Factors affecting plant location (and where they are predominantly important)

1. Nearness to Raw Materials a. Most important for weight losing industries such as sugar cane, mineral processes, etc. 2. Nearness to Markets a. Most important for weight gaining industries 3. Availability of Labour a. Most important where specialists are required (diamond cutting, specialty handicraft, etc.) 4. Availability of Fuel & Power a. Most important for continuous running processing mills and such as minerals (like aluminum) b. When government policy makes price of land cheaper and power cheaper, industrialization will begin. 5. Availability of Water a. Such as leather industry, hydro-electric plants, mineral water bottling, nuclear plants, etc. 6. Climate Conditions a. Agriculture, textile mills, etc. 7. Government Policy a. 8. Land a. Very, very, very, very important (most important factor in all of these) b. When government policy makes price of land cheaper and power cheaper, industrialization will begin. 9. Community Attitude a. Most important for industries with noise polluting, air polluting, and water polluting impact on the community. 10. Security a. Volatile locations (like northeast and J&K) do not have much in the way of industrial production. 11. Transportation facility a. Second most important factor (after land) of all of these factors. b. Most factories and manufacturers do all they can to minimize transportation costs since every rupee saved on transportation increases the profit 12. Momentum of an early start a. When you want to begin a new company or business, you can get a great early start by setting up a factory close to suppliers, where there is a qualified and ample labour force, etc. 13. Personal factors a. Whatever the boss wants goes 14. Communication facilities a. Not quite as important now that everyone has cell phones 15. Other considerations a. Favourable labour climate b. Closeness to raw material

c. d. e. f.

Closeness to markets Cost of raw material, labour, and other inputs (like China) Local taxes, cess (any tax applied by government uniformly), and octroi () Availability of housing, parks, education, etc. for workers (many of the large production facilities develop their own township for this situation)

Industries (and companies) can be divided into two categories: 1. Weight Loosing a. Industries where volume or weight of the input is much larger than the weight and volume of the output b. Example of mineral and metal processes c. They must be near to raw material 2. Weight Gaining a. Industries where volume or weight of the output is greater than the input b. They must be near to markets

Techniques of Plant Location

1. Factor Rating Method or Weighted Score Method

Example
Criterion Cost of the Site Local Taxes Skills Availability Access to Motorways Access to Airport Potential for Expansion Importance Weighting 4 2 1 1 1 1 Nariana (A) 20 50 80 80 70 20 430 Okhla (B) 30 50 80 80 50 30 460 Noida 60 30 70 70 30 80 550

Total Weighted Amount

2. Center of Gravity Method a. Taking into account volume and location in order to select a location that takes all of those into consideration.