What is the best way to wean your factories off of government subsidies. I have used national focuses to encourage capitalists in my most heavily industrialized states and have tried to keep tariffs only as low as I need, to stay in the black instead of the red, budget wise. I also have an extensive railroad infrastructure that is present in every state to help factories as well as RGOs.
But in spite of this, more often than not, when I take subsidies off of some factories that are in the green, they immediately start losing employees, and drastically lower to the point that sometimes they go all way down into the red.
I'm playing as Ottoman Empire and it's now beginning of twentieth century, if anyone needs to know that in answering my question. Thanks.
I've never played the Ottomans, so don't know what kind of government you're dealing with. I've mainly played Japan, Russia, USA, Portugal and mainly have dealt with the Interventionalist economic policy -- wherein I can prioritize factory hiring, reopen factories that the capitalists have bankrupted, close factories down, choose whether to subsidize them or not, and totally destroy factories.
So, anyway, I just let the factories be subsidized by default.
Global and internal market conditions will largely determine if a factory is profitable -- can it manufacture something & pay the factory maintenance & salaries & sell the product for a profit.
Don't bother encouraging capitalists with your rare NF points. Better to encourage clergymen (if you need to increase literacy), or craftsmen and/or clerks. Encourage capitalists by lowering the rich tax rate to 0%.
Availability of raw materials is an important consideration: the more of the materials needed in the production chain that you have in your own internal market (including your spheres) the easier it is to profitably manufacture the end product.
Your nation's prestige is very important in determining if your factories get their fair share of products from the world market, and can sell their finished products on the world market. It sucks to see that you've manufactured a gazillion cases of booze, for example, and nobody will buy from you 'cause you're considered to be too low class. Tariffs as low as you can make them (zero is good) also helps your profit margin considerably.
You're at the beginning of the 20th century you say? Then your global market should be well defined and pretty rubust. By this time, any factory that is consistently in the red should be seriously considered for demolition. Burn a couple of NF points to encourage your capitalists to build something good next time:
Refinery, telephone, automobile, aeroplane, barrel, machine parts, electric gear, radio, synthetic oil, luxury clothes, luxury furniture.