The modulfactory is needed to craft the eight different level 1 basic modules. If you walk into the building with your player the craftingmenu with all the different modules will appear.
You then can select the modul you want to craft but remember the progressbar only fills when your player stays inside this building .
This building can be demolished anytime if your player stays inside.
The button for this building can be found in the buildingmenu (see HUD) with the name moduling.