Industry

Industry as a system (p168)

By Hasaam Uldin and Aman Sahota.

A diagram showing the way most systems work.

Profits    

• a profit is only made if the cost of inputs and processes is less than the money earned from the outputs.

• For example a factory uses £1000 to get raw materials to make a car and spends a further £500 on wages and £100 on transportation. There is also a cost of £100 for the disposal of waste products. 

• Therefore, for the factory to make a profit the car must be sold for more than £1700.

• See figure 2

Types of manufacturing industry.

• manufacuring industries use raw materials and/or parts purchased from companies to make products. 

• three types - Heavy, light and high tech industries. industries.

• footloose industries - light and high tech industries.

Heavy industry.

• Often large scale industries.• often have big plants in large areas of land - can often scar

the landscape.• necessary industries because they are the providers of

materials to light industries.• often require much money to get set up so they need big

investments.• Steel, oil refining, ship building and smelting.

Light and High-tech industries.

• Known as footloose industries because of their greater freedom of location because of smaller factories and products.                  

• light industries make products that will likely be sold to individuals.

• secondary industry.• often operate in industrial

parks.• produce high value/low

weight products.• examples - gadgets,

clothes and toys. 

• High tech industry is quaternary.

• make high value products using technology.

• invest in research and development.

• small enough to be located on units in business parks.

• examples - computers, microprocessors, communications equipment.

Factors affecting industrial location pages 170-171

By Tom Mitchell-Hewitt and Matthew Strachan

Overview

To maximise profits businesses must chose a location with the greatest number of positive factors- different locations have different inputs and outputs of different importance. These depend on the type of industry. Generally, heavy industries need to be close to raw materials and their market to be profitable due to high transport costs. Whereas footloose industries have greater freedom to chose their location dependant on the nature of the industry.

Page 170-1

Transport

Movement of:• Raw materials to factory• Manufactured goods from

factory to marketBoth can be done land (road & rail), water (sea and canals) and air (only if the cargo is of high value)

Heavy, bulky or comparitively low value raw matierals are used in heavy industry and so cheaper/bulk transport is needed- eg, cargo ferries and rail networks Faster transport is more important for consumer goods as they are sold/bought in greater quantities 

Other Communications

Increases in:• Fax• Phone• Internet communication

Better information exchange allows for less need for office work or near-market jobs, as people can work from home

Capital

Money invested in:• Buildings• Machinery • Wages for workers

Invested by: • Banks• Shareholders• Governments

Heavy or high-tech industries require large investments so areas willing to provide capital are more likely to be chosen

Raw Materials 

Any materials that are needed to be processed. eg: • Wood• Oil• Metal• agricultural produce

- all are more bulky and less valuable than manufactured goods

Heavy industry locate closer to raw materials as heavy industries use lots of materials, and the raw materials are often expensive to transport

Site

Any possible site must have its cost, availability and gradient checked- cheap, flatter land generally preferred as it is easier to develop

Heavy industries need large areas of cheap land to develop, while lighter industries use less land and so are less tied down by costs

Market

This reflects • The size• Location • Wealth of buyers• Dispersial of market

(concentrated or dispersed)

Heavy industries or industries that manufacture heavy goods need to be located near the market due to high transport costs whereas the lighter industries only need a major transport link near by to easily retain profitability

Government

Positives:• Lowering restrictions• Providing industrial

locations Negatives• Refusal of planning

permisions • Business taxes

Govenment incentives can often incite more and bigger industries.These are often reserved for areas of high unemployment to encourage a revival in local industries.

Labour

The area must have:• High quantity• Well-qualified workforce• Low enough average

wages to maintian profit

If any of these are too low or high then buisnesses will be reluctant to set up there as it will lower profits and if the extra cost is not accountable for then they will just look for somewhere else.

Energy

• All industries need energy, to operate machinery, manufacture goods and process raw materials

• Energy from coal, oil, gas stations

Heavy industries need more electricity so locate where a source is closest- conversely, lighter industries can locate more freely as electricity is accessible in most places

Heavy Industry By the Teesside

By Mitchell and Cameron

Heavy Industry

• Heavy industries have been located around the estuary of the river tees for over a century

• They are a dominant feature of the landscape (fig 5 pg169)

 

Background to Steel-making at Teesside

• Iron and steel industries developed along the south bank between Middlesborough and Redcar 

• This was because the raw materials and fuel supplies were readily available

• Iron ore, coal and limestone weighed muh more than the iron and steel produced 

• It was more economically viable for the resources to be transported to a closer location

Steel-Making at Teesside in the 1990s

• Of the early advantages for steel-making, only the limestone remains

• British Steel, however, still recognises that teeside has many locational advantages

• This has lead to large investments in new plants and machinery

• Most steel is made in the Redcar works (grid square 5625 on fig 2 pg 173)

 

Transport along the Teesside• Transport is one of the

key factors which caused the Teesside to become heavily industrialised

• The river Tees is very wide (around 1km) meaning large ships can bring in vast quantities of raw materials from wherever it is most economically viable

• It also means that a lot of steel can be exported to many areas of the world, bringing in money so that the industry can further expand

Footloose Industries

• In new industrial regions, the industrial structure is dominated by footloose industries, which are most likely to be located next to motorways.

• They contain growth industries, which are sometimes referred to as sunrise industries.

• Many of these sunrise industries can be found along motorway corridors, such as the M11, M23, M3 and M4. There is a great concentration in the M4 corridor between London and Reading.

• Industries located here are normally light industries manufacturing goods such as small electronics, car parts and food. High-tech industries engaged in research and processing for computers and telecommunications can also be found here.

pg 174-175

General advantages for the growth of light industries

• Transport is an important factor for the location of light industries, which is why they locate close to motorways.

• Because they use or assemble light parts which are not bulky, transport to market is more important than access to raw materials. 

• The wealthiest and most concentrated market is in Greater London, because this is very close to a large market.

• There are also motorways and rail links very nearby which give quick access to other markets in other parts of the country.

• These also provide quick access to the channel tunnel, ports and airports for access to international markets. pg 174-175

Specific advantages for high-tech industries

• Labour is a key locational factor for high-tech industries. It is very important to have highly skilled research scientists and engineers available.

• It is useful to have some universities nearby, to provide a pool of graduates who can be  employed by the companies.

• Aerospace research around the Bristol area has attracted some high-tech companies to locate there.

pg 174-175

• Close by luxuries such as the countryside, shopping centres and airports help attract skilled (high paid) workers who can afford these luxuries.

• The offices try to be in easy reach of London, so employees can visit the city for sporting events, exhibitions, shopping and shows.

pg 174-175

The Rhine-Ruhr Region

Background Information• The North Rhine-Westphalia has a population of 18million

people and is the richest of the German states.• The river Rhine flows through this region towards its western

edge.• In this western region, the largest city is Cologne, with a

population of roughly 1million.• There is the single greatest concentration of industry in this

city than anywhere else in the European Union.• The river Rhine covers areas within the Rhine valley and the

Ruhr coalfield.  

Sukhvir Lyall and John LutwycheThe Rhine-Ruhr Region P176-177

Sukhvir Lyall and John LutwycheThe Rhine-Ruhr P176-177

Map of the Rhine-Ruhr region

Types of Industry in the Rhine-Ruhr• For more than 100 years, the economy of the region has

been dominated by its primary industry in coal mining.• This has led to secondary industries being created which

need coal, such as textiles, smelting metals, heavy engineering, steelmaking and chemicals.

• The industries that have been added today include oil refining, whereas heavy industries still remain essential.

• Regarding consumer industries, the most important is food processing.

Sukhvir Lyall and John LutwycheThe Rhine-Ruhr Region P176-177

Factors for the Growth of Industry in the Rhine Ruhr

• Europe's largest energy supply is based in the Ruhr coalfield and contains massive reserves.

• There are different varieties of coal including high-quality coking coal.

• A pull factor for heavy industries over the years has been the amount and quality of coal available.

• Heavy industries use large consumptions of energy, but by locating in the Ruhr they save considerable amounts of money on transport costs.

• Also, for the chemical industry coal is important as it is a raw material and various products can 

     be made from it.• The concentration of metal-smelting and steel industries in the area

between Dortmund and Duisburg      made it possible to create their own       market.

Sukhvir Lyall and John LutwycheThe Rhine-Ruhr Region P176-177

The Ruhr Harbour

Factors for the growth of industry continued ...

• Industries such as heavy engineering that use metals and industries such as textiles that need factories and machines set up in the Rhine-Ruhr region.

• However the smaller companies found more benefit with setting up in the state where the largest and richest market was in Germany with a population of over 300 million people.

• The River Rhine is also a key part of the industries. This is because it can be used for water transport.

• It is used as a highway for barge traffic and as a link to the North Sea and the world of shipping.

• Moving heavy raw materials, up to 9000 tonnes at a time is much cheaper than using other transport means such as road or rail. Also there are canals which tail off from the river and lead

     to different cities such as      Dortmund.• The River Rhine increases the

      advantages of the region       being a key part of industry in       the world of today. 

Duisberg

Industrial Change in the Rhine-Ruhr Since 1950

Since the 1950's, many coalmining and industrial regions in Europe have been in decline.However, the decline in the Rhine-Ruhr region has not been as sudden, mainly because of:• the important transport links along the River Rhine, which

means that goods can be easily transported to and from the region

• the central position of the Rhine-Ruhr within the EU• the quality and sheer amount of Ruhr coal available, which

was still available in huge amounts even after 150 years of coal mining in the area

• the productivity and prosperity of German industry

Sukhvir Lyall and John LutwycheThe Rhine-Ruhr Region P176-177

Industrial Change in the Rhine-Ruhr Since 1950

However, there still have been changes in the Rhine Ruhr region, for example:• there has been a decline in the number of workers in

primary industries such as coal-mining, where numbers have dropped from 500,000 to 100,000 since 1950. 

• non traditional manufacturing industries are now well established within the area, such as motor vehicle manufacture which has rose from sixteenth to fifth in order of importance in the area since 1950

• there has been a rise in the significance of the tertiary sector of industry. For example, the city of Cologne is now a media and telecommunications centre, with many people employed in these areas.

Sukhvir Lyall and John LutwycheThe Rhine-Ruhr Region P176-177

Problems In the Rhine-Ruhr RegionThere have been a lot of problems in the Rhine-Ruhr region, mainly to do with its reliance on coal mining industries.• There has been a lot of unemployment, and it has not

always been possible replace all the jobs that have been lost

• There is still an overdependence on mining and heavy industry, which still needs to lose workers, especially with machinery doing the work of many men

• The environment of the Rhine-Ruhr area has shown the effects of over 100 years of heavy industry and mining. There have been many schemes to landscape waste tips, clean up water courses and preserving green areas, but the work is still not complete

Sukhvir Lyall and John LutwycheThe Rhine-Ruhr Region P176-177

Newly Industrialised Countries

• Newly Industrialised Countries are exactly that, LEDCs who have recently increased their effectivity in the secondary sector of industry, manufacture

• NICs are usually those countries in which manufacture of good that are sold in MEDCs occur

• The "Made in China" attribute is an example of MEDC use of an NIC, China.

• Other NICs are Brazil, India and South Korea (South Korea less so, as it moves into the MEDC category)

Why LEDCs for investment?

• Cheaper Labouro Wages are lower on average than MEDCs; about $1/hr in

the NICs, whereas the average is several levels of magnitude higher in MEDCs. 

• The governments support the investment that MEDCs make to benefit their economies.

Why LEDCs grew so fast.

• During the 1970s many large companies based in North America moved their labour base to LEDCs because:

• This gave the companies a cheap work force. • Easy transport, so distribution was made more efficient with

access to the sea and roads. • The countries had no home market of their own so relied

havily on the people who invested in them. • During the 1970s the most impressive growth was in South

America.

Since the 1970s

• Since the growth in South America, other countries such as Japan and parts of Europe, invested heavily in countries such as Hong Kong, Singapore,Taiwan and South Korea.

•  These countries have maintained their significant growth rates and are known as 'Tiger Economies'.

• Other NICs trying to match these countries are Malasyia, Thailand, Philippines and Indonesia.

 

Problems with Rapid Development

• When the MEDC countries first invested in the countries, they tried to produce as many goods as possible for the least possible amount of money.

• This now leads to strikes over unsatisfactory wages and faulty goods.

• With all the heavy industry and Heavy Goods Vechiles, there are problems with traffic congestion and Air pollution.

 • With the economies of the NICs being built upon the MEDCs

if there is a low rate of growth in the MEDC then the NICs are going to lose some of their financial backing and someone to sell the goods to. This lead to a crisis in South Koreain 1997/1998.

Colonialism and Dependency

• A major problem experienced by the NICs in the past has left a rapidly growing economy and the countries home market is too small to cope with the large export of goods, leaving them dependent on the MEDC country that invested in them.

• An example of this is Brazil • But in countries that have broken away from the colonies

such as Hong Kong, they are now a supreme trading country, for the same reasons why countries like Britain invested in them in the first place; access to continental Asia and Europe and they also have access to the ocean.

• They nolonger rely upon any other countries.

Why NICs may not be able to Eclipse the Core-Nations.The NICs may not be able to over take countries such as Russia and America because of what the economies of the countries are built upon.• The core-nations' economies are built upon the exports of

natural materials. Which is something other nations need to keep their countries going, which is why America is recovering so quickly from the recession.

• Where as the economies of the NICs is built upon importing materials then exporting a product, the well known phrase of made in China, showing their production power in good economic times. But in poor economic times people can live on the bare minimum, so no longer have a need for the products being made in Asia and South America.

How fast Asian based NICs have grown

• In 1960 the Asian NICs accounted for 5% of the total LEDC exports.

 • In 1980 this figure had risen to 10%

 • By 1989 this figure had risen to 32.1%

 • And now India alone has a figure of 35%

 • I think that this reflects the growth of NICs and also how fast

they have grown during the time of Boom.

Industries in LEDCs

By Navdeep Bhamra &Jaipal Gahir

 pg 178 - 179

Primary Activities in LEDCs pg 178 - 179

 •   Agriculture, i.e. farming

  is the most dominant   actvity within the primary  sector. • This is mirrored in 50%

  of workforce employed in  this area.  

Sub-Saharan Africa pg 178 - 179

• Farming is the way of life for most people.

 • Mali - trading, craft industry

and food processing are all restricted within the capital city of Bamako.

 • However, some trading is

completed in Timbuktu. (Tombouctou)

 • The River Niger is

conveniently placed for this reason.

South America pg 178 - 179

• The employment in agriculture has been plotted against the wealth of the country.

 •  Negative relationship

 • As the wealth of the

country increase, the percentage employed decreases.

Fig 1 - Relationship between wealth and employment in agriculture in South America.

Newly Industrialised Countries pg 178 - 179

• In some LEDC's, secondary and tertiary sectors are becoming more important.

 • Examples: Mexico, Brazil, South

Korea and Malaysia.  • Cause: A sufficient growth in

industry causing a substantial contribution to the economy.

 •  In addition to this the world

manufacturing share for LEDCs has also increased.

 

Multi-National Corporations pg 178 - 179

• Large companies which have business interests in many other countries.

 • E.g. Mining, Plantation, Farming

and Manufacturing. •  Headquarters Locations: usually

in MEDCs • However, where there is a

potential market, there is a key location to set up operations.

Headquarters and Brands of Multi-nationals

• Technology, Knowledge, Expertise and Skills.

 • Industries, Manufacture,

Engineering • Transport Infrastructure

 • Jobs

 • Exports

 • Multiplier Effect & Spin

Offs.

• Few Jobs • Low Wages

 • Taxes and Profits

 • Industries = Export

Dependent • Limited Range Of Industry 

 • Pollution and Poor Safety

   

Pros and Cons

Experiences of Multi-Nationals pg 178 - 179

• Countries' experiences with multi-nationals have been varied.

 • In some LEDCs, multi-nationals have

set up manufacturing industries, and have profited remarkably, for example Reebok in India.

 • However, areas in plantations have

brought little to a country's economy and workers.

 • However, these statements are

GENERALISED.

Changes in Industrial Location in the UK

• The growth of out-of-town locations • Areas in need of government assistance

 • The USA was the starting place of out-of-town locations

growing in abundance.  It now affects big cities in LEDCs in Asia and South America.

 • Poorer areas need to be improved in all EU countries in

order for that country to develop.

pg 182 - 183 By Robert Rossiter and George Zeng

The Growth of Out-of-Town Locations• Manufacturing industry has

traditionally been located near to town- and city-centres.

• When these sites are cleared for new buildings, the remaining land left behind is called a brownfield site (pictured right).

• Modern footloose industries do not find these sites attractive to build upon; they prefer greenfield sites.

pg 182 - 183

• Greenfield site are areas of rural open land that have never been built on.  They are located more commonly in the rural-urban fringe.

• Advantages of building on a green field site are cheaper land; more space; closer to motorways; reduced traffic congestion; easier to landscape to create a pleasant environment.

• Factories, offices, shopping centres, houses and roads - all of these compete for greenfield sites.  This raises issues about the Green Belt and its preservation.

pg 182 - 183

A greenfield site - note the lack of construction on the land

• The new industrial areas that are constructed in and around urban areas have a variety of names, depending upon the nature of the industry located there.

 • If the majority of tenants are

manufacturing companies, the area is referred to as an industrial estate.

pg 182 - 183

An example of an industrial estate in Salford, just outside of Manchester

• Business parks tend to be dominated by offices and research establishments.  However, they could also have a combination of light manufacturing industries; service industries; retail outlets; leisure complexes and distribution warehouses.

The projected image for 'Lakeside', which will provide 76,000 sq feet of lettable office space in the Birmingham Business Park

pg 182 - 183

• As with the growth of out-of-town locations, the idea of science parks also came from the USA.

• Science parks have a direct link to a University, where research is undertaken.  The pleasant working environment is so that successful business opportunities are derived from the research carried out there.  There are roughly 40 science parks in the UK.

pg 182 - 183

An aerial view of the Cambridge Science Park - one of the first, largest and most successful science parks in the UK

Areas in Need of Government Assistance• Coal was the dominant fuel for 200

years up to the 1950s in the UK. It was used in many manufacturing industries.

• Many industries went to the coal fields as coal was hard and expensive to transport. Therefore, areas rich with coal such as South Wales and Lancashire were full of industry.

• Today, there is little need of coal as a fuel in industry, but the areas highlighted in the diagram still contain many manufacturing industries.

Traditional heavy industry

pg 182 - 183

Traditional industrial regions in Britain (fig3 p183)

• However, today's light and high-tech industries are more attracted to the motorways instead of the coal fields.

• Heavy industry has declined rapidly in Britain recently. Industries fail to compete with the more modernised and more profitable industries in the east.

• For example, the shipbuilding industry in Britain has mainly moved to East Asian shipyards such as those in Japan and South Korea. South Korea produces over half the Gross tonnage of ships in the world.

pg 182 - 183

East Asian shipbuilding

An example of the shift in manufacturing industry

• Some heavy industry did survive in Britain however. One example is steel, but it has undergone huge changes in order to compete with the East.

• Steel industries are only concentrated in four places in Britain today, many old steelworks have closed down. Only the most profitable locations with the greatest advantages still have steel-making. From the case study on pages 172-173, one of the locations where steel-making is still active is Teesside.

• The steel output on Teesside has increased from1971 to 1995, but the number of employees in steel works has fallen dramatically. This shows that to compete with more profitable eastern steel industries, modern technology must be used and fewer workers must be hired.

pg 182 - 183

• Without coalmining and other industries, northern and western parts of Britain have suffered.

• The growing number and range of footloose industries prefer southern and eastern Britain where unemployment rates are lower. In these areas, there is no government assistance.

• The UK government and the EU provide financial and other forms of assistance to areas with job losses.

• Therefore, industries are sometimes attracted to these areas where a political factor comes to play. Central Scotland, north-east England and South Wales would become industrial deserts without it.

Assisted areas on the UK in 1996 (Fig 6 on page 183)

pg 182 - 183

How the Government provide assistance• There are a number of ways the government and the EU provide assistance

to areas with job losses.• The government can offer sweeteners like a capital investment, cheaper land

or less taxes.

The Globalisation of Industry

Alex Weir

Industry is international...

• Industrial countries do not only trade in home markets, but in global ones as well.

 •  As well as setting up local factories, larger

companies set up factories in other countries, where the locational attractions are greater.

GlobalisationIn terms of industry, the UK is not as it seems. It is not an island cut off from the rest of Europe, but a member of the EU.This allows for big, multi-national companies like Ford to operate in the EU as if it was one big country. 

 

Globalisation of companies in LEDC's

• This was evident in the 1990s mainly, when companies in LEDCs, especially South Korea, realised they had to gloabalise if they were to sustain  growth.

• Examples of this are: Samsung, who make microwaves in TeesideLG who chose South Wales for their proposed investment.