From knacker (“one who slaughters and (especially) renders worn-out livestock (especially horses) and sells their flesh, bones and hides”) + -'s + yard.

What is the meaning of a knackery?

Knackeries are premises used in slaughtering animals for animal food, including all buildings and holding yards. Knackeries do not include abattoirs slaughtering animals for human consumption.

Why is the word knackered offensive?

Most commonly that means horses, whose remains have been used for dog food and in the manufacture of glue. So if you say you're knackered, you mean you feel as tired as an old and useless horse, fit only for the knacker's yard. ... As a phrase, knackered is not for polite use, but not offensive either.