how mothballing works
the term mothballing is derived from the use of pesticides to prevent damage to clothing or other goods that are stored for a long time and may be subject to damage from moths or moth larvae mothballing can offer production flexibility to manufacturers that have high operating costs as it allows them to quickly re open a factory to produce goods based on temporary spikes in demand instead of keeping a factory open on a continual basis at a potentially lower margin in production plant assets mothballing requires considerable planning to ensure that production can resume quickly mothballing may lead to assets being put back into use their updating and refurbishment disassembly for resale and reuse of their parts or outright scrapping for their salvage value steel aluminum and other valuable metals mothballing is often neglected when companies are under financial duress during the great recession companies frequently shut down plants simply by removing dangerous materials and other hazards and then locking the doors leaving expensive and sensitive equipment to deteriorate in short order much equipment had become scrap if work had been done to deactivate and properly mothball equipment much of their value could have been preserved for later use or sale mothballing tipsexample of mothballinga cyclical business that benefits from proper mothballing is oil exploration and drilling well drilling equipment is expensive and oil prices have proven to be unpredictable not to mention the boom bust nature of the oil business when prices fall wells in some locations may become unprofitable and the demand for new wells will fall that equates to lots of idle drilling rigs properly mothballed rigs can allow drillers to go back to work once a cycle has turned in their favor the difference in restarting a properly mothballed rig vs an inadequately mothballed rig can be three or more times the replacement cost one of the most common uses of mothballing involves aircraft commercial and military such mothballing or long term storage awaiting possible future use happens at aircraft boneyards or graveyards mothballing is also common with seagoing vessels which are stored and maintained as ghost fleets for possible reconditioning updating and recommissioning the cyclical nature of the shipping business the unpredictability of energy prices as well as the tight margins of the airline business means that mothballing these assets is common 