Está en la página 1de 19

REPORT

ON
PLANT LOCATION
Points to be discussed:
• Definition
• Problem of location
• Need for Plant location
• Steps in Plant location
• Factors affecting Plant location
• Recent trends in Plant location
• Merits & Demerits of Urban & Rural site
Definition:
“The function of determining where the plant should be located for
maximum operating economy & effectiveness”
- R.C. Davis

“That spot where, in consideration of the business as a whole, the


total cost of production & delivering goods to all the consumers is
the lowest.”
-Bethel Smiths & Atwater
Plant location means deciding a suitable location, area or place
where the plant will start functioning. It refers to the area where the
plant will operate to produce goods or services.
Problem of Location:
The problem of site selection of a factory can be solved in the
following 3 stages:
 Selection of the Region: Comparative advantages are analyzed
from various options of natural regions & political boundaries in
particular country.

 Selection of the Locality: Urban, Rural & Suburban areas are


various alternatives in selection of locality.

 Selection of the Site: The type of development of land, cost of


leveling etc, plant expansions & other infrastructure facilities like
transport, banking, power, communication, postal facilities etc. are
considered.
Need for Plant Location:
The location of plant can have a crucial effect on the profitability of a project, &
the scope for future expansion. Need for plant location arises when:
I. A new plant is to be established.
II. Old plant undergoes expansion, decentralization &
diversification to meet increased demands for its products.
III. The existing factory is not in a position to obtain renewal of lease.
IV. An undesirable location is to be abandoned.
V. The tendency of shifting the market, depletion of raw materials, changes in
transportation facilities, new processes requiring a different location are
observed in the factory.
VI. A new branch or branches are to be opened for increasing the volume of
production or distribution or both.
Steps in Plant Location by Bethel, Atwater & Smith:

Factors affecting
Plant
Location

Selection of Selection of Selection of


Region Community Plant site
Selection of Region:
 Availability of Raw Materials: It is categorized into two:
• Ubiquities i.e., existing everywhere like clay, water etc.
• Localized materials i.e. minerals, coal, sugarcane etc. & it is sub-
divided into pure (cotton, raw silk) & gross materials (iron-ore,
limestone, sugarcane).
Spriegel & Lansburgh quoted “Nearness to the source of raw
materials is of special importance when the material is bulky in
relation to its value & when the volume & weight are greatly
reduced during its processing.”
For e.g.: Textile mills in Maharashtra, Sugar factories in U.P,
Marble mftg in Jabalpur, Sandal Wood products in Mysore, fish-
canning & salt pans near coast, Export of Alphansos from
Ratnagiri.
 Nearness to fuel & power: It is a decisive factor in plant location. It
is necessary to ensure that the phase, voltage, frequency, rates,
regularity, special discounts allowed are suitable to factory.

 Transport: Getting raw materials to place of manufacture,


transporting finished goods to place of consumption & carrying
employees to the factory & sales representatives to the consumers
are functions of transport.
James Lundy quoted “ideal plant from the point of view of
transportation is one which is centrally located & directly connected
by water, rail, road & air. Cost, dependability, time required to
transport finished goods, prompt availability, shift in the market &
speed are factors considered for choosing particular mode.
For e.g.: TAPS uses road, water & own rail route.
 Market: A place where particular products are sold. Nearness to
market influences:
• Reduced cost of transporting finished goods & promotional
expenses.
• Enables to study the consumers.
• Enables to render quick service & after-sales services.
• Execute replacement orders without delay.
• Perishable nature of goods.
• Fragile nature of goods.

 Meteorological conditions & Topography: Kimball & Kimball quoted


“The effect of climate upon the efficiency in the case of working
force required to work outdoors, as in case of quarries,
constructional industries etc cannot be minimised. A cool climate
develops the best of worker.” For e.g.: Agro-industries.
Selection of Community:
 Labour: Kimball & Kimball wrote “The need of adequate supply of
labour is obvious, but a number of considerations such as cost of
living & the character of labour available as to both skill &
temperament should be taken into account.” According to labour,
factory may be located as follows:
• Semi-skilled/ Unskilled – Rural areas.
• Skilled – Urban areas.
The need of management is to face less strikes or lockouts & to
achieve lower labour cost per unit of production.
A stable labour force, the right type of labour, reasonable wage
rates, adequate number of employees, reliability of labour supply,
proper attitude towards work are features that influence supply of
labour.
 Supplementary & Complementary factories:
D. Jones described advantages of concentration of industries:
• Helps to increase the variety of materials that suppliers offers.
• Improves the labour market for employer & employee.
• Helps banks to discount commercial papers readily.
• Attracts a variety of repair plants like foundries, tool makers &
machine shops.
• Serves to perfect the local markets.
• Division of labour is possible.
 Banking & Credit institutions: Factory expansion needs funds to
meet the requirements. Existence of banks will exert influence over
location of plants.
 Local Taxes & Insurance: Factories must be located in a place
where taxes, insurance costs are comparatively low. E.g.: fire
cracker industry.
 Water supply: Water should be available in adequate quantity &
proper quality. The factors in this connection are stability in its
supply, mineral content of water, problems leading to water
pollution, cost of transporting water if it is not readily available.

 Momentum of early start: Some of the facilities like banking,


transport, communication, repair services, shops & hotels give
momentum to growth of industries in such an area.
 Historical factors: The existence of historical towns are responsible
for location of such industries. E.g.: Banaras, Lucknow,
Kanjivaram, Kanpur.

 Political stability: The political situation in potential locations should


be considered while selecting a locality for establishing a factory.
E.g.: Singur, liquor industries in Gujarat.
 State assistance: Karnataka state provides assistances like
feasibility study subsidy; investment subsidy; concession on term
loans, processing fee, working capital loan; stamp duty exemption;
sales tax exemption to some extent; subsidy on electricity tariff;
Technical guidance; raw materials; marketing facilities; allotment of
land & sheds to entrepreneurs.
Selection of exact plant site:
Following factors must be considered while selecting plant site:
1) Price of land
2) Type of soil
3) Waste disposal
4) Expansion potential
5) Availability of commercial services
6) Communication
7) Availability of amenities
8) Health of the locality
9) Statutory consideration
10) Flood & drought conditions
11) Right & title of the land
12) Good scenery
13) Attitude of local people
14) Technology know-how
15) Existence of religious & social institutions
Selection of Most Economic Site:
According to Kimball & Kimball, “The most advantageous location
is that at which the cost of gathering material & fabricating it plus
cost of distributing the finished product to the customer will be a
minimum.”
Diagram of most profitable site:
Recent trends in Plant Location:
 Seven most important trends with regard to plant location are:
 To locate plants away from cities.
 The development of industrial estates.
 Competition among states to develop industries.
 Trend towards decentralization.
 Pollution control.
 Location of industries leading to balanced regional
 development.
 Growth of multinational firms, thereby transcending the
 geographical areas of the country.
Merits of Urban & Rural Areas
Urban Area Rural Area
•Possible to find existing building to •Cost of land is less & scope of future
house factory. expansion is more.
•Easier to sell building if later. •Healthy & pleasant atmosphere.
•Power & water easily available. •Cheapness of land allows freedom for
most economic design for building.
•Good market for small mftrs. •Lesser taxes & restriction.
•Housing, banks, fire protection, •Housing can be provided by pvt.
railways & education available. Enterprise or local authority.
•Transportation is easy & cheap. •Road or rail connection can be
arranged easily.
•Workers find easy to change job & •Less labour trouble & labour is cheap.
area has good labour market.
•Repairing facility available with
existing industries.
•Opportunity to exchange knowledge
from nearby industries.
Demerits of Urban & Rural Areas
Urban area Rural area
•Climate is not healthy due to •Sufficient power & water may not
congestion. be available.
•Arranging equipment is not •Enough facilities for expansion
possible due to limited area. may not be available.
•High taxes. •No recreational facilities.
•Cost of land is high & scope of •Transport & housing facilities
expansion is less. may not be satisfactory.
•More problems about labour & •Government facilities may not be
employee relations sufficient.
•Cost of building factory will be •Skilled workers are not easily
high. available.
•Higher wages of labour due to •Educational facilities may not be
high standard of living. available.

También podría gustarte