Session 7

FACILITIES LOCATION
Plant location:
where the plant should be located for maximum
operating economy and effectiveness.
A selection on pure economic considerations will
ensure :
► easy and regular supply of raw materials
► labor force
► efficient plant layout
► proper utilization of production capacity
► reduced cost of production.
 Steps in Location Selection
1. Within the country or outside
2. Selection of the region
3. Selection of the locality
4. Selection of the exact time
5.
1. Within the country or outside:
Whether the facility should be located
domestically or internationally.
Choice of particular country depends on such
factors as political stability, export and import
quotas, currency and exchange, cultural and
economic peculiarities, and natural or physical
conditions.
2. Selection of Region:
1 Availability of Raw materials:
• Supply of raw materials is assured at minimum
transport cost.
This ensures reduced cost of
transportation,
regular and proper supply of materials,
saving in the cost of storage of materials.
(ii) Nearness to the Market:
It is very essential that the factory should be
located near their market.

Advantages:
reduction in the cost of transportation
Render prompt service to the consumers.
Provide after sale service
Replacement orders without delay.
(iii) Availability of Power:
► Coal, electricity, oil and natural gas are the
sources of power.
► The factory has to be located where the power
is available regularly and at cheap rates.
(iv) Transportation Facilities:
► Availability of transport facilities
► Place which is well connected rail, road and
water transport is ideal for a plant
location.
► Place with well developed means of transport
attract industries.
(v) Government Policy:
► Influence of Government policies and
programmes on plant location is
noticeable in every country.
► In the name of balanced regional development,
many backward regions have been selected
for the location.
► Licensing policy, Freight rate policy
► Establishing a unit in the public sector in a
remote area and developing it to attract
other industries
► Institutional finance and government
subsidies.
►
►
(vi) Suitability of Climate:
► There are certain industries which, because
of the nature of their production,
require particular climatic conditions.
► Climatic conditions adversely affect labour
efficiency and such places do not attract
industries.
(vii) Competition between the states:
► Various states offer investment
subsidies and sales tax exemptions
to new units.
 3. Selection of Community or Region:

i.Availability of Labour:
► An adequacy of labour supply at
reasonable wages is very essential
for the smooth and successful
working of an organisation.
► Skilled labour influences plant
location.
(ii) Civic Amenities for workers:
► Recreation facilities, clubs, theatres,
parks, schools will influence the
plant location.
(iii) Existence of Complementary and Competing
Industries:
► Improves the labour market
► Banks becomes familiar with the
requirements
► Attract a variety of repair plants
► Reputation will be shared.
(iv) Finance and Research Facilities:
► A place where the financial facilities
is available naturally attracts
new industries.
( v) Availability of Water and Fire-Fighting
Facilities:
► The supply of water should be considered with
respect to its regularity, cost and
purity.
► Fire fighting facilities must be available.
 (vi) Local Taxes and Restrictions:
► Industrialists prefer an area where
taxes and restrictions are the
least irritating.
(vii) Momentum of an Early Start:
► one or more factories existed before, gain
prominence as centers of an industrial
complex with the passage of time
because, around them a number of
facilities develop.
(vii) Personal Factors:
► Locate their plants purely on personal
grounds disregarding economic
considerations.
 4. Selection of the Site:
► Soil, Size and Topography
► Disposal of Waste