Mothballing of Equipment and a Building - What, Why, and Procedure

Published on
December 2, 2021
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Introduction: What is Mothballing? Mothball Equipment and Building Meaning

Mothballing refers to the process of preserving a company's asset in case it is needed for future use or sale. In other words, it means that you're temporarily shutting your operations down and preserving your assets. For example, if more people are working from home and you need less office space, you may mothball an area of the office to save costs - locking the door so it can no longer be accessed.

The History of Mothballing Equipment

The term "mothballing" comes from using pesticides to protect clothes, etc., that are stored for long periods. Moths and moth larvae can cause damage to these items if left untreated, so people put mothballs inside tightly closed containers along with the clothing or materials to preserve them.

One of the most common uses of mothballing involves aircraft (commercial and military). Aircraft have high maintenance and fuel costs if left in operation, so it makes financial sense to mothball them if they’re not needed for a period of time. The unpredictability of energy prices (due to the supply and demand of resources) and the tight margins of the airline and industry means that mothballing these assets is expected. These aeroplanes are often stored at "graveyards", as shown below.

'The Boneyard' at the Davis-Monthan Air Force Base in Arizona, which houses 4,400 planes (The Independent)

Ships with a military background are also typically "mothballed" between uses. This means they are stored to preserve them until they can be used again. They might also be maintained perpetually so that the Army has ships ready on hand for any future war efforts.

Mothballing Process and Procedure

Mothballing is the process/procedure of taking an asset such as a building or process equipment out of commission to be used at a later date. Below are several steps that a business or individual may need to go through before mothballing equipment or an asset. Feel free to leave a comment or drop the RECOVAR Team a message if you have anything to add!

  1. Appoint a person in charge of the mothballing project and come together as a team to define the mothball strategy
  2. Conduct a full audit: It's impossible to mothball an asset without knowing precisely what you're dealing with. This audit process may be costly, as there is often significant manual work required to visit and conduct an inspection at many sites. Especially when the work is done on Excel and paper! A full audit of a building will likely require you to document:
    • All floors (with floorplans) and rooms within a building
    • Power supply and water systems locations in each room
    • The security system in place
    • The quantity, condition and location of equipment and furniture in each room
    • The occupants and their daily working activity
    • Maintenance tasks and step by step process of running the building at present
    • Access details and on-site contact information
    • The facts and location of any hazardous materials, such as asbestos or oil
    • Any additional information needed for the successful site clearance, preservation or future sale
  3. Identify and assess the impact on the site inventory if left for or beyond the mothball period. You may need an external consultant or expert to help with this step.
    For example, a generator that is mothballed may not operate if left idle for an extended period. In this case, you will likely need to enlist experienced operators and mechanics to assist with the successful mothballing.
  4. Present a clear and comprehensive plan to all affected building inhabitants before then beginning the mothballing of the facility
  5. Finally, for the duration of the mothball period, you should continually monitor the condition of the inventory against what was set out in 3. Your plan should be reviewed at least every six months to ensure that the mothballed asset can be reused or sold when needed.

Mothballing Example: Building/Facility Mothball

Mothballing may involve tangible assets such as machinery and computers but can also include intangible assets such as concepts. For example, it can consist of product design concepts, operating theories, or major projects like expanding into new markets. Setting something aside means you can revisit the idea or item at a later point. For mothballing buildings or facilities specifically, we have outlined an example below:

A company identifies that after the COVID pandemic, employees now prefer a hybrid working approach - spending two days a week in the office and three days at home (a survey recently identified that 78% of workers would prefer to work in the office for only two days or less (source)).

This reduced occupancy means the company needs less office space. Reducing the office space could reduce capital expenditure (CAPEX) as the surplus to requirement office space, once-mothballed, no longer needs cleaning or maintaining as it would if in regular use. Mothballing prevents corrosion and damage if completed properly.

Additionally, by mothballing the equipment, this company could identify surplus to requirement assets and furniture that could be sold to generate revenue which could be invested to enhance the remaining workspace. If not sold, the surplus inventory could be recycled or reused by a charity - preventing a large amount of waste that often comes from companies overlooking the valuable inventory left in mothballed sites.

Mothball vs Abandonment – Which Process is Better for Your Facility?

Mothballing a building is a process by which the facility is preserved against deterioration during wartime or an economic downturn. The building might be used again in the future, but it might also remain abandoned for years. This preservation has an associated cost, which may not be best for businesses that need to drastically reduce CAPEX.

Abandoning a building means that it is no longer in use or maintained. The building should not be occupied or used, even temporarily, by people. This approach has the benefit of reduced costs; however, RECOVAR believes that mothballing is generally the best route to go, as it not only allows for the site to be reused or sold for a higher value in the future, but it also prevents environmental.

Leaving a building without preventing it from going into disrepair means that hazardous materials or liquids could enter the environment. Furthermore, the equipment inside doesn't get reused through the circular economy. This means other businesses buy new rather than taking what others no longer need. Abandoned buildings are also linked to increased crime rates (particularly arson) and declining property values.

Conclusion: When Should You Start the Mothballing Process for Your Facility?

This section provides a conclusion to the content that will help readers better understand how to properly mothball their facility, equipment or commercial building.

We have covered the steps needed to prepare for mothballing equipment and the cost involved in mothballing a facility. The next step is ensuring that you have enough time before you start the process. It is essential to know what type of facility you are planning on mothballing and how long it will take to build an inventory with enough detail to complete the project.

Once an estimated duration has been calculated, it is then best to work backwards to figure out when you should start the mothballing equipment process for your facility.

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