Plant Location

Plant - Non-current physical asset applicable to manufacturing activities. Disadvantages of Relocating: Very costly A plant once relocated may find itself, after a few years, cramped or incurring high shipping cost Some communities are hostile to all types of business and use local zoning powers to prevent firm from locating within their borders. The Proper Plant Location A manufacturing organization should seek the best possible location to minimize operating cost. Ideal Location: close to its market and suppliers Have enough skilled workers Enjoy good union relations Have minimum transportation cost. It should be in a community where employees would like to live. Properly zoned and with room for parking and future expansion. ACCESSIBILITY: Streets should be wide and of high quality Adequate public transportation to and from the plant must be accessible. Transportation and Sources of Raw Materials The determination of optimum location based on transportation involves: Consideration of relative importance of transport costs to the total costs References to different costs of alternative methods of transport and variations of rates for different types of materials Considerations of dangers of overdependence upon one source of raw materials or market.

Chapter 8

Market Pull and Marketing Strategies Personal and local contacts with customers and competitors are often suggested by executives as important reasons for locating near the market. For certain distributive industries, location in relation to a competitors location is of paramount importance. Industrial Concentration - concentration of industry within a particular area. Geographical Association: Vertical Association Horizontal or Lateral Association Diagonal Association Advantages & Disadvantages of locating near a Concentration of Industries Advantages: Proximity to market Reduction of transport cost Availability of labor possessing special skills Prestige of location Contact with customers & competitors Knowledge of technical developments Excellent transportation links, the presence of largest ports, & its being the center of fashion, politics, amenities of life Educational facilities Stimulation & motivation to entrepreneurs & executives Availability of specialists, services for banking insurance, and maintenance Page 1 of 3

Disadvantages: Lack of space Premises that are difficult & costly to apply Shortage of labor, high wage rates, & high staff turnover Loss of time & frustration through street & traffic congestion An adverse effect on efficiency & output Disadvantages of competition for everything- market, labor, services, materials and capital Possibility of more militant labor force & sympathy strikes with employees engaged in the same industry locally Provision for Business Growth Labor Availability and Cost Availability of Water and Power Entrepreneurial and Executive Personnel Preference Management and Technical Staff The Sequences of Choices Region Community Specific Site Regional Selection Closeness to ones market Easy access to vendors Adequacy of transportation Regional concentration of skilled labor Availability of sufficient electric power, water, & fuels Existence of regional wage rate differences Satisfactory climatic condition Political stability Regional population, wealth, and income

Industrial and labor attitudes Character of industry already in the community Restrictive legislation and taxes Power, water supply, and sewage disposal Adequacy of police and fire protection Living conditions in the community Population and population growth Community income and purchasing power

Site Selection a preliminary estimate of the building floor must be made. Large enough to accommodate present floor space requirement; expansion; employee-parking space; transportation facilities for receipt and shipment of material; extra space for trucks and rail cars, etc. The main factors involved in the choice of a site are as follows: 1. Technical Requirements 2. Capital Cost 3. Cost of Development 4. Industrial and other neighbors 5. Plot of Land 6. Transportation Facilities 7. Zoning 8. Proximity to police stations, fire stations, and hospitals 9. Adequacy of water and power supply at the chosen site, and adequacy of communications and other services. 10. Proximity to employees facilities. Cities Versus Suburbs
[Dictionary.com]

Cities a large or important town. Suburbs a district lying immediately outside a city or town, especially a smaller residential community; an outlaying part. (ex. San Juan, Quezon, Marikina, Las Pinas)

Community Selection Adequacy of labor supply Prevailing wage scale

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City Zoning Ordinances In the past, zoning restrictions were used exclusively to prevent the degradation of residential and light commercial areas. Although in theory this may seem to work, in practice many forces have weakened the system. Ecology A serious problem brought about by industrial progress is pollution air, water, or any pollution occurring in the environment. INDUSTRIAL ESTATE Industrial Estates are becoming popular. One such estate is the Bataan Export Processing Zone Authority (EPZA or BEPZA)

IMPERATIVES OF RELOCATION Businesses consider relocating their operations for reasons usually associated with business growth. Reasons for business relocation are: 1. Technological Change 2. Optimum Size 3. Release of Capital 4. Strategic Reasons Alternatives for relocation: 1. Reorganization 2. Rationalization of products 3. Other alternatives

Submitted to: The Bataan Export Processing Zone Authority is a government agency of the Republic of the Philippines in charge with the management of Bataan Export Processing Zone, an economic zone located in Mariveles, Bataan. [Wikipedia] According to the 2000 census, it has a population of 85,779 people in 19,460 households. Area: 1600 hectares 900 hectares Industrial purposes 300 hectares low-cost housing 400 hectares green area Location in the Zone provides many benefits. Among them are: 1. 2. 3. 4. 5. 6. 7. 8. Tax Benefits Foreign Exchange and Financing Labor and Manpower Low Cost Housing for Zone Workers Foreign Investors and Technicians Guarantee on Foreign Investments Simplified Administrative Methods Included Facilities Available Dean Marcelina Perez

Reference: Production Management by Esdras Martinez Wikipedia Google

Reported and Prepared by: Beloy, Elizandra Isabel B. Chamian, Maria Alita Oclarino, Lorenza A. ^_____________^

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