The factory was destroyed when Captain America infiltrated the facility due to Red Skull setting it to self-destruct.
The Austrian HYDRA Facility was located in Kreischberg, between Klagenfurt and Kitzbühel in the Austrian Alps. Run by HYDRA, the Nazi special weapons division led by Johann Schmidt, the facility was used to produce advanced weapons powered by the Tesseract energy and parts of the giant superbomber, the Valkyrie.
By October 1943, the officer in charge of the Facility was Colonel Lohmer. He devised a strategy to reduce the potential number of mutinies among the prisoners of war captured and enslaved inside the factory, based on his beliefs that the Third Reich would win World War II because its members were unified, while the enemies of the Reich were of different nationalities and ethnicities, and that would cause conflict among them.
As such, Lohmer split the prisoners by nationality, locking up members of different factions and brigades within the Allied Forces, hoping that they would be too busy fighting each other to try to fight their prison guards. For example, he put in the same cell a British member of the 3rd Independent Parachute Brigade, James Montgomery Falsworth, a member of the French Resistance, Jacques Dernier, a member of the 92nd Infantry Division, Gabe Jones, a member of the 69th Infantry Regiment, Dum Dum Dugan, and a member of the 107th Infantry Regiment, Bucky Barnes, many of them captured during a battle at Azzano. A joke made by Dugan while introducing themselves raised tension between the cellmates, and a brawl started, proving Lohmer's point.
Bucky Barnes, having contracted pneumonia on the battlefield, received a brutal beating for being unable to satisfy the quotas of production, letting munitions fall while moving a cart. Jones tended to Barnes when they returned to the cell, assuring that, given his sickness, contusions and broken ribs, if Lohmer made him work the following day, Barnes wouldn't survive. His cellmates, knowing that Lieutenant Kleiber was a reasonable man, tried to think of a way to avoid Lohmer forcing Barnes into hard labor. Falsworth, being a strategy expert, devised a plan to get rid of Lohmer that required Dugan, Jones and Dernier to work as a team using their respective expertises.
The following day, Falsworth's plan was carried out, with Dugan, Jones and Falsworth smuggling components for Dernier so he could make a substance to melt the chain of a crane carrying scrap. Lohmer appeared, demanding to incorporate Barnes into labor, though Kleiber considered him too sick. Just when Lohmer was shouting how Barnes would die working if he had to, Kleiber ordered the crane to be activated, which made the melted chain break, and the junk fell over on Lohmer as he passed, crushing him.
The soldiers made every prisoner return to their cell. Dugan informed Barnes that Lohmer wouldn't cause any harm again, while their role in his death couldn't be proved and the punishment would just be reducing their food rations for a week. Barnes only response was, however, to ask Dugan to stop calling him "Jimmy", as his full name was James Buchanan Barnes and he preferred being called Barnes.
Steve Rogers, hearing about the events in Azzano and the imprisonment of the soldiers that battled HYDRA, decided to rescue the prisoners alone. Agent Peggy Carter of the Strategic Scientific Reserve supported his decision and offered to fly him from Italy to Austria in a plane piloted by Howard Stark.
Discussing the details of Rogers' extraction, the plane went under attack, so Rogers decided to jump off the plane, ordering them to abandon enemy airspace, as now he was a captain, and therefore able to give orders.
Arnim Zola was transferred from HYDRA Headquarters and put in charge of the weapons facility, with the Tesseract contained inside the factory to harness its energy to fuel production and power the weapons. Zola took Johann Schmidt on a tour of the production floor, with Zola being very pleased that they were ahead of schedule considering the large size of many of the parts. Schmidt was not all that impressed and ordered Zola to increase the output in this and the rest of facilities. When Zola informed him that the request was not possible given the condition of the prisoners, Schmidt casually replied for Zola to use what remaining strength they had left and that new workers were easy to come by.
Rogers successfully infiltrated the facility boarding a truck, and made his way through the production floors to the prison, acquiring a Tesseract fuel cell along the way. Rogers freed the prisoners, asking for the whereabouts of his friend, Sergeant James "Bucky" Barnes, and told them to exit the facility heading to a nearby forest, battling HYDRA soldiers along the way, while Rogers went to look for Barnes.
The freed prisoners battled HYDRA forces, seizing many weapons and vehicles to clear their way out. Schmidt observed the ensuing chaos on the security monitors and activated an alarm signal in the whole facility, before realizing that Captain America also infiltrated the base.
In order to avoid the facility being captured, Schmidt activate the self-destruct sequence to the shock of Arnim Zola, who rushed to his office, in order to save important documents, coming across Rogers but fleeing before being reached.
Rogers eventually found Barnes in a laboratory, where a map showing other HYDRA facilities was displayed. Rogers memorized the map and began searching an exit with Barnes just before the self-destruct mechanisms started to explode. As the two tried to find a way out, they came across Schmidt and Zola, where Schmidt taunted Rogers about their no longer human nature after being subjected to Abraham Erskine's Super Soldier Serum.
Rogers and Schmidt exchanged blows, but Zola pulled a nearby leaver causing the walkway the two were standing on to separate. Before making their getaway, Schmidt revealed his true face to Rogers, the result of have the Erskine's imperfect serum, being that the reason of his nickname, Red Skull.
As the explosions continued, Rogers and Barnes made their way up the factory to a beam they needed to cross to get to safety. Barnes managed to get across before the beam broke. Without the beam, Rogers was left with no other option then to jump across in order to make it to safety. Despite the danger, Rogers successfully made the jump across the void through the erupting flames, although at the cost of Captain America's call beacon being damaged.