PLANT LOCATION

Plant Location

Plant location means the establishment of a particular industrial unit at any particular place. An ideal site certainly contributes to the smooth and efficient functioning of an enterprises.

Need for Plant Location

When a new Plant is to be established. Whenever the existing factory is not in a position to obtain renewal of lease. In the case of established enterprise, the need for enterprise location arises when expansion, decentralization and diversification is undertaken to meet the increased demand for its products.

When the tendency of shifting the market, inadequate labour supply, new processes requiring a different location are observed in a factory.

Importance of Plant location

The selection of an appropriate plant enables the plant to operate smoothly, efficiently, and with the minimum cost. Location of plant is an important managerial decision. It involves a heavy commitment of resources for a long time.

If the selection of the site is not proper, then all the money invested on factory building, machinery and their installation etc. will go waste and the owner of the factory will have suffer a great loss.

Factors Affecting Location of a Plant

Factors affecting plant location

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Availability of Raw Material Nearness to Market Availability of Power Favourable Climate Transport and communication facilities Availability of Labour Government Policy

Availability of Raw Material

Nearness to Market

Industrial units using pure raw materials ( non- weight losing raw material ) tried to locate near the market because customers can be served better and cost of services will also be minimum. The transportation cost will also be at the minimum. Industries producing perishable commodities are also attracted towards the market because of saving in time & transportation cost.

Availability of Power

An uninterrupted and adequate supply of fuel and power is a major factor determining the location of an industrial unit. Power failure has been one of the important reason for industrial breakdowns in the small scale sector. Coal, electricity, oil and natural gas are the source of power.

Favorable climate

The climate has its own importance in the location of a plant because of two reasons. First, there are certain industries which, because of the nature of their production, require particular climatic conditions; ex-textile & jute. Secondly, climate affects labour efficiency. Extreme climatic adversely affect labour efficiency, and such places do not attract industries. Ex- tropical & polar regions.

Transport and communication facilities

Transport facilities are essential for bringing raw materials and men to the factory and for carrying the finished products from the factory to the market. A place which is well connected by rail, road and sea is ideal for plant location. Communication facilities also play an important role in selection of plant location.

Contd

Every business requires every types of business information regarding the position of labour, market, raw material and finished goods, and its information is available only when communication facilities are available.

Availability of Labour

Availability of manpower with proper skills is very important in selection site of a plant. Labour is an important factor in the production of goods. An adequacy of labour supply at reasonable wages is very essential for the smooth and successful working of an organization.

Government Policy

The influence of government policies and programmes on plant location is apparent in every country. The government sets up special economic zones or export zones and software and technology parks. Locating facilities in such areas may lead to tax breaks, low rentals, lower cost of land facilitation of exports and imports and so on.

Different Categories for Selection of plant site

Selection of Plant Site

Rural Area
Suburban Area

Urban/ City Area

A big city has all the facilities which favour a location for a plant. Due to certain typical advantages available only in the city area, promoter of a plant or industrial unit shows preference for the city area for the selection of site.

Advantages
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All types of technical and commercial institutions and universities for the training of the staff and workers are available; A large local market is available; Good transport facilities are available for the movement of row materials and finished goods by rail and road and at times, by water and air.

(Contd)
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Banking and credit facilities are available; Good and prompt postal and communication are available. Ample availabilities of skilled and unskilled labourers; Municipal services for water, sewage disposal, public health and educations are available; High advertising value is available.

Drawbacks
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Houses taxes, water taxes, sanitation taxes and other similar taxes and the rates are fairly high; The cost of labour is high; The cost of land is very high; Industrial city areas are open to the target of air- attacks in war-time.

(Contd..)
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Due to possibilities of changing jobs from one unit to another unit and the tendency of competitors to snatch away the good employees, the rate of labour turnover is very high. The trade union movement is very strong in city areas, which give rise to strikes and lockouts.

Suburban Areas

Suburban sites offer a compromise between the city and village and have the advantages of both. The better compromise in the decision of selection of site, is the selection of suburban area as the location of plant. Suburban areas is the area which is located on the outskirts of the city area.

Advantages
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As the city area is nearest, the the skilled and unskilled, both type of labour are available. Land is available at cheaper rates as compared to urban areas. Adequate land is available for future expansion unit.

Drawback

The disadvantages of suburban area as a site for industry is in the development process, it may be converted into a part of the urban area with all its merits and demerits.

Rural Area

The facilities available at the village site are not as many as are found in a city; but they are more attractive. In certain situations, a rural area is also preferred as a site for the plant or industrial unit.

Advantages
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As compared to city area, the land is available at a cheaper rates. The local taxes which are found in the city areas are practically non-existence in the rural areas. The labour forces is more stable as compared to city, which reduced the rate of labour turnover.

(Contd..)
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Fewer labour trouble The municipal restrictions which are found in the city areas, are not applicable in rural areas. No danger of bombardment in war time. Due to lower standard of living, the rates of labour are relatively lower.

Drawbacks
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Lack of transport facilities. Lack of supply of skilled workers; There is absence of good educational institutes, good and sufficient medical facilities in rural areas. Banking and credit facilities are also not available properly.

What is Plant Layout?

Plant Layout

The term layout usually means the structure of the organization. A plant layout refers to the arrangement of machinery, equipment and other industrial facilitiessuch as receiving and shipping departments, tools rooms, maintenance rooms and employee amenities- for the purpose of achieving the quickest and smoothest production at the least cost.

Objectives of Plant Layout

To ensure economic utilization of available floor space; To maximize convenience and safety of workers; Utilized labour efficiently; Reduce material handling costs; Provide enough production capacity.

Types of Plant Layout

Product Layout

Product layout involves the arrangement of machines in one line, depending upon the sequence of operations. Materials are fed into the first machine and finished products come out of the last machine. It is also called line layout because of machines are arranged in a straight line.

Process / Functional Layout

In the Process Layout, machines of similar type are located together according to their function. Products move between the groups of equipments in order of the operations required. A quantity of raw material is issued to a machine which performs the first operation. This machine may be situated anywhere in the factory.

(Contd..)

For the next operation, a different machine may be required, which may be situated in another part of the factory. The material should be transported to this other machine for treatment. Thus, material would move long distances and along criss-crossing paths.

Fixed Position Layout

In a Fixed Position Layout, the product stays fixed at a particular location because of its bulk and size, the worker team and equipment move to the work site to work on it. The layout is suited for project and high tech job production processes.

Grouped or Combination Layout

Group layout is a combined form of product layout and process layout. The layout is similar to a process layout in as much as the machines perform different processes and is similar to the product layout as the machines are grouped to perform processes required by a limited set of products or a family of products.

Thank You