Your factory closes but the product continues elsewhere

Topic
Manufacturing site closure
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3 minutes
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  1. Compare the proposed responsibilities
  2. Test the arrangement against an ordinary change
  3. Separate old work from future production

Decide what the continuing business will own and control when its factory stops manufacturing. A provider agreeing to make the product does not, by itself, explain the full commercial and quality arrangement.

Prepare the intended division of responsibility with the proposed provider. Ask appropriate legal, technical and product-compliance advisers to assess it. This guide does not decide who is legally the manufacturer or which obligations can be transferred.

Compare the proposed responsibilities

Use the actual product and agreement. The owner needs clear answers to questions such as these:

Function Question for the proposed arrangement
Specification Who controls the authorised requirement and approves changes?
Production What defined work will the provider perform and under which accepted arrangements?
Acceptance Who reviews the required evidence and authorises the relevant product decision?
Traceability Who retains each record and how can the responsible business retrieve it?
Technical enquiries Who assesses a later problem and who has authority to decide the response?
Continuing support What happens if the provider or original technical contact is unavailable?

Treat unanswered questions as open decisions. "The supplier handles quality" is too broad to establish the evidence, approvals or access the business expects.

Test the arrangement against an ordinary change

Suppose the provider proposes a substitute input after the original factory closes. Who receives the request? Which specification applies? Who evaluates the consequences? Is customer or other approval needed for the actual product?

The business should be able to find that route in the accepted arrangement. It should not depend on an informal call to a former employee who no longer holds the relevant role.

Review the traceability retrieval test alongside the agreement. A contractual statement that records will be kept is incomplete as an operating plan if nobody can obtain them through the agreed authorised route.

Separate old work from future production

The closing factory may still have known rework. Confirm whether the new arrangement includes it. Do not assume a future production order commits the provider to investigate or correct earlier output.

Likewise, batches already at outside processors may belong to an earlier route. Keep their identity, receiving decision and acceptance owner clear while the new model starts.

Ask advisers to identify any responsibilities that remain with the continuing business regardless of the proposed commercial division. Record the accepted scope and the decisions still required before relying on it. Ask specifically about regulated products and any customer approval tied to a process or location.

Once the future operating requirements are understood, discuss the resulting surplus assets with UK Auction Group. Explain any retained development, inspection or support function so the disposal enquiry reflects the business that will continue.

Return to the manufacturing site closure guides.

Sources

This guide is general information and education only. Legal, tax, employment and safety decisions may need a qualified adviser who knows your situation. Read the disclaimer.

Closing a business with assets to sell?

UK Auction Group values everything on site, runs the sale and hands the premises back clear, with a full statement of proceeds at the end.

Send a list of what you have, where it is and your deadline. Decisions that are still open can be included.

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Business Closure Guide is part of the UK Auction Group portfolio.

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