Mothballing is a method used by businesses when there is no immediate need for a particular item, such as an aircraft, ship, oil rig, or machinery. Rather than selling the item – which may not be possible in a depressed market – businesses may wish to mothball the item instead. This allows them to maintain control over the item and its immediate value to the business.

Mothballing refers to the process of deactivating, storing and preserving an item for future use or sale. This can include draining systems of any hazardous materials and fluids, wrapping the machinery in protective covers to prevent corrosion, and storing it in a secure, covered location. For example, if a manufacturer wishes to mothball an aircraft, they would need to properly fuel the aircraft, move it to a secure hangar, and cover it.

The chief goal of mothballing is to preserve the item in its current state, thus retaining the potential value of the asset. This allows the business to remain flexible in a changing market, preserving the potential value of the asset, and avoiding the costs associated with sale.

Mothballing has many benefits for businesses of all sizes. Companies can reduce operating costs and prevent lost value due to market depreciation. In addition, businesses can take advantage of rising and falling markets without being tied to a particular asset. By mothballing items, businesses gain the flexibility to move into different markets, adjust capacity, and control their financial exposure.

Mothballing is a valuable process in managing volatile markets. By controlling costs, preserving value, and maintaining flexibility, businesses are able to maximize their profitability and better cope with changing market dynamics.