Industrialisation led to the creation of the factory. Arguably the first highly mechanised was John Lombe's water-powered silk mill at Derby, operational by 1721. Lombe learned silk thread manufacturing by taking a job in Italy and acting as an industrial spy; however, since the silk industry there was a closely guarded secret, the state of the industry there is unknown. Because Lombe's factory was not successful and there was no follow through, the rise of the modern factory dates to somewhat later when cotton spinning was mechanised.
The factory system contributed to the growth of urban areas, as large numbers of workers migrated into the cities in search of work in the factories. Nowhere was this better illustrated than the mills and associated industries of Manchester, nicknamed "Cottonopolis", and the world's first industrial city.[81] Manchester experienced a six-times increase in its population between 1771 and 1831. Bradford grew by 50% every ten years between 1811 and 1851 and by 1851 only 50% of the population of Bradford was actually born there.[82]
For much of the 19th century, production was done in small mills, which were typically water-powered and built to serve local needs. Later, each factory would have its own steam engine and a chimney to give an efficient draft through its boiler.
The transition to industrialisation was not without difficulty. For example, a group of English workers known as Luddites formed to protest against industrialisation and sometimes sabotaged factories.
In other industries the transition to factory production was not so divisive. Some industrialists themselves tried to improve factory and living conditions for their workers. One of the earliest such reformers was Robert Owen, known for his pioneering efforts in improving conditions for workers at the New Lanark mills, and often regarded as one of the key thinkers of the early socialist movement.
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. Josiah Wedgwood and Matthew Boulton (whose Soho Manufactory was completed in 1766) were other prominent early industrialists, who employed the factory system.