Factory system

The manufacture of items for sale is widespread and is a core element of the global economy. The factory system is an approach to manufacturing that has been central since the eighteenth century. In the centuries since the factory system’s introduction, it has employed millions of people in industrialized countries and produced a high volume of goods.

Prior to the introduction of the factory system, many goods were manufactured by individual craftspeople who made complete products from beginning to end in a home-based shop. Another approach was the putting-out system, in which work was subcontracted out to individual craftspeople or to small workshops. These systems, though widespread, were limited in scale, as an individual artisan or small workshop could produce only so many of an item within a given time frame. The effort to address those challenges led to the development and institution of the factory system, which allowed goods to be produced en masse and, in many cases, at a lower per-item cost.

Background

In the centuries preceding the development of the factory system, craftspeople were accustomed to working in their own personal shops or in shared facilities near their homes, where they worked with a small number of other craftspeople. However, this system was greatly affected by the new machines introduced during the Industrial Revolution (1760-1840). Such machines, which included steam engines, mechanized looms, and other useful tools, were purchased in substantial quantities by companies, who used them to produce goods en masse. Mass-produced goods could be sold at a lower per-item price than those made by individual craftspeople in home-based workshops.

As a result, the craftspeople whose lifestyles were based on making goods at home found themselves priced out of the market they had depended on. Out of financial necessity, many went to work in the factories that were producing goods with the aid of machines. The work-life balance for many families radically changed, and the factory system was born.

Factories needed to be close to resources such as water and distribution channels that would enable goods to be transported to as many markets as possible. This often meant that having one large, centralized factory was better for business owners than having several smaller ones. Because of this centralization, workers were often required to travel to large factories far from their hometowns and live in dormitories, boardinghouses, or other low-quality housing. Their transportation was facilitated by railroads, which became more common as industrialization continued.

Overview

The factory system’s chief appeal to business owners was based on economies of scale, which refers to the ability to produce a greater volume of goods at a lesser cost per unit to the manufacturer. This allows a company to be more competitive by selling the goods it produces for lower prices while retaining high-profit margins due to lower costs. It also allows a company to fill larger orders due to the sheer volume of goods that can be produced, guaranteeing that consumer demand can be met. This rationale for the continued existence of the factory system remained just as central in the early twenty-first century as it was centuries before.

One key element of the factory system is the division of labor. Earlier systems of manufacturing goods required a skilled craftsperson to oversee the process from beginning to end; the factory system, however, typically produces goods on a step-by-step basis, with different workers carrying out different steps. This allows for the use of unskilled labor, since workers often need to perform only one step in the process. In such a system, unskilled laborers are, at times, considered interchangeable, and employers can easily replace workers if they do not meet certain requirements.

This interchangeability of workers is paralleled by the interchangeability of parts and products. The machines for any given stage of the process are identical and can use interchangeable parts. Companies typically keep supplies of those parts on hand so that any mechanical needs can quickly be addressed and production can continue. This standardization of manufacturing equipment and processes allows manufacturers to ensure that each product is uniformly made, with the same size, shape, components, and function as every other copy of that product.

Prior to the factory system, individual home-based craftspeople could set their own wages according to how much they could get for their products. They were in control of their own earnings, based on the dynamic between their skill in creating products and the demand for those products. With the factory system, this changed dramatically. In factories, employers could pay the workers per hour, per day, or per piece. If the workers felt that they could be easily replaced due to the unskilled nature of their work, they would often accept lower pay. This allowed further maximization of manufacturers’ profit margins, albeit at the workers’ expense.

This dynamic remains a key issue for many twenty-first-century labor activists. Employers still aim to minimize labor costs by paying workers the least that they can. In some cases, this led companies to pay less than they are legally required to or to outsource some work to countries where pay levels are lower. While legal, outsourcing is a controversial element of the factory system. Many large corporations outsource their factories to developing nations to benefit from the low cost of labor and materials. However, in some cases, this results in companies paying factory workers $2 to $5 or less per hour without the added cost of employee benefits like health insurance, which would be required in the US. Other issues have also been highlighted by labor activists, including the use of child labor, poor working conditions, and the unequal distribution of pollution that factories create when they are concentrated in specific regions.

Some critics of the factory system also question whether the uniformity of goods makes them less desirable. For that reason, there has been a renewal of interest in handmade goods produced by individual craftspeople, just as they were before the introduction of mechanization. Nevertheless, the economies of scale that can be achieved with the factory system are a necessary component of many businesses’ operations.

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