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The location of an industry is generally determined with reference to the costs of raw material, transport, power land labour so as to secure maximum advantage. Thus when as industrialist wants to find a suitable location for a factory, he has to assess the favorable factors and set them against any disadvantages at the site. The factors which influence location of an industry depend on the type of raw materials used, the processes involved in manufacture, type of labour factors. A combination of several factors decides the location and not a single factor alone. Raw Materials Raw Materials are important factors of location when they are heavy or bulky commodities or of perishable nature. Iron and steel industry in Europe was located close to iron ore mining centers, so as to reduce the cost of transport. The iron and steel plants in the Ural region of Russia are raw material based. Smelting of material ores having low metal content like copper ores, is done near the centre of mining. Manufactures of wood pulp involve use of bulky logs and therefore pulp mills are located near the forests. Pulp mills in Canada and Sweden are raw material based. Food processing industry is located near the centres of raw materials.

For example, sugar mills are located in the areas of sugar cultivation, as sugar content decreases if sugarcane is transported over a long distance. Sugarcane is both bulky and perishable in nature. Fruit canning, meat packing, milk processing are based on raw materials. Industries using lightweight or durable raw materials are not necessarily close to source of raw materials. Secondary industries like petrochemical industries are tied to the oil refineries, which supply the raw materials. In modern times, the importance of raw materials as location factor is reduced owing to development of transport facilities. Japan has iron and steel industry based on import of bulky iron ore from Australia and India.

Power: In the early decades of industrial development, coalfields attracted industries. Most of the old industrial centres in European countries and the United States were located near coalfields. Petroleum, and natural gas are more easily transported by pipelines and the oil fields do not attract industries. The increasing use of electricity for industries has led to dispersal of industries. This is because electricity can be transmitted by high-tension lines up to a distance of even 900 km. Power as a location factor has declined very much except in the case of such industries, which consume large quantities of power. The smelting of aluminium consumes large quantities of electricity and therefore such smelters are located in Canada and Norway in areas, which produce large quantities of cheap hydroelectric power.

Labour: The growth and development of industry is based on technological skill and invention of new processes and organizational and management skill to enable smooth working of the industry. Thus industries need managers, technicians skilled and unskilled workers. The number of workers needed in each category depends on the nature of industry. Labour is not a factor affecting industrial location, as skilled workers are mobile and willing to go to any place for work. Unskilled workers are available in abundance especially in areas having dense population. Labour is however a factor of industrial location in such industries as diamond cutting, match making and jewellery, where highly skilled workers are needed. Diamond-cutting industry in Amsterdam and Surat in India and watch-making industry in Switzerland are examples of labour oriented locations.

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