Arguments against Site Consolidation

Consolidating sites makes less sense if the sites manufacture completely different products using different processes. Be especially careful about integrating sites that produce high-margin specialties into a commodity operation. These are two completely different concepts that require completely different approaches. A merger can lead to specialties being neglected and the overall margin falling.

Consolidating also results in the merging of personnel between the sites. If wage levels have been different up to now, adjustments will now have to be made for labor law reasons. Such an adjustment will be more expensive in the medium to long term.

However, you should also bear in mind that, depending on the distance, you will lose employees when you merge locations. With the loss of these employees you will lose know-how, which can have effects on productivity and quality costs.

From now on, you will act under one flag in the market. Whereas up to now the purchasing department may have been able to receive and compare several offers from your group of companies, it will now have to include at least one additional offer from your competitors in order to be able to make a formal comparison. For you, this entails the risk of losing orders and even customers.


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