Evaluating the Risk of Plant Closure in the Automotive Industry in Spain

This study looks at the reorganization of production in the context of a multi-plant firm in the automotive industry. Changes in such firms may result in the closure of some plants and/or the opening of others. The article provides a method for assessing the risk of plant closure, and then applies that method to a specific case: the automotive plants located in the Spanish region of Navarre. This entails acknowledging the factors that increase what has come to be known as the “degree of vulnerability” of the plant, including sunk costs and relative productivity levels. This paper can also be understood as a source of information for designing developmental after-care programmes for foreign direct investors in the periphery of the European Union.