Industry

APHGSpring 2015

Industrialization

•What is it?•Where?•Why?

•Why care?

What 2 things were needed in order to manufacture products at the

beginning of the Industrial Revolution?

1.Close access to raw materials2.Ability to move materials

(waterway)

Why big cities like London and Paris?

Is this true today?Would you add any other

factors?

Economic Classification

• Production / Consumption / Distribution

• Sectors – Primary – Secondary – Tertiary – Quaternary

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Industrialization is the process by which economic

activities evolved from producing primary goods to factories that mass-produce

goods.

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Britain Industrializes

Wealth became a sign

of virtue instead of kinship.

Western European

Nations and the US

followed Britain

The Industrial Revolution• Pre-Industrialization: what did

the Revolution change?– People had made goods for

thousands of years before IR• things made slowly (low

productivity), all by hand• workmen handled all

facets of production > different quality goods• guilds created production

standards, but prices were high

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Before the Industrial Revolution

There were industrial centers before the late 18th Century but it was isolated. Most industries

were cottage industries.

Examples:Chinese Silk Factories

Metal Workshops in India

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The Early 18th Century

Early factories in Great Britain during the 18th Century were run by water running down slopes.

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The Most Important Invention

In 1769, James Watt built the first efficient steam engine. This was the most important invention to the Industrial Revolution.

Assembly Line Production

• 1920’s– Henry Ford – Assembly Line Production – Interchangeable parts –Mass Production • Division of Labor

New Industrial Concepts

• International Division of Labor

• Just in Time Production

Time-Space Compression• Just-in-time delivery

rather than keeping a large inventory of components or product, companies keep just what they need for short-term production and new parts are shipped quickly when needed.Two issues can result from reliance on just-in-time delivery: labor unrest and “Acts of God”

• Global division of labor corporations can draw from labor around the globe

for different components of productionThis labor can be skilled or unskilled.

Current Industrial Patterns

• Develop faster / Richer?• Levels of Development –Material condition of people – Everywhere / some level of development

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Diffusion of the Industrial RevolutionGreat Britain

Belgium/France (late 1700s)

The United States (1790s)

Italy, Netherlands, Russia, Sweden (late 1800s)

Asia, Middle East and Africa (Mid 20th Century)

The United States entered the IR later than Belgium and France but expanded more rapidly.

Most of Europe came late to the party because of revolution and strife (ie. French Revolution, Napoleonic Wars)

The Middle East and Africa entered the IR because of WWI and the need for oil.

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Why do you think that some places were affected by industrialization while others were not?

Diffusion to Mainland Europe• In early 1800s, innovations diffused into mainland

Europe.• Location criteria: • proximity to coal fields; • Connection via water to a port• Flow of capital

Later Diffusion•In late 1800s, innovations diffused to some regions without coal.• Location criteria:• Access to railroad• Flow of capital

Industrial Regions

The world’s major manufacturing regions are found in North America, Europe, and East Asia. Other manufacturing centers are also found

elsewhere.

Industrial Areas in Europe

Industrial Areas in North America

Manufacturing Centers in East Asia

Many industries in China are clustered in three centers near the east coast. In Japan, production is clustered along the southeast coast.

What is the hearth? What is diffusing?What historic patterns can you identify?

EXIT SLIP:1. Why was Great Britain the first country to become industrialized? 2. What changes occurred with the steam engine, new machinery, and the factory system?

MUDDY WATERS…What idea/concept did you not understand from today’s lesson?

Can you predict where a factory should locate?

• What is the goal of any factory? Profit = Price - Costs• Assuming:– Labor cost the same and is available anywhere– There is only one market– Topography is flat– Transportation costs are a direct result of weight

• Where would you put a factory?

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• Develops as transportation improves.

• Less dependent on location

Secondary Industry

• Develops around natural resources.

Primary Industry

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Secondary Industry Locations

Variable Costs

Friction of

Distance

Distance Decay

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Situation Factors• Transportation Issues• Bulk-Gaining, Bulk Losing

Site Factors• The cost of Land, Labor, and Capital• Climate• Access to Amenities

Situation factors

• Inputs– Heavy, bulky, fragile – locate near the

inputs• Known as Bulk-reducing• EX. Copper, steel, canned tomatoes

• Outputs– Heavy, bulky, fragile – locate near

market• Bulk-gaining• Beer, glass, concrete

Transportation Factors

• Methods– Ship (ocean, lake, river)

• Very Low cost, very slow, long-distance, non-perishables

– Rail• Low cost, slow speed, long/med. Distance

– Trucking• High cost, mod to high speed, any dist., very flexible

– Air• Very high cost, very high speed, med/long dist.

– Pipeline• Very low cost, LIQUIDS!

Types of TransportationMode of

Transportation Advantages DisadvantagesTrucks •Can go anywhere there are roads

•Fair amounts, large distance, relatively quickly

•Weather Delays•Traffic•Fossil Fuels•Maintenance

Trains •Efficient and Cost-effective•Immense amounts long distances

•Inflexible routes•Break-of-bulk points needed•Can’t cross oceans

Airplanes •Fastest means•High flexibility

•Most expensive•Break-of-bulk points needed•Weather delays

Pipelines •Highly efficient ways to move liquid and gas•Very safe delivery method

•Limited to gas and liquid•Expensive to build•Costly to move a pipeline

Ships •Most energy efficient •Slowest method•Need access to waterway•Break-of-bulk points needed•Weather delays and Port costs

Site factors

• Physical characteristics of a place.• Different industries have different needs.• Availability and cost of:– Land (lg areas – Airplane manufacturing)– Power (lots of electricity or fuel – Aluminum)– Labor (unskilled – electronics, skilled – research/dev)– Capital (Money, money, money…money!)

• Footloose Industries – – Can locate anywhere (Diamonds, computer chips -

YUMM)

Location ModelsWeber’s Model

Manufacturing plants will locate where costs are the least (least cost theory)

Theory:

Least Cost Theory

Costs: Transportation, Labor, Agglomeration

Hotelling’s Model

Location of an industry cannot be understood without reference to other industries of the same kind.

Theory:

Locational interdependence

Losch’s Model

Manufacturing plants choose locations where they can maximize profit.

Theory:

Zone of Profitability

http://ed.ted.com/lessons/why-do-competitors-open-their-stores-next-to-one-another-jac-de-haan#watch

MARKET

Resource 1 Resource 2

Weight Gaining Industry

Weight Reducing Industry Footloo

se Industr

y

What is this model called?Weber’s Least Cost Theory (Industrial Location Theory)

Weber’s Least Cost Theory • Factory Location – Least Cost to the

Factory / Company

• Assumptions– Cost of

Transportation • Weight • Distance

– Maximize Profits • Minimize Cost

Weber’s Least Cost Theory

• Assumptions –Markets are fixed– Labor is fixed– Uniform Landscape – 4 Main Drivers • Transportation • Labor • Agglomeration • Deglomeration

Weber Key Ideas

• Friction of Distance:The greater the weight the greater the costThe greater the distance the greater the costThe greater the time the greater the cost (think

veggies!)

• Focused on Costs : Variable Costs!Profit = Price – Costs

Hotelling’s Model Locational Interdependence

• Variable Revenue:– Maximize Profits not minimize costs!

Profit = Price – Costs Find the location that provides the best profit

…and where other industries are located.

Can you create a Spatial

Monopoly?

Losch Model(pronounced laesch)

• You can look at one point…but maybe a bunch of points will work.

• And things can change…replace labor with machines? Increase transport costs but reduce land rent?

Time to apply some theories…Using Weber, Hotelling, and Losch…

Where would you sell doughnuts in the morning for OHS?

Use the school map provided.

What is a Post Industrial World?What does it look like?• Tertiary, quaternary, and

quintary sectors.• Deindustrialization?• Increasing Mechanization• Multinational Corporations• Post-Fordist Production• Global Division of Labor• Global Production Chain• Can outsource services –

Who prepares the food and cleans the place?

Where is it located? Core countries still Sunbelt in USWith Services…what is

more important? ResourcesMarkets

Why call centers in India?

What is a high tech corridor?

(IL Research and Technology Corridor…Silicon Prairie?)

Why Are Location Factors Changing?

• Attraction of new industrial regions– Changing industrial distribution within MDCs• Interregional shift within the United States– Right-to-work laws– Textile production

• Interregional shifts in Europe– Convergence shifts– Competitive and employment regions

– Changing distributions– 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.• http://www.metatube.com/en/videos/10420/The-Simp

sons-India-Outsourcing/• Offshore – Outsourced work that is located outside of

the country.

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.

Key Question

What is the Service Economy, and Whereare Services Concentrated?

Service Economy• Service Industry

• Economic activity associated with the provision of services – such as transportation, banking, retailing, education, and routine office-based jobs.

Geographical Dimensions of the Service Economy

• New influences on Location:

- information technologies- less tied to energy sources- market accessibility is more relevant for some and less relevant for others because of

telecommunications.- presence of Multinational Corporations

Wal-MartRequires producers of goods to locate office in the Bentonville, Arkansas (Wal-Mart’s headquarters) area in order to negotiate deals with Wal-Mart.

Proctor & Gamble put their office in nearby Fayetteville, Arkansas.

How does the presence of these companies in the region change the region’s economy and its cultural landscape?

NikeHeadquartered 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

High – Technology Corridors• An area designated by local or state government

to benefit from lower taxes and high-technology infrastructure with the goal of providing high-technology jobs to the local population.

eg. Silicon Valley, California

• Technopole – an area planned for high technology where agglomeration built on a synergy among technological companies occurs.eg. Route 128 corridor in Boston