GREEN FIELD PLANT /FACTORY LOCATION PLANNING

1 The general objective in choosing a location is to select that site or combination of sites that minimizes two classes or costs – regional and distribution or sites that minimizes two classes or costs – regional and distribution costs.

Regional costs are those associated with a given locate and include land, construction, manpower, and state and local expenses and regulations.

Distribution costs are those directly related to the shipping of supplies and products to customers and other branches of the distribution network.

2 LOCATIONAL FLEXIBILITY

Availability of Raw Material

Nearness to Markets

Transport Facilities

Availability of Labour

Availability of Fuel and Power

Climate

Water Availability

Government Policies

Land

Community Attitude

The presence of related industries

Housing facilities

Security

Local by-laws, taxes, building restrictions

Existence of other service facilities like hospital marketing centres, schools, banks, post offices, clubs.

3 COST FACTOR

In plant location, apart from the availability of technology, etc. the major deciding factor will be the cost of the final product. The ideal plant location is the one which results in lowest cost of production and distribution of the items in the market. For some production facilities, the basic necessity itself may be that it has to be located nearer to the market, that is, the facility has to be created in the urban area.