Store Closing?

For this discussion, consider the following scenario:

The privately owned Baker Company was founded in 1960. Thecompany manufactures kitchen cabinets and has been very successful,expanding from one facility to twelve facilities in the same andother states. All facilities but the original are located nearinterstate highways. The original facility, which is no longer theheadquarters, is in a downtown area of a major city (which grew uparound it) with relatively high real-estate taxes. It has had anegative contribution margin and a net loss for the last fiveyears. The founder is retired and three of his children want toclose the facility. The fourth does not, because it "was Dad'sfirst place and I went there every day after school." She believesthey can bring the facility back to profitability if the city'sdowntown revitalization project succeeds and they dedicate thefirst floor of the facility to retail.

• Your definition for "negative contribution margin."
• Whether the fact that the facility is not near an interstatemakes a difference in the decision.
• Would it make a difference if the company were publiclytraded?
• Might there be additional costs, in addition to revenues, toconvert the first floor of the facility to retail?
• What risks may be associated with leasing to retailstores?
• What is your recommendation? Close and sell the facility ormodify the first floor to be able to lease to retail stores.