake any sale project the framework for activities need to incorporate requirements stipulated in relevant legislation and acts including Workplace Health & Safety, Environmental Protection, Trade Practices & Road Transport to name a few with further attention to company policies covering these areas. Company policies likely needing review as the activity of the site transitions from manufacturing to one facilitating a sale project. With all this to consider it would be nice if someone could purchase the challenge from you but unfortunately companies cannot opt out of key requirements. Therefore, they must maintain engagement even if assets are sold.

When it comes to the complete sale of your assets the international and national market for machinery is deep but there are some ‘real world’ realities that should have decision makers planning for the worst but hopeful of better. Only the best equipment will be of interest to the international marketplace. In particular young assets, sold at attractive prices that are cost effectively removed and shipped.  Structures and older equipment will be difficult to sell with salvage or scrap the likely outcome. In the case of the automotive industry closure there is also the fact that there will be a large amount of the same type of equipment hitting the market at the same time. The volumes will be unprecedented. While you should have faith in the depth and eagerness of the national market to participate in your buying opportunity there will be some asset losers. Stillages and office furniture at volume are potential pending headaches. It is not to say premium results won’t occur and shouldn’t be cost effectively pursued but rather treat the process as a probability game. Plan for all outcome so there are no surprises and always be eager to negotiate a better outcome.

Site closures should be viewed as a combination of equipment sales, salvage and scrap sales, dangerous goods removal, rubbish removal, contractor management, sale event management, logistics and safety. Contractors are needed on the site to disconnect services, remove equipment, salvage equipment and demolish structures. While contractor companies are multi-disciplined there are specialist contractors for each of these activities. Further, all these activities may need to be timed to perfection and managed closely to meet aggressive timelines required due to labour costs, lease costs and property sales driving planning.

A site closure presents a type of project and combination of skills that are naturally unfamiliar to managers of a humming operation. A site closure project achieves optimal outcomes with strong planning and the right project management decisions made by onsite management and professionals who have done it before.

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