EU4 Advanced Economics 4. Manufactories

What provinces should you develop? What buildings should you build? Are Manufactories overrated? Should you get a loan or debase currency? These questions are answered over a series of guides. For players looking for nothing less than mathematical precision in their EU4 economy management.

Introduction

Manufactory is a controversial topic within the EU4 community. The +1 Goods Produced modifier is definitely powerful because it affects both Production and Trade income, but is it worth the hefty cost of $500? This is what I will investigate in this guide.

Manufactories unlock at various Technology levels. Furnaces are the last to unlock, at Admin Technology 21. Since Furnaces function differently from the other types of Manufactories, I will discuss them separately at the bottom of this guide. Barring Furnaces, Mills are the last Manufactories to unlock, at Admin Technology 16 (Year 1609).


Manufactories cost $500 and boost Goods Produced by +1 before any Goods Produced modifiers are applied. This means a boost in provincial Trade Value, which in turn boosts both Production and Trade income. Note that the Build Manufactories tab only shows rises in Production income.


However, there is an error in the way the game calculates this.


In a province with a Manufactory, the correct formula for calculating Goods Produced is:
((Base Production x 0.2) + 1) x Goods Produced modifiers

But the Build Manufactories tab calculates them as
(Base Production x 0.2 x Goods Produced modifiers) + 1

Due to this, the actual boost in income will be greater than what is predicted by the game. For example, have a look at Crimea from one of my games.


With a Manufactory, the changes should be:

• Goods Produced: ((7 x 0.2)+1) x 1.161 = 2.7864
  
• Market Price: 4.05
  
• Annual Production income: 2.7864 x 4.05 x 1.9 = 21.441348
  
• Monthly Production income: 21.441348/12 = 1.786779
  
• Change in monthly Production income = 1.786779 - 1.04 = $0.74

But the prediction given by the game is $0.64, which is wrong.


PARADOX FIX IT!!

With that out of the way, let's start evaluating the cost-efficiency of Manufactories.

Manufactories - change in Production income

France on 1 Dec 1444 is used as an example. Remember that 1 Nov is not used because provincial Trade Powers take a month to be accurately displayed.

This is a list of provinces in the Build Manufactories tab, aligned in the supposed order of cost-efficiency.


This is an Excel table showing what actually happens when you build Manufactories, for the top 10 provinces in the list above.

• Peff = Production Efficiency, which in 1444 France is 1.02.
  
• GPeff = Goods produced modifiers for individual provinces
  
• MP = Market price of the resource produced in the province
  
• GP = Goods produced, after applying modifiers
  
• TV = Annual Trade Value of the province
  
• $P/m = Monthly Production income
  
• d$P/m = Difference in monthly Production income, after building a Manufactory
  
• (d$P/m)/Cost = Difference in monthly Production income divided by the cost of a Manufactory ($475). It assumes -5% construction cost from Renaissance Institution.

As mentioned in the Introduction, there is an error in the way the game predicts boosts in Production income. Due to this, the values in the d$P/m column do not match the values in the Predicted increment column. The game will always understate the boost in Production income from Manufactories.


Next I will evaluate the cost-efficiency of Manufactories and compare it with other income-boosting buildings.

This table is similar to the above, but Production Efficiency is set to 1.12, because that is the benchmark used in my guides to allow fair comparisons between the various income-boosting buildings (see EU4 Advanced Economics 2. Buildings Part I for details). ROI(yr) and Last profitable year columns have been added.

• ROI(yrs) = Return on investment. Number of years it takes for the building to start producing profit i.e. number of years it takes to 'break-even'. Decimal points omitted. Note that the 5-year construction period is not considered, so you need to add 5 more years if you want to count from the construction start date.
  
• Last profitable year = the last date when the building can be finished and still expect a profit before the campaign ends in 1821. Not applicable in non-Ironman games. Decimal points omitted.

Based on these examples, Manufactories are less cost-efficient compared to Tax/Production Efficiency buildings. For example, a Cathedral in Paris will take 60 years to break even (including the 1 year construction period), a Counting House will take 68 years, but a Manufactory will take 125 years to break even (including the 5 year construction period).

Manufactories - change in Trade income

Now we look at how Manufactories affect Trade income.

I will use Paris and Lyonnais on 1 Dec 1444 as examples.

Paris is part of Champagne Node. France collects from trade in Champagne, a home Node, without a Merchant.
Lyonnais is part of Genoa Node. France collects from trade in Genoa, a non-home Node, using a Merchant.




This is the Excel table showing what happens when you build Manufactories in Paris and Lyonnais.


Champagne and Genoa Nodes have been discussed in the previous guide, EU4 Advanced Economics 3. Buildings Part II. Do refer to that guide for more details on the two Nodes, such as Trade Power and Trade Value.

• dTV/m = Difference in Trade Value of the province after building a Manufactory
  
• Node total TV = Incoming Trade Value + Locally produced Trade Value in the Node
  
• Node retained TV = Incoming Trade Value + Locally produced Trade Value - Outgoing Trade Value
  
• French TP% of collectors = TP of France in the Node / TP of all nations collecting in the Node. The necessary values were acquired from the Excel tables in EU4 Advanced Economics 3. Buildings Part II.
  
• French collection = Amount of TV collected by France.
  
• Income modifier = Used to convert French collection into actual income. They are set as 1.24 for Champagne (+0.1 from Burghers, +0.14 from Diplo Tech) and 1.34 for Genoa (+0.1 from Burghers, +0.14 from Diplo Tech, +0.1 from having a Merchant present in the Node).
  The reason I used 0.14 from Diplomatic Technology is explained in the previous guide, EU4 Advanced Economics 2. Buildings Part I.
  
• $T/m = Monthly Trade income from the Node
  
• d$T/m = Difference in monthly Trade income from the Node, after building a Manufactory
  
• (d$T/m)/Cost = Difference in monthly Trade income from the Node, divided by the construction cost ($475). It assumes -5% construction cost from Renaissance Institution.
  
• ROI(yrs) = Return on investment. Number of years it takes for the building to start producing profit i.e. to break-even. Decimal points omitted. Note that the 5-year construction period is not considered, so you need to add 5 more years if you want to count from the construction start date.
  
• Last profitable year = the last date when the building can be finished and still expect a profit before the campaign ends in 1821. Not applicable in non-Ironman games. Cells highlighted in red mean that the last profitable year occurs before the building becomes available i.e. it's not worth it. Decimal points omitted.

The boost in Trade income in Paris is slightly understated. When you boost Trade Value in Champagne Node, a small portion of it will leak 'downstream' to Genoa Node, and the French Merchant in Genoa will pick up a portion of it. The exact change is minuscule, however ($0.001533/month to be exact), so it is ignored in this guide. This value was calculated using a separate Excel spreadsheet that I developed, which will be mentioned in EU4 Advanced Economy 5. Light Ships.

For both Paris and Lyonnais, the boosts in Trade incomes are abysmally low. Looking at Trade income alone, a Manufactory in Paris would take 663 years to break even, and in Lyonnais, 1917 years!!

This rather disappointing result is because Manufactories increase your Trade Value, but not Trade Power, in the Nodes you trade. Also, France has a relatively low Trade Power share in Champagne and Genoa Nodes. A boost in Trade Value in a Node means little for you if your Trade Power share in that Node is minor.

Manufactories - total change in income

Now I put Production and Trade incomes in one place.

In Paris, a Manufactory boosts Production income by $0.33/month and Trade income by $0.06/month.
In Lyonnais, a Manufactory boosts Production income by $0.35/month and Trade income by $0.02/month.

The following Excel table evaluates the cost-efficiency of Manufactories, when Production and Trade incomes are combined.

• d$P/m = Difference in monthly Production income
  
• d$T/m = Difference in monthly Trade income
  
• Total d$/m = Difference in income, Production and Trade together
  
• (d$/m)/Cost = Difference in income divided by the construction cost ($475). It assumes -5% construction cost from Renaissance Institution.
  
• ROI(yrs) = Return on investment. Number of years it takes for the building to start producing profit i.e. to break-even. Decimal points omitted. Note that the 5-year construction period is not considered, so you need to add 5 more years if you want to count from the construction start date.
  
• Last profitable year = the last date when the building can be finished and still expect a profit before the campaign ends in 1821. Not applicable in non-Ironman games. Decimal points omitted.

In Paris, a Manufactory will take 102 years to break even. In Lyonnais, it will take 106 years.

This is a table comparing the ROI years of various income-boosting buildings, in Paris and Lyonnais. The values were calculated in the previous guides.


Construction times are not considered. For all buildings other than Manufactories, add 1 year to count from the construction start date. For Manufactories, add 5 years.
Even when you combine Production and Trade income, Manufactories show a relatively unimpressive cost-efficiency compared to other buildings - at least for the examples we used. I ascribe this to two reasons:

1. In provinces with low autonomy such as Paris and Lyonnais, Tax/Production Efficiency buildings show their full potential, outshining Trade Power buildings and Manufactories. Trade Power buildings and Manufactories will however outperform Tax/Production Efficiency buildings in provinces with high autonomy.

2. France has relatively low Trade Power shares in Champagne and Genoa Nodes, making it difficult for the player to reap the benefits produced by Manufactories. If France had greater Trade Power shares in the two Nodes, the boost in Trade income would have been higher.

Real example

Let's have a look at a real game situation.

This is the province of Crimea in my recent Italy game. Crimea does not have a Manufactory. It is part of Crimea Trade Node. Italy is steering trade from Crimea Node to Constantinople Node, using a Merchant.




This Excel table shows the change in Production income when a Manufactory is built in Crimea.

• Peff = Production Efficiency, which in Crimea is 1.9
  
  
• GPeff = Goods produced modifiers for individual provinces, which in Crimea is 1.161
  
  
• MP = Market price of the resource produced in the province. Crimea produced salt which is priced at 4.05.
  
• GP = Goods produced, after applying the modifiers
  
• TV = Annual Trade Value of the province
  
• $P/m = Monthly Production income
  
• d$P/m = Difference in monthly Production income, after building a Manufactory

A Manufactory in Crimea will boost Production income by $0.74/month.

Next is an Excel table showing the change in steered Trade when a Manufactory is built in Crimea.

• dTV/m = Difference in Trade Value of the province after building a Manufactory
  
• Node total TV = Incoming Trade Value + Locally produced Trade Value in the Node
  
• Outgoing TP% = % of total Trade Power in the Node that pulls Trade out of the Node. This value, as mentioned in EU4 Advanced Economics 3. Buildings Part II, is found by hovering the mouse over the link between Crimea and Constantinople Nodes.
  
  
• TP% to Constantinople = % of Trade Power that pulls Trade towards Constantinople. This is out of the nations that steer Trade, not out of all nations with Trade Power in the Node. The value is found in the same spot as above.
  
• Steering TV modifier = amplifies the Trade Value that leaves the Node. It is determined by the number of Merchants steering Trade in that direction, and the steering power of each of those Merchants. The steering power of your Merchant is determined by your Trade Steering modifier (which is identical to Naval Tradition).
  
  
  
• Steered TV = The amount of TV steered from Crimea to Constantinople, after applying the Steering TV modifier.
  
• d$T/m = Difference in the amount of steered TV. This does not mean a direct boost in Trade income, but I will assume so for the sake of simplicity. The actual boost in Trade income will almost always be smaller than this unless the steering nation has dominant Trade Power shares in all downstream Nodes.

A Manufactory in Crimea will boost Trade income by $0.24/month.

This Excel table combines Production and Trade incomes together:

A Manufactory in Crimea will boost Italy's income by a total of $0.98/month. Remember that there is a slight overestimation in the boost in Trade income. Accepting this overestimation, it will take 40 years (excluding the 5-year construction period) for the Manufactory to break even. This is a very decent income boost. These are some reasons why a Manufactory in Crimea produces such a good result:

• Crimea in this example has a high Production Efficiency (1.9), due to modifiers such as Workshop (+0.5) and being ahead in Technology (+0.2).
  
• Crimea produces Salt, which is a highly-priced commodity (4.05).
  
• Crimea has 0 autonomy, so there is no penalty on Production income.
  
• Italy is the dominant trade power in Crimea Node, with 42% Trade Power share.

This shows that Manufactories can be a solid investment when built at strategic locations and combined with various modifiers that augment their utility. But then, you can say the same thing about any other income-boosting buildings as well, so I hesitate to make a conclusion that Manufactories are more cost-efficient compared to other buildings.

Should you get a loan to build Manufactories?

Is it a good strategy to get a loan to build a Manufactory?

Supposing a Manufactory costs $475 ($500 - 5% construction cost from Renaissance Institution):

A loan in EU4 incurs 4% interest per year, and each loan lasts for 5 years.
Hence the interest cost on a loan of $475 (assuming that the loan is repaid on time) is
$475 x 0.04 x 5 = $95

So the minimum cost of a Manufactory financed with a loan is 475 + 95 = $570.
The additional cost coming from +0.1% inflation due to the loan is not considered.

The following Excel table calculates cost-efficiencies of Manufactories financed with loans.
The three provinces we discussed in this guide, Paris, Lyonnais and Crimea, are used as examples.


The table at the top was used previously in this guide, using $475 as the cost of a Manufactory. For the bottom table, the cost of a Manufactory is changed to $570.

• ROI(yr) of Paris changes from 102 to 122.
  
• ROI(yr) of Lyonnais changes from 106 to 127.
  
• ROI(yr) of Crimea changes from 40 to 48.

With a loan, the ROI years go up for all three provinces. As expected, it takes longer for the Manufactories to start producing profits. If you do not repay the loan on time, the ROI years will be even higher.

Investment in an income-boosting building in EU4 is a perpetuity - an initial lump sum payment that results in a monthly income boost with no end date. Therefore, a building of any cost will, given time, eventually break even and start producing a profit. A Manufactory financed with a loan will eventually break even - it will just take a bit longer to do so.

Hence, whether you should get a loan to finance a Manufactory will depend more on the current health of your nation's economy. Do you have big spendings coming up (eg. big war)? Can your economy sustain the additional interest expenses? Are there easier ways to raise quick cash (eg. beat up a small nation for war reparations)?

Also, think of opportunity costs. Can the total cost of $570 be invested elsewhere that can give you better returns? Is building a Manufactory the most prudent investment you can make right now?

If yes, then finally consider whether it is better to save up the required cash yourself, without a loan.

For example, these are the cashflow timelines of the two scenarios (loan / no loan) when you build a Manufactory in Paris:


Since the ROI difference between the two scenarios is 20 years, if you can save up the cost of a Manufactory ($475) in less than 20 years, then it is better NOT to take a loan - you will break even earlier that way. If you don't think you can save up $475 in 20 years, then it is better to take a loan.

Furnaces

Furnaces are a special type of Manufactory that unlocks at Admin Tech 21 (1674). It is available only with Rule Britannia DLC.



You can build Furnaces only in provinces that produce coal. Each Furnace you own raises Goods Produced by +5% in all your provinces.

This is the single most powerful income-boosting building in EU4, as it affects all provinces, not just the province it is located in. Its effect becomes more powerful as your empire grows in size. Unless you intend to play a tall game with a limited number of provinces, you should build Furnaces wherever you can.

Conclusion

• There is an error in the way the game predicts boosts in income from Manufactories.
  
• Manufactories are usually not as cost-efficient as other income boosting buildings such as Churches or Workshops. This is even when both Production and Trade incomes have been considered.
  
• Of course, a Manufactory located in an economically important province with the help of the right modifiers can be quite powerful, but you can say the same thing with any other building.
  
• This, coupled with the fact that Manufactories have a 5-year construction period (as opposed to 1 year for other buildings), makes me hesitant to recommend them over other types of income-boosting buildings.
  
• Having said that, Manufactories and Trade Power buildings have the potential to outperform Tax/Production Efficiency buildings in high-autonomy provinces. If you are going for a WC, there will be a lot of non-State provinces where autonomies are high. Manufactories and Trade Power buildings will suit those provinces well.
  
• If your provinces already have other income-boosting buildings and you need a place to invest spare cash, by all means, go for Manufactories. Manufactories synergise well with Production Efficiency and Trade Power buildings.
  
• Further reasons to build Manufactories: they are required to spawn the Manufactories Institution. Also, there is a generic mission, accessible to almost every country, that requires the construction of 20 Manufactories. The reward is 1.5 years' worth of income, which is quite nice.
  
• It's fine to get a loan to build a Manufactory, but only if your economy will not be overburdened by its interest costs. Also, consider the opportunity costs of getting a loan.
  
• Always build a Furnace wherever you can.

Links to the rest of my guides: EU4 Advanced Economics
1. Province development
2. Buildings Part I
3. Buildings Part II
4. Manufactories
5. Light Ships

[Woke Bush]

what I learned from this: I will not be building manufactories.

[tomthebarbarian]

Good analysis of manufactories. I worry that you are contributing to manufactory hesitancy when they are essentially boosting diplo development by 5 in every province built. The double dipping nature of goods produced means that if properly captured, every goods produced ducat can essentially be made twice. Any good with value at least 2.5 would be better served with a manufactory than a church. Their fixed good produced modifier is also very consistent.

In the context of EU4 as a blobbing simulator and properly controlling good trade nodes, I'd argue that manufactories are a large part of the eu4 economy because they are mostly unaffected by autonomy and should be a top priority for construction.

[Lord]

Jeez, do you have a economics degree? That's one of the most in-depth mechanics related articles i read. Good job.

[garbage_bin_2]

OK, consider this scenario. You take max loans you can, for midrange empire its like 15-20k ducats. You use your mission -25% build time and you use economic ideas with cheap buildings. You use ~75% of your money to build manufacturies(actually can build any buildings). You wait 5 years after they are finished and force yourself bancrupt. Buildings will not dissapear. Actual cost of theese buildings gonna be equal to around 8 year of your income which is 4x loan, in your case like 4-5k while you spent 10k. Magic....

[werogatda]

@grotaclas Thanks for the great suggestion. Taking Paris for example, you would have 20 years to save up $475 and start building a Manufactory, then wait for 102 years for it to break even - this would be equivalent to getting a loan straight away, build a Manufactory, then wait 122 years for it to break even. I will update the guide to include this.

I'm not sure about comparing the benefit of a Manufactory to the $1.5833 monthly interest expenditure. As shown in the examples above, it is very difficult, if not impossible, for a single Manufactory to boost your monthly income by $1.5833 and beat the interest expenditure. I think the assumption that the loan is repaid in a reasonable time has to be there. If the loan drags on, it will take longer and longer for the Manufactory to break even, possibly not before the game ends in 1821.

[Vector🍁❄]

Good guide

[grotaclas]

The section "Should you get a loan to build Manufactories?" seems to assume that you pay back the loan after 5 years. But if you can do that, it would be better to save money for 5 years and then build the manufactory. Then the investment pays off earlier than if you take a loan(at least in your examples).
I think it is better to compare the monthly interest to the increase in monthly income that the manufactory brings. In your example you pay 475*0.04/12=1.5833 ducats of monthly interest. If a manufactory doesn't increase your monthly income by at least that amount, it is not worth it to take a loan for it. And you also have to factor in the 95 ducats of interest that you pay in the 5 years in which the manufactory is still being built. But I'm not sure how to properly take that into account