Plant Closings and layoffs: Warning Signs

The best time to respond to a closing or layoff is before it occurs. It is important for community leaders to understand the local economy, businesses and industries. One way to accomplish this is through a business visitation program. Regular meetings with business executives help to identify issues and provide an opportunity to address any concerns before a problem arises. As part of a comprehensive business retention program, communities should also look for and be aware of changes that may affect local businesses. Here are several examples:

• Changes in ownership: Has the business been purchased by owners that are not located in your community? Does the new owner have other facilities that produce a similar product or do they have underutilized facilities in other locations? What are the short and long term plans for the local facility?

• Changes in management: Have there been frequent management changes? Is the facility operated under a plant manager or has a department, such as human resources, been placed in charge?

• Aging ownership with no clear succession plan: What will happen when the owner decides to retire?

• Economic changes: Is the business being affected by global competition? Have there been changes in the industrial sector that makes it difficult to be competitive. Can the product be produced at a competitive price?

• Product obsolescence: Has the business been innovative in developing new products or adapting existing products? Does the product still have a market?

• Lack of investment in equipment and buildings: Is the building in disrepair? Is the equipment obsolete? Is the facility landlocked with no room for expansion?

• High employee turnover or reductions in wages, benefits or jobs: Has the business encountered labor - management conflicts?

• Rumors of changes at the facility or hints of financial difficulties

• Reductions in inventory or production

• Complaints by the business about local services e.g. roads, water, sewer, police protection, etc ...

If your community becomes aware of any potential warning signs, the local economic development organization, local elected officials or other local leaders should try to initiate contact with plant management in order to assess the situation. Ideally, the community will have a formal business retention program in place with a designated process for responding to a potential situation. If the business is not willing to share information at the local level or if the community is in need of assistance, there are several resources available to assist with this critical step.

The Wisconsin Department of Commerce has a network of Area Development Managers that specialize in working with communities and businesses on a variety of economic and business development issues including potential closings and layoffs. ADMs are available to meet with businesses and can work to pull together resources to address a company's unique situation. If the at-risk business is a small to medium-sized manufacturer, assistance may be available through the Wisconsin Manufacturing Extension Partnership (WMEP) or the Northwest Manufacturing Outreach Center (NWMOC). Both organizations help manufacturers work toward improving productivity, profitability and competitiveness (Back).