Factory system

The factory system is a method of manufacturing using machinery and division of labor. Because of the high capital cost of machinery and factory buildings, factories are typically privately owned by wealthy individuals or corporations who employ the operative labor. 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 by successive entrepreneurs in Britain at the beginning of the Industrial Revolution in the late-eighteenth century and later spread around the world. It replaced the putting-out system (domestic 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.