Plant Closure and Market Dynamics: Competitive Strategy and Rationalization

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Abstract
This paper examines the role of market dynamics and competitive strategy in industrial plant closure using a case study of Sheller-Globe Corporation's Canadian Steering Wheel Division. The dominant motive for plant closure is to reduce production capacity in markets that have surplus supply. The market dynamics that precede rationalization are often complex, however, and the adaptive and competitive strategies of plant-closing firms need to be examined in detail for the reasons for closure and the mechanisms behind regional job loss to be understood. Firms attempt to adapt to market decline, new entrants, and changes in buyer and supplier relations. When competitive strategies fail, plant closure is the ultimate means of withdrawal from an untenable market position.

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