Why is industry/manufacturing located where it is?

• Begin theory…. Now!

The Paris Basin is the Industrial base of France. Rouen (above) is at the head of navigation point on the Seine River.

Location Theory• Location Theory –

predicting where a business will or should be located.

• Location of an industry is dependent on economic, political, cultural features as well as whim.

• Location Theory Considers:– Variable costs-energy,

transportation costs & labor costs

– Friction of distance-increasing distance =increased time & cost

Location ModelsLocation ModelsWeber’s Model-The Least Cost Theory

Alfred Weber, (1868-1958) a German economists, published Theory of the Location of Industries in 1909. His theory was the industrial equivalent of the Von Thunen Model.

Manufacturing plants will locate where costs are the least.

Categories of Costs:

Transportation-the most important cost-usually the best site is where cost to transport raw material and finished product is the lowest

Labor-high labor costs reduce profit-location where there is a supply of cheap, non-union labor may offset transportation costs

Agglomeration-when a group of industries cluster for mutual benefit-shared services, facilities, etc.-costs can be lower

Deglomeration-when excessive agglomeration offsets advantage-eastern crowded cities

Booming Town

                                               

Bunny Fur Bricks

Weber’s Least Cost Theory: Brick Bunny

Bulk Gaining Vs. Bulk Reducing.

Location ModelsLocation Models• Hotelling’s Model-Harold

Hotelling (1895-1973) this economist modified Weber’s theory by saying the location of an industry cannot be understood with out reference to other similar industries-called Locational Interdependence

• Losch’s Model-August Losch said that manufacturing plants choose locations where they can maximize profit. Theory: Zone of Profitability

How has Industrial Production Changed?

How has Industrial Production Changed?

Fordist –Fordist – dominant mode of mass production during the twentieth century, production of consumer goods at a single site.

Post-FordistPost-Fordist – current mode of production with a more flexible set of production practices in which goods are not mass produced. Production is accelerated and dispersed around the globe by multinational companies that shift production, outsourcing it around the world.

Time-Space CompressionTime-Space Compression

• Just-in-time deliveryJust-in-time delivery

rather than keeping a large inventory of components or products, companies keep just what they need for short-term production and new parts are shipped quickly when needed.

Global division of laborGlobal division of labor

corporations can draw from labor around the globe for different components of production.

Modern Production

Outsourcing –

moving individual steps in the production process (of a good or a service) to a supplier, who focuses their production and offers a cost savings.

Offshore –

Outsourced work that is located outside of the country.

Nike (A Light Industry)-Headquartered in Beaverton, Oregon, Nike has never produced a shoe in Oregon. Beginning in the 1960s, Nike contracted with an Asian firm to produce its shoes.

Skopje, Macedonia-The swoosh is ubiquitous, but where is the shoe produced? Nike has a global network of international manufacturing and sales.

Maquiladora in Nuevo Laredo, Mexico repairs telephones for AT&T

New Influences on the New Influences on the Geography of ManufacturingGeography of Manufacturing

• Transportation-intermodal connections where air, rail, truck, ship and barge connect-eases flow of goods-e.g. container shipping… Break of Bulk

• Regional and global trade agreements-WTO, Benelux, European Union, NAFTA, MERCOSUR, SAFTA, CARICOM, ANDEAN AFTA, COMESA, etc. goal to ease flow of goods by eliminating trade tariffs or quotas

• Energy-coal was replaced by natural gas & oil after WW II-transported by pipeline or tanker

• Europe-despite North Sea Oil-still must import

• Mexico & Canada oil and natural gas

• U.S. uses 27% if oil & 37% of natural gas produced in the world. Dependent on imported oil

• OPEC: Saudi Arabia, Kuwait, Iraq, Russia large oil reserves

Deindustrialization – a process by which companies move industrial jobs to other regions with cheaper labor, leaving the newly deindustrialized region to switch to a service economy and work through a period of high unemployment.

Abandoned street in Liverpool, England, where the population has decreased by one-third since deindustrialization

The Rust Beltvs

The Sun Belt

THE END