Manufacturing Industrial Location - Essay Example

Introduction

In today’s business world, every business manager is faced with a significant challenge of making a critical decision on the best location site, a manufacturing plant due to its complex nature. Any business entrepreneur's goal is to situate the business enterprise where it is highly convenient to run its operations, and total expenses are reduced. Nevertheless, a location's choice decision relies on several factors; hence, it is regarded as the multiple steps of decision-making challenges in nature. It is a significant issue related to the planning stage of the manufacturing company. Identifying the best location site is very important, as it should minimize the total costs of production and distribution. The plant location's decision is essential as immediately the business entity is situated at the convenient site; the firm has to endure several benefits and limitations of that particular decision.

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Whereas addressing the location decisions, firms should consider several factors, including labor availability, availability of raw materials, availability of ready market, availability of best transportation means, adequate security, water and electricity availability, government policies, and capital availability, among others (Bartik, 2015). If the plant is situated in a possible satisfactory location site then, it can achieve its intended business goals smoothly at long last. Conversely, opting for the business's poor location does not offer the expected outcomes due to the unavailability of some essential factors such as raw materials, strict government policies, and inadequate labor, among others (Walker & Calzonetti, 2019). Therefore, choosing a location site for the manufacturing plant requires a balance and consideration of several factors.

Availability of Raw Materials

The availability of raw materials in the location site is one of the significant determinants of a firm's location site strategy (Walker & Calzonetti, 2019). Most firms that significantly minimize the bulk of the raw materials during the production process reduce their total expenses by locating near the source of raw materials.

Labor Availability

The availability of both skilled and unskilled labor is essential for the labor-oriented manufacturing firm. Most firms tend to locate in areas with low workforce and easy accessibility of skilled and unskilled labor to minimize production costs (Bartik, 2015). Therefore, before deciding on the industry's location site, they must consider various determinants, including wages, laborer attitude, and turnover rate, absenteeism, and competition level from the area's rivals.

Adequate Transportation Networks

Most manufacturing firms choose to locate in an area where the cost of transporting raw materials and products are reduced (Walker & Calzonetti, 2019). Hence, when selecting a location area for the business operation, organizations consider the availability of road networks, rail tracks, air transportation services, trucking services, and water transportation means.

Other Determinants of Location Site

Other determinants of the location site decision include the availability of utilities, good infrastructure, personal choices, tax incentives, government policies and industrial clusters, land availability for expansion, and security in the location site (Yoon & Hwang, 2016).

Conclusion

To conclude, the firm's decision to choose the best location site is crucial for the organization as they opt for the good results in return. The manufacturing firms must consider several factors before making the final decision on the location chosen to construct a plant. Factors such as labor, raw material, labor availability, among other factors, must be considered in their decision on the selection of the location site for the proper business operations.

References

Bartik, T. J. (2015). Business location decisions in the United States: Estimates of the effects of unionization, taxes, and other characteristics of states. Journal of Business & Economic Statistics, 3(1), 14-22.

Walker, R., & Calzonetti, F. (2019). Searching for new manufacturing plant locations: a study of location decisions in Central Appalachia. Regional Studies, 24(1), 15-30.

Yoon, K., & Hwang, C. L. (2016). Manufacturing plant location analysis by multiple attribute decision making: Part I—single-plant strategy. International Journal of Production Research, 23(2), 345-359.