Why would companies who got huge tax breaks want to close some of their factories/stores?

[dixiegrrrrl]

The latest one:

Kimberly-Clark, maker of paper products like Kleenex, Viva paper towels, Cottonelle bathroom tissue and Huggies diapers, announced earlier this month it would use its tax cut windfall to pay the costs of closing 10 factories and dumping as many as 5,500 workers.”

Carreir, Wal-Mart, and many others are shuttering stores, factories and employees, NOW, but will get the tax break money ...when?

Don't they want to continue to make money by selling their products?

There has to be a reason, I can't figure it out, tho.

[MichMary]

1. Don't know about the others, but

Wal-Mart is closing a bunch of Sam's Clubs because they weren't making $$$ due to competition from Costco.

[Clarity2]

2. Tax cut incentive

To favor automation over humans. Wouldnt be surprised. http://www.newsweek.com/tax-plan-robots-jobs-senate-republicans-712930

[Phoenix61]

3. Those facilities weren't profitable

Also, one of the little known changes in the tax law covers depreciation. It can now be taken all at once which makes automating a factory much more cost effective. So basically, they are going to use the new tax laws to modernize their factories costing 1,000's of jobs.

[Sophia4]

4. My theory is that one of the primary reasons for the tax bill was facilitating,

speeding up, automation at all levels of industry and retail.

The whole point is to reduce jobs although those who wrote the bill would never admit that, think of it quite that way much less sell it for what it really is.

We need to move from a 40 hour standard work week with overtime pay after 40 hours to a 30 hour work week with even higher overtime pay after that and stringent laws controlling who is a manager and paid on salary.

[Wellstone ruled]

9. Knowing of a couple of these plants

and the age of them and their paper making machines. Very surprised they were not closed in the Nineties. Now with the new Tax Rules,they can write off the closures in the first year,and walk away with extra money in their pockets.

Because of Exchange Money rates,we are the Dumping Ground for the World. We have a Paper processing plant here,and their bulk raw Paper comes from Canada and Mexico. And most likely the Asian Basin,noticed Asian based Containers backed into their receiving docks from time to time.

This Plant as well as nine others,make facial tissue,Toilet Paper,and Napkins under Private Labels as well as some well known labels.

And there will be a doubling of Capacity at this plant by this time next year. BTW,tons of Robotics and very few people.

[sarah FAILIN]

5. It helps their bottom line

We as common folk think the goal should be providing jobs and ramping up the economy. I suspect, could be wrong ..but suspect when they cut their workforce and close plants in one area while maximizing production at a central location without increasing workers it is better for them. Retool a plant with more automation and you will get better stock prices and dividends. It's about making them money, not making all of us money.

[JHB]

6. It costs money to close things too...

When companies are deep in the red it is pretty easy to decide to close locations, but in better times there’s more of a cost/benefit calculation in doing so. If a location is only marginally profitable, Corporate will be deciding whether they want to incur costs (severance pay, property issues, tax issues, etc.).

The windfall from the Trump Tax Handout will in some cases be enough to make the calculation work out to “let’s wash our hands of these while the washing is good.”

After all, their job is maximizing shareholder returns, not selling products.

[MichMan]

7. A myriad of reasons

It isn't as simple as you are inferring. Companies may close manufacturing plants and /or retail operations for all kinds of reasons.

Oversaturation in a particular region, excessive capacity, or uncompetitive in a particular segment are all potential reasons.

A company like Wal Mart may close some stores that are poor performing while opening new ones in other areas. Could be that a company lost a big contract to one of their competitors.

An automaker may lay off workers in an assembly plant producing a vehicle with poor sales while expanding production and hiring in plants producing hot selling models.

[HeartachesNhangovers]

8. Regardless of the tax situation, companies typically have

growth and/or profitability targets for their manufacturing and retail facilities. If a retail store consistently under-performs - because of high operating costs (rent, security, labor, etc) or low sales - it gets closed. Similarly, if a manufacturing facility under-performs, it gets upgraded, re-purposed or closed.

The tax situation doesn't affect this fundamental process of chasing growth and profits.