37

Nature and Characteristics of Factories

37.1 Introduction
The factory system of production is the outcome of industrial revolution
in England during the last quarter of the eighteenth-century. Changes
in the methods of agricultural and industrial production, transport and
communications, overtime led to commercial orientation of society world
wide with emphasis on production of goods and services for market,
and not for self consumption, exchange of goods and services for money,
existence of profit motive, specialisation and division of labour, and
marketing activities in terms of buying, selling, and risk bearing. The
growth of capitalist enterprise in India started with mining and plantation,
followed by manufacturing industries. It was the factory system of
production which brought about a gradual development of the organised
sector of manufacturing industries in India.

37.2 Objectives
After studying this lesson, you will be able to :

explain the meaning of the term factory;

describe the characteristics of factory organisation;

familiarise yourself with important terms used in connection with

factories e.g., manufacturing process, occupier of the factory,
workers etc; and

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describe the factors that led to the development of factory system

in India.

37.3 Meaning and characteristics of Factory

Let us first take the meaning of the term factory and describe the
characteristics of the factory system.
The term factory is defined to mean any premises
i)

Wherein ten or more workers are working, or were working on

any day of the preceding twelve months, and in any part of
which a manufacturing process is being carried on with the aid
of power.

ii)

Wherein twenty or more workers are working, or were working

on any day of the preceding twelve months, and in any part of
which a manufacturing process is being carried on without the
aid of power.

From the above definition, the characteristics of a factory may be

stated to be as follows:
a)

factory is a premises:

b)

in such a premises, or in any of its part, workers are engaged in

a manufacturing process; and

c)

ten or more workers are working with the aid of power or twenty
or more workers are working without the aid of power. In other
words the minimum number of workers must be ten in case
power is used to carry out manufacturing process and it must be
twenty if power is not used, for the premises to be a factory.

A premises would be called factory when the characteristics mentioned

above are fulfilled. The legal meaning of the term factory does not
include a kitchen, or the activity of showing movie films. But a
restaurant can be considered as a factory, when the characteristics
mentioned above are fulfilled. Railway workshops come within the
meaning of factory, but Railway running shed, does not.
To regulate the working of factories, the Government of India passed

Nature and Characteristics of Factories :: 3

a legislation which is the Factories Act, 1948. It is under this law that
the conditions of work in factories, are regulated. It coveres different
aspects of labour welfare, conditions of work, safety measures in the
work place, etc.

Intext Questions 37.1

1A

1.B

Fill in the blanks with suitable words:

i)

_________ is the result of industrial revolution in England;

ii)

It was the -_________ which led to the development of

Indian industries.

iii)

The development of organised sector of manufacturing

industries in India followed _________ .

iv)

In order to regulate the growth of factories in India, the

Govt. of India enacted a legislation known as the
_________ .

v)

Commercial orientation with emphasis on production of

goods and services, profit motive, specialisation and
division of labour and activities in terms of buying, selling,
and risk bearing is the result of the _________ in India.

State whether the following statements are True or False.

i)

In a factory, work may be done without a manufacturing

process.

ii)

Workers in the factory are not engaged in a manufacturing

process.

iii)

A factory may exist without the use of power.

iv)

The minimum number of workers in a factory with power

is twenty.

v)

A mine is a factory.

vi)

Railways running sheds are not factories.

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37.4 Factory Organisation and its characteristics

Organisation of a factory is based on the same principles that we have
studied in the modules on management of the business. The chief of
the factory is known as the occupier of the factory. He may be
designated as Factory Manager/Works Manager or even as General
Manager of the factory. Under him, there are heads of the various
workshops/sections in the factory. The foreman of the factory is the
person who maintains contact with the workers engaged in the
manufacturing process on the one hand, and with the managerial staff
on the other. Such an organisation of the factory is based on the
principles of division of labour, unity of command, and direction,
authorityresponsibility relationship, delegation of authority and the
like. The other aspects of factory organisation are concerned with
activities which help in the production of goods. These include finance,
marketing, personnel and other activities. The organisation of such
activities are also based on the same principles.

Factory System
The factory system has given rise to a new system of production which
is characterised by large size and complexity in various respects. The
workers now work in large factories located not in the homes of
workmen, but in buildings constructed for the purpose in the cities and
towns. The scale of production is enlarged and the products cater to
the needs and tastes of consumers within and outside the country. The
old machines and tools are replaced by modern and sophisticated
machines driven by power to produce standardised products. For largescale production with specialised machines, large amount of capital is
needed. Capital thus becomes the dominating factor of production, and
the supplier of capital owns industrial unit. He is known as
entrepreneur. The most important features of the factory system are
outlined below:

a)

Mass production :
Factories in modern times are engaged in production for markets
much wider than those served under the old domestic system.
Production of goods on a mass scale is, therefore, the first
distinctive feature of the modern factory system.

Nature and Characteristics of Factories :: 5

b)

Mechanisation:
Mass production of goods has necessitated the use of costly
machines with high degree of efficiency and precision.
Employment of machinery has reduced the workers position to
that of a mere operator. His manual skill has less significance
now.

c)

Standardisation:
The employment of expensive machinery for mass production
has naturally led to the standardisation of products. The products
no longer bear the stamp of the workers personal attention and
artistic talents. All products of a particular variety or lot are now
identical and inter-changeable because they are produced with
highly specialised and accurate machines.

d)

Aggregation:
Aggregation refers to the increase in the size of industrial
establishments, and the concentration of industrial power. Mass
production of standardised, machine-made goods necessitated an
increase in the size of the premises, and the staff of the industrial
establishments. Besides, the ownership of industrial units passed
on to large and powerful joint stock companies which collect
their capital from a large number of people, rather than an
individual or a few partners. Later on, the industrial world came
to be controlled by powerful groups of large and small companies.

e)

Changes in the industrial scene:

Changes in the size of markets and the complex consumer needs,
led to increase in the scale of business operations. Large scale
business is the order of the day. Technology has started playing
a significant role. It has become so complicated that only qualified
people can handle it. People have to be employed in such large
numbers in the factories that only trained people can handle
their recruitment and management. Finance and marketing
functions equally have become complicated. Only competent
people can handle it. Workers have also got organised themselves

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into unions to protect their interest against managementgiving

rise to industrial disputes which also require careful handling. In
view of its welfare responsibility, the state has also started
interfering in economic activities. All these have made business
and its management a highly technical, specialised and
complicated activity. Management of business is fast becoming a
professional job. It calls for expertise, knowhow and skills
guided by the responsibilities of the business enterprise to the
owners, government, and society at large.

Important words used in connection with factories

Some of the terms used in connection with factories are explained
below:
1.

Manufacturing process It means any process used for

a)

making, altering, repairing, ornamenting, finishing, packing,

oiling, washing, cleaning, breaking up, demolishing, or
otherwise treating or adapting any article or substance with
a view to its use, sale, transport, delivery or disposal, or

b)

pumping oil, water or sewage, or

c)

generating, transforming, or transmitting power, or

d)

composing types for printing, printing by letter process,

lithography, photogravure or other similar process or book
binding.

e)

constructing, reconstructing, refitting, finishing, or breaking

up ships or vessels.

Thus to produce a product, there must be transformation, and

use of a process to change the character of the raw materials
i.e., the article to become commercially different from its original
character. For example, bidi making is a manufacturing process,
so is making computers.
2.

Occupier Occupier of a factory means the person who has

ultimate control over the affair of the factory. Where the factory

Nature and Characteristics of Factories :: 7

work is entrusted to a Manager or similar such person, such

person is deemed to be the occupier of the factory.
Occupier of a factory may be a firm or association of individuals.
A person may occupy factory either himself or through his agent.
The occupier of the factory has the right to occupy the property
and dictate the nature of management. He needs not be only its
proprietor, or be in possession of it, but may also control its
working. The occupier is not merely a servant entrusted with
specific duties in regard to the control of the machinery, workmen
or office.
3.

Workers Worker means a person employed directly or through

an agency, whether for wages or not in any manufacturing process.
There needs to be a contractual relation between employer and
the employee to fall within the meaning of the term worker.
Thus, whether a particular person is a worker depends on the
terms of contract between him and the employer. Persons coming
and working at their sweet will in the factory are not workers
within the meaning of the term workers. But the term worker
does not include an independent contractor or his coolies or
servants who are not under the control and supervision of
employers. If an employer has no control over the work done by
employees, they are not workers. Payment of wages is not an
essential condition to categorise a person within the definition of
workers. What needs to be established is his employment in the
manufacturing process.

4.

Power Power means electrical energy or any other form of

energy which is mechanically transmitted and is not generated
by human or animal agency.

5.

Machinery The term machinery includes prime movers,

transmission machinery, and all other appliances whereby power
is generated, transformed, transmitted or applied.

6.

Establishment Establishment means a place permanently used

for business with necessary equipment; or any office or place of
business. Establishment is a far wider term than factory which
has a special legal connotation and meaning.

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Intext Questions 37.2

1.

Fill in the blanks by appropriate expression, as per instructions

given in the bracket.
i)
The factory system of production is characterised by
__________ (mention two characterics of factory system)
ii)
Aggregation refers to __________ (mention two
characteristics)
iii)
Occupier of the factory is a person who __________
over the affairs of the factory . (Fill in the right expression)
iv)
The __________ of the factory is the person who
maintains contact with the workers, on the one hand and with
the managerial staff, on the other. (Fill in the right expression)
v)
Factory organisation is based on the principles of
__________ (mention any three principles of factory
organisation)

2.

State which of the following statements are true or false:

i)

Factory system has simplified the character of business.

(True/False)

ii)

In the factory system, the significance of workers manual

skill has increased.
(True/False)

iii)

Factory system of production caters to the needs of

selected people in society.
(True/False)

iv)

Manufacturing process results in changing the character

of the article from which it began its existence.
(True/False)

v)

Only an individual can be the occupier of the factory.

(True/False)

Nature and Characteristics of Factories :: 9

vi)

In order to be a worker, one must receive wages.

(True/False)

vii)

Power means only electrical energy.

viii)

An establishment is something more than a factory

(True/False)

(True/False)

37.5 Factors responsible for development of factories

in India
The industrial revolution in England was the main factor that led to
development of factory system in India. The impact of the British
rule, which was capitalist in nature based on private ownership of
property, production of goods for markets and not for self consumption,
large scale enterprises, profit motive, exchange of goods and services
for money, specialisation, division of labour and marketing activities of
buying, selling risk bearing etc. contributed to the development of
factories in India. The orientation towards Market Economy as
different from subsitance economy (as prevailed in villages during
18th century in India in which there was limited exchange of goods
within the villages and with the outside world) contributed to the growth
of factory system in India. The trend towards market economy, and the
emergence and growth of capitalist enterprises led to the establishment
of factories in India.
The modern means of transport and communication introduced by the
British was found to be another important factor that contributed to the
growth of factories in India. It resulted in expansion of markets. This
brought an end to the self sufficiency and isolation of the villages.
Cheap factory products from the west poured into the villages with the
growth of transport facilities, and later factories were started in Indian
cities.
Village industry could not compete with such a trend. It suffered from
certain defects like traditional methods of production, lack of
specialisation etc, which contributed to its decay. The income of village

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artisans fell and they were compelled to migrate to cities and towns.
Such migration led to concentration of a certain class of artisans like
weavers, dyers, gold smiths etc in cities and towns. They came to use
mill made materials. There was a change in their outlook. All these
contributed to the growth of factories in India with emphasis on
production for markets, profit motive, specialisation and division of
labour.
But it must be noted that with all the foresight and enterprise shown
by entrepreneurs in India in introducing the factory system of production,
the early growth of factories in India was very slow. The growth of
factories in India after independence was the result of planned effort,
under successive five year plans. The industrial policy of the country
with its emphasis on establishment not only of capital / producers
goods industries but also of consumer goods played a significant role.
From all accounts, the government made a determined effort to
industrialise the economy at as rapid a pace as possible. At the same
time small scale units using simple tools and machinery co-exist with
the large scale factory establishment. It is encouraging to note that
many small scale establishments have adopted a more enlightened and
progressive attitude with regard to the use of power driven machinery.

Intext Question 37.3

State whether the following statements are true or false:
(i)

Market economy is the same thing as the subsitence economy.

(ii) Village industries were competing well with factory industries

during mid-eighteenth century in India.
(iii) The growth of factories in India after independence was the
result of planned efforts during five year plans in the country.

Nature and Characteristics of Factories :: 11

37.6 What you have learnt

The existence of factory system was the outcome of industrial

revolution. Commercial orientation with emphasis on production
of goods and services for market, profit motive, specialisation
and division of labour and marketing activities of buying, selling
and risk bearing gave rise to the factory system in India.

A factory is defined as a premises wherein ten or more workers

work in any manufacturing process with the aid of power, or
twenty or more workers without the aid of power.

The factories Act, 1948 regulates the working of factories in

India.

The important features of a factory are mass production,

mechanisation, division of labour, standardidation and consequent
changes in the industrial scene.

37.7 Terminal Exercise

1.

Explain the meaning of the term factory. Also describe the

characteristics of factory system of production.

2.

Explain the factors responsible for the growth of factories in

India.

3.

On what principles would you organise a factory? Describe. Are

these different from the principles of management and
organisation?

4.

What are the changes brought about by the factory system of

production in the industrial scene? Are these desirable? Explain.

5.

Write short notes on

a)

Manufacturing process;

b)

Occupier;

c)

Workers; and

d)

Establishments.

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37.8 Answer to Intext Questions

37.1 1A.

1B.

37.2 1.

2.

37.3

i)

Factory system

ii)

Factory industry

iii)

Factory system

iv)

Factories Act, 1948

v)

Factory system

i)

False

ii)

False

iii)

True

iv)

False

v)

True

i)

Any two characteristics e.g., Mass production;

and Mechanisation

ii)

Any two characteristics e.g., increase in size of

industrial establishment; and concentration of
industrial power.

iii)

Ultimate control

iv)

Foreman

v)

Divison of labour, unity of command, and authority,

responsibility relationship.

i)

False

ii)

False

iii)

False

iv)

True

v)

False

vi)

False

vii)

False

viii)

True

i)

False

ii)

False

iii)

True