After you venture past the conveyor belts of the Factory, you fall down a hole and battle Cloaker and Domino.
Defeat Cloaker and Domino
The enemy you defeat first will determine which boss you fight next. If you want to use magic to defeat the next boss, and want a boss that uses physical attacks against you, defeat Domino first. If you want to use regular attacks to defeat the next boss, and want a boss that uses magical attacks against you, defeat Cloaker first.
Cloaker is very weak to magic, but Domino has high defense overall. Domino is slightly weaker to physical attacks than Special attacks. Cloaker can hit a single character with a boulder, which does high damage. Cloaker also uses regular physical attacks. Domino uses many magical attacks, including Flame Stone, Diamond Saw, and Lightning Orb, which each hit a single character; and Blizzard and Light Beam, which hit all characters. Domino can use Endobubble to inflict Fear.
Defeat Earth Link or Mad Adder
After you defeat one, the other hops on board a large snake. If it's Cloaker, you have to use magic to defeat them. If it's Domino, you have to use physical attacks to defeat them. Start by defeating Cloaker or Domino. Cloaker's snake can use Carni-Kiss, dealing high damage to a single character. Domino's snake can use various magic attacks.
Afterward, you appear in the area where you fell down the hole, and there are replica Yaridoviches falling from above. You can optionally jump on the spring to go back to the previous part of the factory. Otherwise, go northwest to arrive in part 2 of the Factory.