- Welcome to Educationleaves. In this video, we are going to discuss plant location. Let's start the video.

What is plant location? Plant location is a place where men, money, material, machinery, et cetera are brought together for manufacturing products. A plant should be in a place where the cost of production is kept low in order to gain maximum profit.

Identifying an ideal location is very important, as it determines the cost of getting suitable raw material, processing raw material to finished goods, and distribution goods to customers.

Hardly any location can be ideal and perfect. Decisions regarding selecting a location need a balance of several factors which are affecting plant location. Now we will discuss each factor separately.

Factor number 1-- nearness to raw material. Availability of the raw material near the plant will reduce the cost of transporting raw material from the vendor's end to the plant, especially those plants which consume raw material in bulk or need heavy raw material but loses a good amount of material in processing. Must be located close to the source of raw material.

Number 2-- transport facilities. One point must be kept in mind, that cost of transportation should be small in proportion to the total cost. Depending upon the size of the raw material and finished goods, suitable method of transport, like roads, rail, water, or air is selected and plant location is decided accordingly.

3-- nearness to market. It reduces the cost of transportation as well as chance of finished product getting damaged and spoiled in the way. If the industry is nearer to the market, then it can catch big market share by offering quick services.

Number 4-- availability of the labor. Another important factor which influences the plant location decisions is the availability of labor. The combination of the adequate number of labor with suitable skills and reasonable labor wages can highly benefit the firm. However, labor intensive firms should select the plant location which is nearer to the source of manpower.

5-- availability of fuel and power. Because of the widespread use of electric power, in most cases, fuel has not remained a deciding factor for plant location. Even then, steel industries are located near the source of fuel to reduce fuel transportation costs.

Factor number 6-- availability of water. Water is used for processing, drinking, and sanitary purpose. Depending upon the nature of the plant, water should be available in adequate quantity and proper quality.

7-- climate condition. With the development of heating, ventilating, and air conditioning, climate of the region does not present much problem for many industries. But for industries such as agriculture, leather, and textile, climate is influencing factor. For such industries, extreme humid or dry conditions are not suitable for plant location.

8-- financial factor. In order to attract the investment and large scale industries, various states offer loans, subsidies, benefits, and sales tax exemptions to the new units. So choosing the state is an important factor in order to a new industries.

9-- land. Area, shape of the site, cost, drainage, and other facilities, the probability of floods, chance of earthquakes influence the selection of plant location.

Factor number 10-- presence of related industries. An industry can outsource some of the parts from the related industries near the plant location. It reduces the headache of making every part within the plant.

11-- availability of facilities. Availability of basic facilities such as schools, hospitals, housing, recreation clubs, security, et cetera can motivate the workers to stick to the jobs. Success of industries depends very much on the attitude of its workers. So while selecting the plant location, organization must give preference to other facilities also.

12-- disposal of waste. Disposal of waste is becoming a major problem for industries like chemical, leather, sugar, et cetera. So plant location should have proper provision for this.

These are the factors every industries need to consider while choosing a plant location. I am trying to explain topics such a way you can understand it easily. So please support me by subscribing my channel.

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