Factory system

The factory system is a method of manufacturing using machinery and division of labour. Because of the high capital cost of machinery and factory buildings, factories are typically owned by capitalists who employ the operative labour. Use of machinery with the division of labor reduced the required skill level of workers and also increased the output per worker.

The factory system was first adopted in Britain at the beginning of the Industrial Revolution in the late 18th century and later spread around the world. It replaced the putting-out system. The main characteristic of the factory system is the use of machinery, originally powered by water or steam and later by electricity. Other characteristics of the system mostly derive from the use of machinery or economies of scale, the centralization of factories, and standardization of interchangeable parts.

The defining characteristics of the factory system are:

Workers were paid either daily wages or for piece work, either in the form of money or some combination of money, housing, meals and goods from a company store (the truck system). Piece work presented accounting difficulties, especially as volumes increased and workers did a narrower scope of work on each piece. Piece work went out of favor with the advent of the production line, which was designed on standard times for each operation in the sequence, and workers had to keep up with the work flow.

One of the earliest factories was John Lombe's water-powered silk mill at Derby, operational by 1721. By 1746, an integrated brass mill was working at Warmley near Bristol. Raw material went in at one end, was smelted into brass and was turned into pans, pins, wire, and other goods. Housing was provided for workers on site. Josiah Wedgwood in Staffordshire and Matthew Boulton at his Soho Manufactory were other prominent early industrialists, who employed the factory system.

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