Definitely don't sell the factory - hydro plants increase factory output (by 50%?) , so if you haven't got a factory, factory output=0, and 50% of nothing isn't a whole lot...!
There are 2 shield-enhacing improvements of the Industrial Era - Factories and Power Plants. You need a Factory in order for any of the Power Plants to function (including the Hydro Plants provided by Hoover). This means when you get Hoovers you can sell off your Power Plants (Coal, Solar, etc.) but do NOT sell off your Factory because you need it for the Power Plants to function.
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