ECONOMIC SYSTEMS AND DEVELOPMENT

Secondary IndustriesSecondary Industries►What factors influence the What factors influence the

location of industry ?location of industry ?►How has the location of How has the location of

industries changed over time ? industries changed over time ?

INDUSTRY AS A SYSTEMINDUSTRY AS A SYSTEM

Industry as a whole, or a factory as an individual unit, can be regarded as a system.

INPUTSRaw materialsHuman inputcosts

PROCESSESManufacturing processes generally in a factory.Value added

OUTPUTSEnd productsincome

For a firm to be profitable and to remain in business, the value of its outputs must be greater than the cost of its inputs.Some of the profit should then be re-invested, e.g. in modernising the factory and introducing new technology.

What factors are important What factors are important when locating a factory / when locating a factory /

industry ?industry ? PHYSICAL PHYSICAL FACTORSFACTORS

HUMAN AND HUMAN AND ECONOMIC ECONOMIC FACTORSFACTORS

Raw materialsRaw materialsPowerPowerFlat landFlat land

LabourLabourCapitalCapitalMarketsMarketsTransportTransportGovernment Government PoliciesPoliciesTechnologyTechnologyLeisure facilitiesLeisure facilities

What Factors are Important when locating

a Factory?Physical FactorsPhysical Factors

Raw Materials:Raw Materials: The bulkier and heavier these are to transport, the nearer the factory should be located to the raw materials. This was even more important when transport was poor.

Power – energy:Power – energy: This is needed to work the machines in the factory. Early industry needed to be sited near to fast-flowing rivers or coal reserves, but today electricity can be transported long distances.

Site and Land:Site and Land: Industries should be built on FLAT land with room to expand. The land is often low-quality as it is cheaper to purchase.

Human and Economic Human and Economic FactorsFactorsLabour:Labour: This includes both quantity (large numbers in nineteenth-century factories) and quality (as some areas demand special skills as technology develops).Capital:Capital: Early industry depended on wealthy entrepreneurs. Now banks and governments may provide the money.

Markets:Markets: The size and location of markets have become more important than the source of raw materials.

Transport:Transport: Costs increase when items moved are bulky, fragile, heavy or perishable. Industries want to save money.

Economies of scaleEconomies of scale: Small units may become unprofitable and so merge with, or are taken over by, other firms.

Improved Technology:Improved Technology: The better the technology, the faster the speed of production.

Leisure Facilities:Leisure Facilities: Both within the town and the surrounding countryside, leisure activities are becoming more desirable.

Government Policies:Government Policies: Governments control most wealth so can offer industries money to locate in certain areas.

Human and Economic FactorsHuman and Economic Factors

Questions:

1. Describe and explain an example of an industry where being located near to the following factors is important:

•raw materials•labour•market•transport•Government help e.g. grants

2. What are footloose industries?

HOW HAS THE LOCATI ON OF INDUSTRY I N THE UK CHANGED ? Secondary industries, of ten called manufacturing industries, process raw materials f rom primary industries to produce fi nished or semi-fi nished products. I ndustry does not stay the same but changes over the years. New products are developed, new techniques introduced and diff erent location f actors become increasingly more or less important. As a result, the type and distribution of industry across the country also changes.

Main Changes in UK Manufacturing I ndustries

POWER I ndustries are no longer located near coalfields. Coal is no longer needed to power industries. Electricity, transmitted through the National Grid is now

the major power source. I ndustries now, have a wider choice of location and of ten

locate in an attractive environment, with good transport links and near a large market.

CHANGE IN TYPE OF I NDUSTRI ES

Many of the traditional ‘heavy’ manufacturing industries e.g. iron and steel have been replaced with ‘light’ assembly manufacturing industries such as electronics.

These industries can locate anywhere and are described as FOOTLOOSE. They of ten locate on GREENFI ELD SI TES on the edge of built-up areas away f rom inner city areas.

INCREASE I N TECHNOLOGY Changes in technology have

resulted in a reduction in the labour force with computers and robots replacing people. J obs are then lost.

OVERSEAS COMPANI ES I NCREASE

A large number of overseas manufacturers have been attracted to the UK e.g. electronics and cars.

MOST PEOPLE EMPLOYED I N

TERTI ARY I NDUSTRI ES

There has been an overall decline in the numbers employed in manufacturing as the UK moves towards a more tertiary-based economy.

CHANGING INDUSTRIESCHANGING INDUSTRIESCASE STUDY : SOUTH WALESCASE STUDY : SOUTH WALES

1.1. Why did iron and steel decline in Why did iron and steel decline in Wales? Wales?

2.2. Where are new iron and steel Where are new iron and steel factories located ? Why ? factories located ? Why ?

HOW MANY MINERS ARE THERE IN WALES ?

050100150200250300350400450500

1925 1981 2000

number ofcolleries

number ofminers('000s)

CHANGING INDUSTRIESCHANGING INDUSTRIESCASE STUDY : SOUTH WALESCASE STUDY : SOUTH WALES

Port Talbot integrated Steelworks

BOC at Port Talbot

Integrated Steelworks at Port Talbot

Why do heavy industries locate at Port Talbot?1) cheap, flat and plentiful reclaimed land2) accessible – near the M4 and on the coast (port)

There is only one remaining steelworks in South Wales. This is located at Port Talbot (Llanwern steelworks closed in 2001 causing 1340 jobs to be lost).

The Port Talbot steelworks is called an ‘integrated’ steelworks because all stages of manufacture take place on one site. The high quality coal and iron ore have now been exhausted in South Wales. Nowadays coal and iron ore are imported from abroad where high quality raw materials can be extracted more cheaply. It is therefore more efficient for the steelworks to be located on the coast.

Traditional Industries on the coast - Integrated Steelworks

Give reasons why raw materials can be extracted more cheaply from abroad.

CASE STUDY : THE UK IRON AND CASE STUDY : THE UK IRON AND STEEL INDUSTRYSTEEL INDUSTRY

► As the raw materials are mainly As the raw materials are mainly imported by bulk carrier ships, the imported by bulk carrier ships, the most favoured locations for iron and most favoured locations for iron and steel plants are at steel plants are at BREAK OF BULK BREAK OF BULK POINTS. POINTS.

► What are break of Bulk points ?What are break of Bulk points ?► The best locations are, therefore, at The best locations are, therefore, at

deep water portsdeep water ports where the heavy where the heavy imported raw materials are unloaded imported raw materials are unloaded eg Port Talbot.eg Port Talbot.

► Large integrated iron and steel works Large integrated iron and steel works are the most efficient locations. are the most efficient locations. Large areas of flat land are needed Large areas of flat land are needed and again, coastal areas have large and again, coastal areas have large expanses of land available for expanses of land available for development.development.

How have governments tried How have governments tried to encourage industry in the to encourage industry in the

UK ?UK ? CASE STUDY : SOUTH WALESCASE STUDY : SOUTH WALESLook at p 24 in bookletLook at p 24 in booklet

What are …What are …1.1. DEVELOPMENT ZONES ?DEVELOPMENT ZONES ?2.2. ENTERPRISE ZONES ?ENTERPRISE ZONES ?

Who did this encourage to Who did this encourage to locate in Wales ?locate in Wales ?

Ebbw Vale – Festival Park Shopping

The WDA (Welsh Development Agency), local authorities and the private sector spent £60 million on converting the area from a wasteland of spoil heaps into the Ebbw Vale Garden Festival.Festival Park Factory Shopping Village is now located on this site.

What has been done ?

Sources of Regional Assistance

WDA (Welsh Development Agency)UK Government

European Regional Development Fund

The Valleys are a Development Area.

This means that industries are encouraged to the area by offering them incentives such as grants, reduced business rates, planning permission and premises.

Who gains from regional assistance?

Rhondda gains new jobsFenner is closing its Hull and Peterborough factories to move its production to Maerdy. The company has been attracted to the Rhondda by £12 million in government grants.The factory is a godsend. Maerdy’s colliery closed in 1990 putting 400 out of work and male unemployment stands at 25%. The new factory will be built on this site. Eventually, the factory, which makes mouldings for the car industry, will employ 500 people.

1995

Why did Fenner move its production to Maerdy?Who loses and who benefits from Fenner’s decision?

Lucky Goldstar in Newport

LG, a South Korean multinational company, decided to locate a semi conductor plant in Newport, South Wales in 1996.

Why do you think LG located in Newport?What type of support jobs may be generated?

South Wales celebrates with Korean multinational investmentLucky Goldstar (LG) plans to build a new factory on a 250 acre site at Imperial Park in Newport. The factory, which eventually aims to employ 6,100, will produce semi conductors and television parts. It is likely that another 15,000 support jobs will be generated. LG were given a generous subsidy in order to attract their investment to South Wales. The WDA refuses to confirm rumours that the grant was as much as £200 million. This is equivalent to £20,000 per job.

July 1996

Summary – selected industries in South Wales

Lucky Goldstar

Tourism in the Valleys –Big Pit at Blaenavon and Rhondda Heritage Park at Trehafod Ebbw Vale – Corus galvanizing steel and tin plating

tertiary and quaternaryCorus

Integrated steel works

Nickel and copper plating,DVLA HQ (Driving License)

Business parksE.g. Sony and Hotpoint in Bridgend Industrial Park

HOW HAS INDUSTRY CHANGED HOW HAS INDUSTRY CHANGED IN SOUTH WALESIN SOUTH WALES ? ?

► Look at page 27 in bookletsLook at page 27 in booklets

► FROM ‘SOOT’ TO ‘SONY’ !!!FROM ‘SOOT’ TO ‘SONY’ !!!► South Wales was once famous for its coal and steelworks in valleys South Wales was once famous for its coal and steelworks in valleys

such as the Rhondda. such as the Rhondda. ► The industrial scene today, is very different. The industrial scene today, is very different. ► The old ‘heavy’ industries have gone and new industries from The old ‘heavy’ industries have gone and new industries from

OVERSEASOVERSEAS have located there due to have located there due to INWARD INVESTMENTINWARD INVESTMENT..► What is Inward Investment ? What is Inward Investment ? ► This is where a government office eg Welsh Development Agency, This is where a government office eg Welsh Development Agency,

has offered financial incentives to companies to set up in the area. has offered financial incentives to companies to set up in the area. ► (This area also received financial support from the Central (This area also received financial support from the Central

government under Assisted area scheme).government under Assisted area scheme).► Much of the new industry is Much of the new industry is HI-TECH INDUSTRY.HI-TECH INDUSTRY.► This is a general term used to describe a range of recently developed This is a general term used to describe a range of recently developed

information technology industries involving micro-electronics and information technology industries involving micro-electronics and related activities. related activities.

► South Wales has therefore, moved from South Wales has therefore, moved from heavy industries to light heavy industries to light manufacturing industriesmanufacturing industries such as electronics etc. such as electronics etc.

SummaryIn the nineteenth century and first half of the twentieth century, the coal and iron and steel industries dominated the landscape of the _______ of South Wales. These industries prospered due to the accessibility of raw materials and due to the fact that Britain had an _______ which provided a ready market.

These industries declined in the latter half of the twentieth century because Britain lost its Empire, the raw materials became exhausted and there was competition from abroad. In addition, coal is no longer the major source of _______ in Britain.

Coal is an example of a _______ industry.

Iron and steel is an example of a _______ industry. The raw materials that make iron are iron ore, _______ and _______. Steel production increased because it is stronger and less _______ than iron.

primary

tertiary

secondary

fuel malleable Empire

coal

limestone

coast Valleyssteelbrittle