Location is one of the first decisions in the design of a new chemical plant.

It impacts
profitability and scope for future expansion. If the project is a new facility, a suitable site
must be found and an optimal layout of the site and process units must be planned. If the
project adds to an existing site, the impact of the new addition on the existing plant must be
considered. The plant also needs to accommodate for the nearby infrastructure, the services
that it requires

Location Decision Factors

Initially, economists viewed the plant location decision as a cost-minimization problem. The
optimal location was one where the transportation costs of raw material to the plant and
product to the market was minimized. Between the early 1900s and post World War II
period, most industries were sensitive to the cost of transportation. As transportation costs [Titre
became less of an obstacle, the approach to the problem developed with considerations of
trade-offs between transportation and factors such as wages, energy, local regulations, etc. If
lower wages could balance the higher transportation costs of building the plant in a low-
wage area, the low-wage location may be more desirable.
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Although location is a long-term investment, a firm does not decide on a location with the
sole objective of maximizing its profits or minimizing its costs. Managers may choose a
rapport]
“safer” location that is more likely to produce higher profits rather than a riskier location
that yields the maximum investment return. Personal factors of the people involved are also
influences. For example, new businesses tend to locate where the founders live.

Analysis of the Importance of Factors

In 1963, Morgan surveyed 17 companies and found that on average the most important Par
factors on industrial location decisions are market, labor, and raw material. Taxes and
financial incentives were of little significance. More recently, Fortune magazine surveyed [Nom]
among the 1000 largest US companies and found that the most important factors were [Titre du cours]
market and labor. The survey also found that personal preferences of a firm's executive, tax, [Nom de
and central cities have great influence over the site of corporate headquarters. Surveys of l’enseignant]
interstate locational decisions found that the factors that played key roles for new firms were
access to customers and the growing market, labor force, transportation, personal reasons of
management, and availability of capital. The cost of land had the least important influence.
For firms that expanded across states, the influential factors were labor costs and labor
supply. Companies seeking expansion usually have made their production more routine, so
quick access to suppliers is less of a concern. Cost minimization becomes more relevant to
existing corporations.

Site Layout
The process units and buildings need to be arranged in such a way that allows for the most
economical flow of materials and people. Dangerous processes need to be a safe distance
from other buildings, and the layout should be planned to allow for future expansion.

Process units are usually laid out first in an arrangement that allows for smooth flow of
materials between the process steps. The distance between equipment is usually at least 30
m. Next, the location of the principal ancillary buildings are sited as to minimize the time
that it takes the workers to travel between buildings. Administrative offices and laboratories
are located away from hazardous processes. Control rooms are next to the processing
equipment. Utility buildings are located as to minimize piping between the process units.
Storage is placed between the loading and unloading facilities and next to the process units
that they serve. Tanks containing hazardous material are placed at least 70 m from the plant.

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