When a factory is newly started, the organizer has to determine its locality. To arrive at the right decision, he should obtain full knowledge of the places where that industry is localized. After a careful consideration of the relative advantages of the various places where the point of view of availability of raw materials, skilled labour, Good markets, means of communication and transport and so forth he should locate the industry at the most favorable site. The correctness of this decision is very important and determines, to a large extent.

Causes of localization: It is interesting to investigate into the causes, which attracts organizer to the same place. The most important of such causes are mentioned below:

• Availability of power: The most important cause of the localization of industry is the availability of power. Industry should establish in those areas where power for that production may available.

• Availability of raw material: Raw materials are important ingredients of manufacturing. The regions where raw materials are available mostly become the centers of industries. For example; lumbering industry must be localized where forest are to be found.

• Climate: Climates help in the growth of industries in as much as it determines the conditions of work. Extremes of the temperature are not suited top hard work. The regions with temperature climate are therefore, important for localization of industries. In certain cases, the climate requires as special importance as in the case of cotton textile industry. The industry require moist climate so that fine thread could be spun out of cotton. If climate is dry, the thread soon become dry and breaks.

• Availability of skilled labour: The origin and persistence of localization is sometimes the result of availability of skilled labour. The glass bangles manufacturing industry of Pakistan is localized at Hyderabad not because it is near to sources of raw material but simply because skilled labour is available here.

• The movement of an early start: Sometimes a place where an industry get an early start begins to enjoy so many advantage s with respect to industry that ultimately its get localized there. New entrants into business find it economical and profitable to set up a factory at the old place rather at anew place.

• Nearness to market: Product have to be transported to the market for sale, the nearness of the market saves the cost of transport.

• Availability of means of transport and communication: The disadvantage of distant market is reduced if cheap, quick and easy means of transport and communication are available.

• Accessibility of market: Markets should not only exits in the geographical sense but should also be available in the economic sense. The accessibility of markets implies that the purchases in those markets should have the demand for goods. The competition therein should not be prohibitive, there should not exist very high import and export or duties, which check the movements of goods.

• Miscellaneous causes: There are various miscellaneous considerations, which favour the localisation of industries, are water for factory use and cheap land.

Advantage of localisation:

• Growth of skill: When in industry is localized in a particular place, the laborer of that place acquires special skills in that industry. The skill once acquired becomes hereditary and is passed on from father to son.

• Growth of local market for skill: Localisation gives rise to local market for the particular kind ok skilled labor, An organizer of a few factory in that line can find skilled labor in that market, while the labors skilled in that line can hope to find employment there. Not only does labor become specialized but specialized machinery also makes its appearance.

• Reputation or good will: When a industry is localized in a particular place, the product of that place earn a reputation or good will for themselves, so that the article manufactured there find a ready market.

• Growth or subsidiary industries: Near 6he industry center many subsidiary industries tend to grow. Thus the iron and steel industry generally leads to establishment of cement industry b/c the slag, which is the waste product of the iron and steel factory, happens to be raw material of the cement industry.

• Growth of supplementary industries: Localization of industries also lead to the development of supplementary industries which provide to the women and the children.

• Growth of machinery of commerce: An industry center becomes a bee-hire of commerce. Huge quantities of the products are sent out regularly. Therefore its needs means of communication and transport, banking, organization and capital market.