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Method of manufacturing using machinery and division of labor

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.

In Ancient Sumer around 3000 BC, the Ancient Mesopotamian economy began to develop a version of the factory system that also featured the division of labor.

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. Other prominent early industrialists who adopted the factory system included Josiah Wedgwood (1730 1795) in Staffordshire and Matthew Boulton (1728 1809) at his Soho Manufactory (1766 1848).

The factory system began widespread use somewhat later when cotton spinning was mechanized by a series of inventors. The first use of an integrated system, where cotton came in and was spun, bleached, dyed and woven into finished cloth, was at mills in Waltham and Lowell, Massachusetts. These became known as Lowell Mills and the Waltham Lowell system. The Nasmyth, Gaskell and Company's Bridgewater Foundry, which began operation in 1836, was one of the earliest factories to use modern materials handling such as cranes and rail tracks through the buildings for handling heavy items.

Richard Arkwright (1732 1792) is the person credited by some with being the brains behind the growth of factories and the Derwent Valley Mills. After he patented his water frame in 1769, he established Cromford Mill, in Derbyshire, England. The factory system was a new way of organizing labour made necessary by the development of machines which were too large to house in a worker's cottage. Working hours were as long as they had been for the farmer, that is, from dawn to dusk, six days per week.

An early instance of transition from skilled craftsmen to machine tools began in the late eighteenth century. In 1774, John Wilkinson invented a method for boring cannon barrels that were straight and true every time. He adapted this method to bore piston cylinders in the steam engines of James Watt. This boring machine has been called the first machine tool. Mass production using interchangeable parts was first achieved in 1803 by Marc Isambard Brunel in cooperation with Henry Maudslay and Simon Goodrich, under the management of (with contributions by) Brigadier General Sir Samuel Bentham, the Inspector General of Naval Works at Portsmouth Block Mills at Portsmouth Dockyard, for the British Royal Navy during the Napoleonic Wars. By 1808 annual production had reached 130,000 sailing blocks. This method of working did not catch on in general manufacturing in Britain for many decades, and when it did it was imported from America, becoming known as the American system of manufacturing, even though it had originated in England.

Much manufacturing in the 18th century was carried out in homes under the domestic or putting out system, especially the weaving of cloth and the spinning of thread and yarn, often with just a single loom or spinning wheel. As these devices were mechanized, machine made goods were able to underprice the cottagers, leaving them unable to earn enough to make their effort worthwhile. Other products such as nails had long been produced in factory workshops, increasingly diversified using the division of labour to increase the efficiency of the system. Factory workers typically lived within walking distance to work until the introduction of bicycles and electric street railways in the 1890s. Thus the factory system was partly responsible for the rise of urban living, as large numbers of workers migrated into the towns in search of employment in the factories. Many mills had to provide dormitories for workers, especially for girls and women. The transition to industrialisation was not without difficulty. For example, a group of English workers known as Luddites formed in the 1810s to protest against industrialisation and sometimes sabotaged factories. They continued an already established tradition of workers opposing labour saving machinery. Numerous inventors in the textile industry such as John Kay and Samuel Crompton (1753 1827), suffered harassment when developing their machines or devices. In other industries the transition to factory production was not so divisive. Until the late nineteenth century it was common to work 12 hours a day, six days a week in most factories; however long hours were also common outside factories. Debate arose concerning the morality of the system, as workers complained about unfair working conditions prior to the passage of labour laws. One of the problems was women's labour; in many cases women were paid not much more than a quarter of what men made. Child labour also became a major part of the system. However, in the early nineteenth century, education was not compulsory and in many families having children work was necessary due to low incomes (Samuel Slater (1768 1835) employed children but was required to provide basic education). Children commonly did farm labour and produced goods for the household. Besides working in factories, children worked in mines. Automation in the late 19th century is credited with displacing child labour, with the automatic glass bottle blowing machine (c.  1890) cited by some as an example, having been said to have done more to end child labour than child labour laws. Years of schooling began to increase sharply from the end of the nineteenth century. Some industrialists themselves tried to improve factory and living conditions for their workers. One of the earliest such reformers, Robert Owen (1771 1858), became known for his pioneering efforts in improving conditions for workers at the New Lanark mills, and is often regarded as one of the key thinkers of the early socialist movement. Karl Marx worried that the capitalist system would eventually lead to wages only sufficient for subsistence due to the tendency of the rate of profit to fall. Subsistence wages were indeed the case in parts of England. The British Agricultural Revolution had been reducing the need for labour on farms for over a century and farm workers were forced to sell their labour wherever they could. Conditions became particularly bad during the depression years of the late 1830s to early 1840s. The depression was immediately followed by the Irish famine of 1845–1850, which brought large numbers of Irish immigrants to seek work in the English and American factories. One of the best known accounts of factory workers’ living conditions during the Industrial Revolution is Friedrich Engels' The Condition of the Working Class in England in 1844. By the late 1880s, Engels noted that the extreme poverty and lack of sanitation he wrote about in 1844 had largely disappeared.