LOCATION OF INDUSTRY

Setting up a business enterprise, the manufacturer or producer has to take note of the following
three factors:

i. The scale of operation.

ii. The technique to be adopted (capital or labour intensity) which involves the selection
of the appropriate combination of the factors of production.
iii. The location of the business enterprise.

The general determinant of the location of a industry is anchored on the decision to site factories
in the most economical location where profit will be maximised. This decision involves a large
number of technical, economic and institutional factors which exert pull and pressure on the
location of the factory in varying magnitude. General lists of such factors are:

i. Technical factors and physical factors

The important factors here include-

a. Availability of land given the anticipated size of the business

b. Nature and quality of raw materials from land e.g. forest products, agricultural inputs,
minerals and semi-finished products from existing industries.
c. Accessibility to the factory site by different modes of transportation.
d. Quality and quantity of human resources
e. Availability of abundant energy resources (petroleum products and electricity).
f. Availability of water for drinking and industrial uses.
g. Waste disposal facilities.
h. Climate.
ii. Economic and Infrastructural Factors

Inputs prices, taxes, markets, skills of labour, availability of adequate infrastructural

facilities, finance etc constitute together the economic factors. They include the following:

a. Availability of local markets for the sale of the products of the enterprise.
b. Possible avenue in relation to export markets.
c. Cost of land.
d. Cost of infrastructural facilities and whether the firm can afford them e.g. transport
charges, power, tariffs, water rates etc.
e. Cost of living viz-a-viz fair salaries and wages available for workers.
f. Taxes and subsidies
g. Cost and availability of finance
h. The structure of existing industries and possible inputs from them under bearable
competition
i. Industrial relations and trade union activities around the proposed location sites
j. Availability of local educational, medical, housing and recreational facilities which may
be important to workers
k. Availability of communication facilities
 l. Government policies towards location of new factories
m. Personal factors

The weights assigned to individual factors depend on the prevailing circumstances and nature of
the industry. In some industries, firms re located near sources of major raw materials such as
Iron and Steel, pulp and paper while in other industries, they are located near markets.