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 reasonsShift 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.

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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.

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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 coordination, improved supply of labour and raw material and better distribution of products. Balanced regional growth.

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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
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In particular the choice of plant location should be based on following considerationsAvailability 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
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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.

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