Factory is a custom block effect available in the Workshop. It causes the custom block to emit a doodad at regular intervals when a laser from a Beam Emitter or Pressure Pad is fired into it.
Placing a custom block on top of the factory will make the doodad emitted look like the custom. If a custom block on top of the factory is called "minecart", the custom doodad will be replaced by a high poly minecart model.