MINI, Plant In Oxford, Capital Oxfordshire County, South East England, United Kingdom

Many historians regard Matthew Boulton's Soho Manufactory (established in 1761 in Birmingham) as the first modern factory. (Other claims might be made for John Lombe's silk mill in Derby (1721), or Richard Arkwright's Cromford Mill (1771)—purpose built to fit the equipment it held and taking the material through the various manufacturing processes.) One historian, Jack Weatherford, contends that the first factory was in Potosí, for processing silver ingot slugs into coins, because there was so much silver being mined close by.
British colonies in the late 18th century built factories simply as buildings where a large number of laborers gathered to perform hand labor, usually in textile production. This proved more efficient—for administration and for the distribution of raw materials to individual laborers—than earlier methods of manufacturing such as cottage industries or the putting-out system.
Cotton mills used inventions such as the steam engine and the power loom to pioneer the industrial factory of the 19th century, where precision machine tools and replaceable parts allowed greater efficiency and less waste.
Between 1820 and 1850, the non-mechanized factories supplanted the traditional artisan shops as the predominant form of manufacturing institution. Even though the theory on why and how the non-mechanized factories gradually replaced the small artisan shops is still ambiguous, what is apparent is that the larger-scale factories enjoyed technological gains and advance in efficiency over the small artisan shops. In fact, the larger scale forms of factory establishments were more favorable and advantageous over the small artisan shops in terms of competition for survival.