The factory is a system allowing players to combine items to make news ones that normally cannot be purchased from shops. You can put the gathered resources into the factory and leave it there until your ready to process/build.
A maximum weight of 20.000kg can be stored in the factory and it will get saved when the server save loop has run.
You need a Gathering Skill of atleast 5 (!) to access the factory.
Note: Items on the left are needed and the list on the right are what can be produced.