Navigating Factory Closures

Factors like a cost-of-living crisis, economic uncertainty and national insurance rises have made it difficult for firms up and down the country, with a record-breaking 198,000 businesses closing at the end of 2024.

The manufacturing sector is one that has been particularly affected in recent times, and experts believe the struggles will persist in 2025. Unfortunately, this may mean that more factories must shut their doors for good, leaving many site managers wondering what to do next.

Taking action early is the single best way to navigate a factory closure, which is why we have prepared this article to help you understand what to expect and, crucially, what you should do throughout the process.

What are the most common reasons for factory closures?

Economic factors – Recessions, rising operating costs, increased competition and unfavourable exchange rates can make it difficult to sustain operations
Industry changes – Consumer demand shifts, technical advancements or industry restructuring can make some firms obsolete
Financial difficulties – Poor financial performance, bankruptcy, and lack of investment can mean a business no longer has the means to operate
Unavoidable issues – External factors like geopolitical instability, supply chain disruptions and natural disasters could make it difficult to run a factory normally

The stages of a factory closure

After you decide to close your factory’s doors, here are the stages you can expect to follow throughout the process.

Planning and preparation

Collate a detailed assessment of the impact shutting your factory will have and put together the dedicated closure team. Clear objectives, timelines and legal obligation reviews should be completed before you progress to the next step.

Communication and stakeholder engagement

Transparency is key, especially when your employees’ livelihoods are at stake. Tell them, as well as your customers and suppliers, that you will be ceasing production to open a dialogue and address concerns during this sensitive period.

Operational shutdown

Gradually bring your manufacturing processes to a halt. Ensure equipment is safely shut down and prepared for the next phase.

Asset disposal

Efficiently removing assets is essential to maximise returns. Gaining a professional valuation and exploring options like auctions can help you raise funds quickly. It is also the most sustainable way to dispose of your goods, allowing them to serve others and contribute to a circular economy.

Site closure

Close your doors for good. The building should be cleaned in line with regulations, permits should be surrendered, and final legal or financial matters settled.

Arranging a factory equipment auction

As mentioned, auctioning off your factory equipment during a closure can help you recoup vital capital to pay back your debt or fund your next venture. Here is what a typical process should look like:

Itemise your assets
Service and clean them to ensure they look great and function properly
Find a reliable asset auction firm, like Eddisons Asset Auctions, to list, market and sell your goods. It is advisable to choose a RICS-certified company to increase your chances of successful sales
Funds will be returned to you if your factory is closing without being in debt. However, insolvency practitioners or banks handling the process will receive the funds if there are debts to settle. Any outstanding capital will be sent to the factory stakeholders at the end of the proceedings

Book a comprehensive valuation of your factory closure assets today

Closing your factory and want to list your equipment for auction? We have more than 180 years of experience, a strong track record and are highly rated, making us a suitable choice for your requirements.

Start the process today by calling 0333 2002 041 or completing the form below. Alternatively, get in touch if you have any questions or concerns, and our team members will be on hand to assist you.