How/why did Plzeň become the "armourer" for Austria-Hungary?

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You have asked several questions. I will address directly your first one, based on what I have now researched, although this answer also encompasses some of your additional points:

Why did this concentration of arms manufacturing capability take place?

See Skoda Works: (www.globalsecurity.org/military):

Emil Škoda Emil Škoda

The fortunes of the Skoda Works were interwoven with those of Plzen through several generations of employees. The Skoda factories were founded by Count Wallenstain in 1859. Count Wallenstein-Vartenberk set up a branch of his foundry and engineering works in Plzen...

Emil Škoda, a highly competent engineering expert and dynamic entrepreneur, became the Chief Engineer of the factory which had more than a hundred employees...

In 1869 it was taken over by Emil Skoda, the Czech engineer, who employed 130 people. Emil Skoda purchased the factory from Count Waldstein for 167000 gulden with money borrowed from his physician uncle in Vienna, Josef Skoda the great Viennese clinician. Skoda had originally been employed in the iron works of Wallentein (Valdstejn) in Pilsen...

When engineer Emil Skoda purchased a small engineering works located in the center of Plzen, then a town with a population of 30,000, he set out on a path leading to the major development of his plant and fame for Plzen around the world.The coalfields at nearby Nýrany and local iron-ore deposits gave rise in the 19th century to Plzen's engineering industry, symbolized by the Skoda Works, which occupy most of the city's western sector.

By 1914 Skoda was one of Europe's major arms producers. At the Skoda Works in Pilsen everything was done on an enormous scale - grounds covered, trip hammers of a hundred tons apiece, 30,000 men toiling and sweating for good pay; and capital galore. And enormous profits; during the Great War one of the Krupps became a partner. A Czech, Baron Skoda, was the brain of the concern, and a number of able German engineers were the sub-brains.

Based on this account, we see the important factors that led to Skoda Works's enormous success:

  • Perhaps some good political connections: The Skoda factories were founded by Count Wallenstein-Vartenberk of the notable House of Waldstein.
  • A highly competent engineering expert and dynamic entrepreneur in the person of Emil Skoda: Excellent technical knowledge combined with business acumen in one individual, giving them the ability to both envision and successfully implement a large and successful technical/industrial enterprise like the Skoda Works. Supra: Czechs like Emil Skoda and Tomas Bata [the shoemaker] became symbols of the new Czech capitalists. This is an oft-repeated pattern, reminiscent of figures such as Thomas Edison. an American inventor and businessman; Bill Gates, an American business magnate, investor, programmer,inventor; and Larry Ellison, an American business magnate, co-founder and chief executive of Oracle Corporation, among numerous others.
  • The close proximity of important natural resources for the business in question: coalfields at nearby Nýrany and local iron-ore deposits
  • A deep and capable human resource pool suitable for the business: a number of able German engineers were the sub-brains.

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This is a compendium of what I've learned from the other answer and the comments.

There were several natural advantages of the Pilsen location, pointed out in detail by Vector; abundant raw materials and suitable labor nearby, and the presence of enterpreneur Emil Skoda, a "native son."

Mark C. Wallace asked an important question in a comment (since deleted) about how far the Skoda Works matched Austria-Hungary's needs. The answer was, "pretty closely," which meant that there wasn't a need for a second plant.

One important consideration was that this project was undertaken at the initiative of Mr. Skoda, who put forth, and got his terms. It's not like the Austro-Hungarian government put out an RFP ((Request for proposal) and said, "let's take the top two," as the American government might, given its concerns about anti-trust issues. On the other hand, the Austro-Hungarian government didn't "push back" on Mr. Skoda to diversify by building a second plant elsewhere.

Upvote:1

Because that is where the iron ore was and still is (Pilsen marked by the red flag):

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as well as convenient access to coal for coking

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As is readily seen Pilsen is on the edge of several major iron ore deposits, in total far larger than anything else in the Austrian (later Austro-Hungarian) Empire, with convenient access to coal fields in the Sudeten as well as Moravia and northern Hungary.

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