Production Factor is the output of your resource producing structures. A production factor of 100% means your buildings are at 100% efficiency, meaning you have enough power to power all of your buildings.
If you don't have enough energy output, then the production factor overall will be reduced. Each building will operate at reduced efficiency. For example, if your energy is negative, your production factor will be less than 100% and instead of producing X amount of a certain resource, it will produce X times the production factor (as percent).
You can raise the production factor by upgrading your power plants or reducing the production at one (or more) of your resource mines. This can be done on the resources page by changing the % Output and pressing "Recalculate", and is useful for prioritising the production of a specific resource.