Download - Chapter 7 Manufacturing
Chapter 7 Manufacturing• Fundamental nature of manufacturing
processes• Major manufacturing regions in the world• Deindustrialization in the developed world
and the rise of manufacturing in the developing world
• Sector specific dynamics• The rise of flexible production systems,
business process outsourcing & downsizing• (The product life cycle model is not in this
chapter again)
The Nature of Manufacturing
• Elements of the manufacturing process:
(a) product design, (b) assembling inputs, (c) transforming the inputs, (d) marketing the product
• Location decision – Weber model again
• Value added in each stage of production
Porter’s Value Chain
Firm InfrastructureHuman Resource Management
Technology Development
Procurement
SupportActivities
InboundLogistics
PrimaryActivities Operations
OutboundLogistics
Marketingand Sales
Service
Upstream value activities Downstream value activities
Concentration of World Manufacturing80% of Global Output in Three Regions
How current are these data?Current role of China?
Global Distribution Manufacturing Value Added
North America
26%
Europe33%
Japan14%
China11%
Other Asia8%
Rest of World8%
Source: Calculated from NationMaster.com
U.S. – 22.4%
Shares of Manufacturing Value Added
Source: World Bank World Development Indicators, 2011
U.S. & CanadianManufacturingBelt: AccountsFor aboutTwo-thirds of Total ManufacturingEmployment inThe U.S. andCanadaRise of
Maquiladoras –Border & interiorMexico
A goodOverview Of specializedVersus marketOriented manufacturing
Specialization in the Regional Distribution of Manufacturing
• Some cartograms – where area is proportional to employment (using the BEA Economic Area classifications)
• The first map shows the actual geometry of the BEA Economic Areas
• The following maps depict industries distributed broadly across the U.S., and industries that are highly concentrated
• These are old maps, but for many lines of manufacturing the data are probably relevant
BEA Economic Areas – As of 1985
Other Manufacturing Regions
• Europe – Figure 7.5, Japan - Figure 7.9
• Globalization of manufacturing – movement of capacity from U.S. & Canada, Europe, and Japan to less developed countries
• “The new international division of labor”
• “Anatomies of Job Loss”
U.S. Manufacturing Employment Trend
x
2012
2013
x
Change in U.S. Mfg. Employment 1960-2000
Post-2000 Trends?
Deindustrialization in industrialized countries
The Share of Mfg. may have fallen, but real mfg. output is probably up in all these countries – see next slide for WA state
Real Output by Industry WA State
Anatomies of Job-Loss: disinvestmentBroad
StructuralTrends
CorporateAgency
The “outfall”of restructuring
Spatialoutcomes
Macroscalecausal forcesin the global
economy
Corporate responsesto global trends
Corporate competitivestrategies
Plant openingsPlant closings
In-situ changes
Events on the ground
Bluestone & Harrison - Deindustrialization of America:“The core of B&H’s argument followed a restructuring approachwith the need to restore the drive to accumulate, producing, through spatially distributed effects, a major reworking of therole of U.S. cities and regions in the geographic distributionof production.”
Impacts on Manufacturing Jobs in U.S., Europe and Japan
• Job losses in manufacturing in all of these regions
• Replacement has primarily been in services
• Occupations created in the services are frequently very different than occupations lost in manufacturing, leading to high unemployment rates and income deterioration
Assets of Centers of Control versus Peripheral Regions
Centers of Control• Key role in circulation;
realizing wealth• Focal point for investment,
profits, interest• Focus on forms of capital:
FIRE• Occupational dominance by
professionals• “Virtuous” multiplier
relationships driven by above points
• Support networks of a large cadre of service workers in lower occupational categories
Peripheral Regions• Key role in creating value
through labor pools & resource endowment
• Compete with centers for capital
• Capital transfers to core; possible scarcity in periphery
• Multipliers chancy: impacts only if investment comes to them
• Employment fortunes conditioned by “waves of investment” and restructuring
No direct transference
Current Spatial Outcomes in the U.S.
• Old centers are having their power erode
• New centers are rising, based on redistribution– Charlotte NC - banking
or the rise of “new industrial spaces”
- Orlando-Melbourne (retirement)
- Las Vegas (entertainment)
- Seattle & Atlanta - technology based
manufacturing & information services• The rural renaissance - retirement, footloose entrepreneurs, recreation, rich people, niche mfg., IT, commuter air and courier services