Plant

location
Power point presentation
By-Mrs. Vinesh Khanna
PLANT LOCATION
ESTABLISHMENT OF AN INDUSTRY AT A
PARTICULAR PLACE
IMPORTANCE OF PLANT LOCATION

 LOCATION OF PLANT PARTIALLY DETERMINES

OPERATING AND CAPITAL COSTS.
 EACH PROSPECTIVE LOCATION IMPLIES A
NEW ALLOCATION OF CAPACITY TO
RESPECTIVE MARKET AREA.
 LOCATION FIXES SOME OF THE PHYSICAL
FACTORS OF THE OVERALL PLANT DESIGN eg:
HEATING AND VENTILATION
REQUIREMENTS,STORAGE CAPACITY FOR
RAW MATERIAL TAKING INTO CONSIDERATION
THEIR LOCAL AVAILABILITY,
TRANSPORTATION NEEDS, POWER AND
LABOUR NEEDS, TAXES ETC.
 GOVERNMENT PLAYS AN IMPORTANT ROLE IN
THE CHOICE OF THE LOCATION.
DYNAMIC NATURE OF
PLANT LOCATION
 No location can be considered to be unique and
can remain competitive indefinitely.

 The shift of location to some other place is known

as relocation. The relocation of plant may be
necessary due to following reasons-
 Shift in the structure of the market.
 Changes in the nature and costs and availability of
materials.
 Change in the pricing policy of the enterprise.
 Undesirable labour situation.
 Relocation of various associated industries.
 Scientific discoveries developments ,new fields of
technology ,increasing competition etc.
LOCALISATION
(CENTRALISATION) OF PLANTS

 The propensity of particular industries to cling,

breed and cluster in particular localities are called
localisation of industries.

 Disadvantages of localisation:
 It leads to too many workers at one place making
the atmosphere crowdy and unhealthy.
 It leads to unbalanced development and unequal
distribution of wealth.
 Unsafe in case of war and safety reasons.
 Local population becomes economically dependent
on the industry.
 Market may be over exausted.
DELOCALISATION
(DECENTRALISATION) OF
PLANTS
 Decentralisation is an indication that there are many
good locations for many industries.

 The main reasons responsible for decentralisation

are:
 Development of large national markets.
 Various concessions and incentives in tax, building,
land etc. by urban and rural communities to
encourage establishment of industries in their
areas.
 Many times decentralisation leads to better co-
ordination, improved supply of labour and raw
material and better distribution of products.
 Balanced regional growth.
FACTORS RESPONSIBLE FOR
PLANT LOCATION CHOICE
 The physical factors associated with location of an
enterprise can have a significant impact on on the
operations of the enterprise and its cost structure.
 These factors can be qualitative as well as
quantitative.
 Qualitative factors can be measured in terms of
some qualitative criteria namely adequate, good ,
significant etc. Quantitative factors can be
measured on cost or some other quantitative basis
i.e. labour ,material , housing, land, transport etc.
FACTORS RESPONSIBLE FOR
PLANT LOCATION CHOICES.
A plant should be located at a place where the inhabitants
are interested in its success, the product can be sold
profitably and the production cost is minimum.

According to Dr. Visvesvarirya the decision of plant location

should be based on nine M’s, namely
 MONEY
 MATERIAL
 MANPOWER
 MARKET
 MOTIVE
 MANAGEMENT(POWER)
 MACHINERY
 MEANS OF COMMUNICATION
 MOMENTUM TO AN EARLY START
FACTORS RESPONSIBLE FOR
PLANT LOCATION CHOICES
 In particular the choice of plant location should be based
on following considerations-
 Availability of raw materials
 Nearness to the potential market
 Location should be near the potential market
 Location should be near to the source of operating
requirements.
 Supply of labour
 Transport of communication facilities
 Integration with other group of companies
 Suitability of land and climate
 Availability of housing, other amenities and services
 Local building and planning regulations
 Safety requirements
 Other considerations-future requirements, political factors,
tastes and preferences, loans and grants etc.
SELECTION OF SITE
 Points to be kept in mind for the selection of the site:
 It should be well connected with rail, road and river
transport.
 There should be efficient sewage system for the disposal
of water and waste material.
 The surroundings should be good and peaceful.
 The sub soil should be capable of bearing the load of the
building, plant and equipment.
 There should be sufficient land to meet the present as
well as the future space requirements of the plant and
equipment.
 Space for parking requirements.

An area five times the planned plant area is considered to

be minimum to allow for other facilities required by the
organisation.
Thank you