The Closing of Profitable Plants: An Area for Government Restrictions?

Publication Date: June 1982

Publisher: Heritage Foundation (Washington, D.C.)

Author(s): Richard B. McKenzie

Research Area: Manufacturing and industry

Type: Report


The purpose of this paper is t o analyze the economic and political case-for plant-closing restrictions by specifically dealing with three central contentions.of its proponents. First, firms are closing profitable plants. Second, firms are "ruining" otherwise profitable plants by using them as "cash cows" (the meaning of which will become apparent). Third, the modern wave of industry conglomeration has reduced the ties of firms to the communities in which their plants are located and, consequently, has led to the closing of plants that, in the absence of the conglomerate movement, would have remained viable concerns.