In the case of manufacturing companies plant location is the key factor which can have a big influence on the future of the company because plant location plays a very important role in ensuring that the company achieve its goals or objectives as it can significantly impact the cost, efficiency, and success of company’s operations. Given below are some of the important factors that influence the plant location –
Factors Affecting Plant Location
Proximity to Raw Materials
Proximity to raw materials refers to the location of a manufacturing plant or facility in relation to the sources of the raw materials which is needed by the company to produce goods. It is a critical factor in supply chain management and influences the cost, availability, and quality of raw materials. Hence when the raw materials are heavy or bulky, it can be expensive to transport them, so a plant should be located close to the source of raw materials to reduce transportation costs.
Labour Availability
Plants without labour are like the human body without a heart just like a human cannot survive without a heart in the same way a plant cannot survive without labour. Hence the availability of skilled and unskilled labour is an important factor when it comes to plant location decisions because the cost of labour varies by location, and a plant may need to be located where there is an ample supply of labour as workers will be more willing to come to a plant if the plant is located close to the residence of labours.
Transportation Facilities
In the case of a plant, the movement of both raw materials, as well as finished goods from the plant, requires a good transportation facility hence a plant should be located in a place that is well connected to highways, railways, ports and airports so that the company can transport goods from plant to markets without any effort or delay and hence can be a good advantage point as far as the company is concerned.
Environmental Concerns
In today’s world where global warming is a focal point all over the world and if the location of the plant is close to a place where it causes harm to the environment such as close to the river or schools or green zone then it can be a big minus point because people living close to plant will oppose against the company and hence will bring a lot of negativity about the company.
Subsidies and Incentives
Governments all over the world give subsidies and incentives to encourage companies to locate their plants in certain areas and hence if the company wants to take advantage of tax incentives and subsidies then the company should set up its plants in such areas so that it can save a lot of money on production and setting up of the plant.
Infrastructure
Well-connected roads, 24-hour electricity, availability of water round the clock, and good internet connectivity are some of the basic infrastructure facilities which can go a long way in ensuring that the plant of the company runs without any interruption and hence plant should be located in a place which has good infrastructure facilities.
Climate
The climate is another important factor which plays a key role in deciding the location of the plant because areas which are affected by extremities of weather are not ideal for the location of the plant hence companies should choose a location of a plant which has favourable climatic conditions so that climate does not affect the production in the plant of the company.
As one can see from the above plant location is a very integral part as far as the success of the manufacturing company is concerned and hence the company should carefully decide the plant location as it can be a big factor as far as the success of the company is concerned.