I feel like this part was missed.
You can't use this for a bunch of hexes, you can use this for one.
Therefore this does not mitigate dominions at all, but what this does do is open up an avenue for one additional hex to be gained through an alternate method.
Nor can this replace faction activity as a whole, you still need to make threads, including dominions in order to survive - period. Could there be additional restrictions on what these factory subs are? Absolutely, should they be items the faction would actually use, like vehicles, starships or the like? Sure, let's do it, but in no way shape or form is this going to simply resolve all faction activity problems. At the end of the day if you cannot produce a single dom a month at the least - then how are you going to manage ten factory submissions? Could there be restrictions like, hey these can't all be done by the same person or what have you - yes, this is not set in stone but rather this is what's on the table. I like this as a concept and yeah it can use some work, but it's definitely here to help not hurt.