Identification of the critical success factors for relocation of industrial plants: the case of a lubricant plant in Sri Lanka

Abstract

The best optimum location for industry or manufacturing plant is a highly debated issue in industrial location theory. In literature of industrial location, there are many theories, frameworks and techniques available for the selection of optimum location. But when it comes to practice there are many issues and factors have to take into account which are not in the domain of the traditional industrial location theory. Generally in literature, the most important primary and secondary factors for industry or plant location/relocation listed as economic, financial, social, environmental, legal, regulatory, incentives, taxes, transport, energy, communication, human resources, raw materials, market, regions factor endowments and speciality, law and order, etc. In this context, this study analyze the case of Sri Lankan Lubricant Plant relocation by using Factor Rating Model with Weighted Score Method to find out how far these factors are critical in plant relocation and their relative significance. The main objectives of the study are to identify the most critical success factors for relocation of industrial plants, ascertain the optimum plant location to maximize benefit to the company and to find strategies and guide lines for effective plant relocation. Primary data was collected by interviews (sample 75 people) key stakeholders of the Lubricant industry, including pressure groups (civil society and NGOs), and recently relocated other similar types of plants as this is a relocation rather location of a new plant. Special emphasis is given to collect data from top to middle management in various functional areas, trade unions and different levels of employees at the Lubricant Plant itself. After completion of literature survey and consultation with industry experts, twelve critical success factors and possible eight optimum locations have identified. The main outcome of this study is ranking of these eight locations according to the selected twelve critical locational factors and finally presenting options for the management to decide which location to select according to their preferences. Furthermore, this study could be used as guidelines for any similar type of plants relocation. The main policy message of the study is that before relocation of any industrial plant stakeholder consultation and awareness about the repercussions of. relocation among the present employees and trade unions are very necessary for any sustainable plant relocation. Therefore, management has to frame proper strategies and means to convince stakeholders including employees and trade unions well in advance about the realities of relocation. ABSTRACT 44