why are site factors important? - themisterparsons...cotton. synthetics now account for...

356 The Cultural Landscape

KEY ISSUE 3

Why Are Site FactorsImportant?

■ Labor■ Land■ Capital

Site factors result from the unique characteristics of a loca-tion. Land, labor, and capital are the three traditionalproduction factors that may vary among locations. ■

LaborThe most important site factor at a global scale is labor. Mini-mizing labor costs is important for some industries, and thevariation of labor costs around the world is large. Worldwide,around one-half billion workers are engaged in industry,according to the UN International Labor Organization (ILO).China has around one-fourth of the world’s manufacturingworkers, India around one-fifth, and all MDCs combinedaround one-fifth.

Labor-Intensive IndustriesA labor-intensive industry is one in which wages and othercompensation paid to employees constitute a high percentage ofexpenses. Labor constitutes an average of 11 percent of overallmanufacturing costs in the United States, so a labor-intensive

industry in the United States would havea much higher percentage than that. Thereverse case, an industry with a muchlower than average percentage of expen-ditures on labor, is considered capital-intensive.

The average wage paid to manufactur-ing workers exceeds $20 per hour inNorth America, Western Europe, andother MDCs. Health care, retirementpensions, and other benefits add sub-stantially to the compensation. In LDCs,average wages are less than $5 per hourand include limited additional benefits.For some manufacturers—but not all—the difference between paying workers$5 and $20 per hour is critical.

A labor-intensive industry is not thesame as a high-wage industry. “Labor-intensive” is measured as a percentage,whereas “high-wage” is measured in dol-lars or other currencies. For example,motor-vehicle workers are paid muchhigher hourly wages than textile work-ers, yet the textile industry is labor-intensive and the auto industry is not.

Although auto workers earn relatively high wages, most of thevalue of a car is accounted for by the parts and the machineryneeded to put the parts together. On the other hand, laboraccounts for a large percentage of the cost of producing a towelor shirt when compared with materials and machinery.

Textiles: Labor-IntensiveProduction of apparel and textiles, which are woven fabrics, isa prominent example of an industry that generally requiresless-skilled, low-cost workers. Textile and apparel productioninvolves three principal steps:

• Spinning of fibers and other preparatory work to make yarnfrom natural or human-made materials

• Weaving or knitting of yarn into fabric (as well as finishingof fabric by bleaching or dyeing)

• Cutting and sewing of fabric for assembling into clothingand other products.

The textile and apparel industry accounts for 6 percent ofthe dollar value of world manufacturing but a much higher 14percent of world manufacturing employment, an indicator thatit is a labor-intensive industry. The percentage of the world’swomen employed in this type of manufacturing is even higher.

Spinning, weaving, and sewing are all labor-intensive comparedto other industries, but the importance of labor varies somewhatamong them. As a result, their global distributions are not identi-cal, because the three steps are not equally labor-intensive.

TEXTILE AND APPAREL SPINNING. Fibers can be spunfrom natural or synthetic elements. The principal natural fiber iscotton. Synthetics now account for three-fourths and naturalfibers only one-fourth of world thread production.

FIGURE 11-15 Break-of-bulk point: Port of Long Beach, California. Most goods shipped across the oceanare packed in uniformly sized containers, which can be quickly transferred between ships and trucks or trains.

Chapter 11: Industry 357

Before the Industrial Revolution, spinning of cotton was ajob for women, often an unmarried daughter still living athome, called a spinster, a term that came to be applied to anyunmarried woman. Children usually performed carding, whichinvolved preparing the fibers for spinning by untangling themonto rolls called cards.

Because it is still a labor-intensive industry, spinning is doneprimarily in low-wage countries (Figure 11-16). China producestwo-thirds of the world’s cotton thread.

Synthetic fibers include regenerated synthetics and true synthet-ics. Regenerated synthetic fibers are produced from natural rawmaterials modified to produce fibers suitable for weaving. The firstcommercially successful regenerated synthetic was rayon, made byprocessing the cellulose in wood pulp. True synthetic fibers areproduced from substances like petrochemicals that do not natu-rally form fibers. The first true synthetic fiber, nylon, was devel-oped from petroleum in 1937. Polyester is now the leading truesynthetic, accounting for one-third of synthetic fiber production.

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COTTON YARN PRODUCTION(METRIC TONS)

FIGURE 11-16 Cotton yarn production. Spinning of cotton fiber into yarn is clustered in a handful of lessdeveloped countries where cotton is grown. A man works with machines spinning spools of cotton at a textilemill in Indore, India.

China69%

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India9%

Turkey 2%

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TEXTILE AND APPAREL WEAVING. For thousands ofyears, fabric has been woven or laced together by hand on aloom, which is a frame on which two sets of threads are placedat right angles to each other. One set of threads, called a warp,is strung lengthwise. A second set of threads, called a weft, iscarried in a shuttle that is inserted over and under the warp. Asthe process of weaving was physically hard work, weavers weretraditionally men.

For mechanized weaving, labor constitutes a high percentageof the total production cost. Consequently, weaving especially ishighly clustered in low-wage countries: 93 percent of theworld’s woven cotton fabric is produced in LDCs (Figure 11-17).Despite their remoteness from European and North Americanmarkets, China and India have become the dominant fabric pro-ducers because lower labor costs offset the expense of shippinginputs and products long distances. China alone accounts for

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COTTON WOVEN FABRIC(SQUARE METERS)

FIGURE 11-17 Woven cotton fabric production. Woven cotton fabric is likely to be produced in LDCsbecause the process is more labor-intensive than the other major processes in textile and clothingmanufacturing. The cotton looms in the photograph are from a factory in North Carolina during the 1990sbefore it closed.

China59%

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Russian Federation3%

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Cs 4%

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nearly 60 percent of the world’s woven cotton fabric produc-tion, and India another 30 percent.

TEXTILE AND APPAREL ASSEMBLY. Sewing is probably aneven older human activity than spinning and weaving. Needlesmade from animal horns or bones date back tens of thousands ofyears, and iron needles date from the fourteenth century.

The first functional sewing machine was invented by Frenchtailor Barthelemy Thimonnier in 1830. In 1841, Thimonnierinstalled 80 sewing machines in a factory in St.-Etienne,France, to sew uniforms for the French army. However,Parisian tailors, fearing the machines would put them out of

work, stormed the factory and destroyed the machines. IsaacSinger manufactured the first commercially successful sewingmachine in the United States during the 1850s, but he was con-victed of infringing a patent filed by Elias Howe in 1846.

Textiles are assembled into four main types of products—garments, carpets, home products such as bed linens and cur-tains, and industrial items such as headliners inside motorvehicles. MDCs play a larger role in assembly than in spinningand weaving because most of the consumers of assembledproducts are located in MDCs. For example, two-thirds of thewomen’s blouses sold worldwide in a year are sewn in MDCs(Figure 11-18).

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PRODUCTION OFWOMEN'S BLOUSES

FIGURE 11-18 Production of women’s blouses. Sewing of cotton fabric into blouses is more likely to take place in MDCs. Clothing producers must balancethe need for low-wage workers against the need for proximity to customers. These women are sewing garments in Los Angeles.

United States23%

Romania13%

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LandLand suitable for constructing a factory can be found in manyplaces. If considered to encompass natural and humanresources in addition to terra firma, “land” is a critical sitefactor.

Rural SitesEarly factories located inside cities due to a combination of sit-uation and site factors. A city offered an attractive situation—proximity to a large local market and convenience in shippingto a national market by rail. A city also offered an attractivesite—proximity to a large supply of labor as well as to sourcesof capital. The site factor that cities have always lacked is abun-dant land. To get the necessary space in cities, early factorieswere typically multistory buildings. Raw materials were hoistedto the upper floors to make smaller parts, which were then sentdownstairs on chutes and pulleys for final assembly and ship-ment. Water was stored in tanks on the roof.

Contemporary factories operate more efficiently when laidout in one-story buildings (Figure 11-19). Raw materials aretypically delivered at one end and moved through the factoryon conveyors or forklift trucks. Products are assembled in logi-cal order and shipped out at the other end. The land needed tobuild one-story factories is now more likely to be available insuburban or rural locations. Also, land is much cheaper in sub-urban or rural locations than near the center of a city.

In addition to providing enough space for one-story build-ings, locations outside cities are also attractive because theyfacilitate delivery of inputs and shipment of products. In thepast, when most material moved in and out of a factory byrail, a central location was attractive because rail lines con-verged there. With trucks now responsible for transporting

most inputs and products, proximity to major highways ismore important for a factory. Especially attractive is theproximity to the junction of a long-distance route and thebeltway or ring road that encircles most cities. Thus, facto-ries cluster in industrial parks located near suburban high-way junctions.

Environmental FactorsNot every location has the same climate, topography, recre-ational opportunities, cultural facilities, and cost of living.Some executives select locations because they are attracted tothe distinctive amenities of a site. Attractions could be rela-tively mild climates and opportunities for year-round outdoorrecreation activities, or proximity to cultural facilities andmajor-league sports franchises. Industries may be attracted tospecific parcels of land that are accessible to low-cost energysources. Prior to the Industrial Revolution, many economicactivities were located near rivers and close to forests becauserunning water and the burning of wood were the two mostimportant sources of energy. When coal became the dominantform of industrial energy in the late eighteenth century, loca-tion near coalfields became more important. Because coalfieldswere less ubiquitous than streams or forests, industry began toconcentrate in fewer locations.

In the twentieth century, electricity became an importantsource of energy for industry. Electricity is generated in severalways, by using coal, oil, natural gas, running water (hydro-electricity), nuclear fuel, and, to a very limited degree, solarenergy and wind. In the United States, electricity usually ispurchased from utility companies, which are either publiclyowned or privately owned but regulated by the state govern-ment. Like home consumers, industries are charged a certainrate per kilowatt hour of electricity consumed, although large

industrial users usually pay a lower ratethan do home consumers. Each utility com-pany sets its own rate schedule, subject toapproval by its state’s regulatory agency.Industries with a particularly high demandfor energy may select a location with lowerelectrical rates.

The aluminum industry, for example,requires a large amount of electricity to sep-arate pure aluminum from bauxite ore (Fig-ure 11-20). Aluminum producers locatenear dams to take advantage of the largeamount of cheap hydroelectric power gen-erated there. The oldest continuously oper-ating aluminum production and fabricatingplant in the United States at Massena, NewYork, was established in 1902 by the Pitts-burgh Reduction Co. (now Alcoa, Inc.) neara dam constructed by the St. Lawrence RiverPower Co. as part of a three-mile canal link-ing the St. Lawrence and Grasse rivers.Alcoa, the world’s largest aluminum pro-ducer, also makes aluminum near othersources of inexpensive hydroelectric power.

FIGURE 11-19 Land as a site factor: rural location. South Korean-owned Samick Musical InstrumentsCompany located its piano-making factory in Gallatin, Tennessee.


FIGURE 11-20 Land as a site factor: aluminumindustry. Low-cost electricity is a critical site factorfor aluminum producers. To obtain electricity, Alcoaconstructed the Cheoah Dam across the LittleTennessee River in 1919.

As an indication of the importance of inexpensive electricityfor aluminum production, a subsidiary of Alcoa even ownsdams that generate power along the Cheoah, Little Tennessee,and Yadkin rivers in eastern Tennessee and western NorthCarolina.

CapitalManufacturers typically borrow funds to establish new facto-ries or expand existing ones. The U.S. motor-vehicle industryconcentrated in Michigan early in the twentieth centurylargely because this region’s financial institutions were morewilling than eastern banks to lend money to the industry’spioneers. The most important factor in the clustering ofhigh-tech industries in California’s Silicon Valley—evenmore important than proximity to skilled labor—was theavailability of capital. Banks in Silicon Valley have long beenwilling to provide money for new software and communica-tions firms even though lenders elsewhere have hesitated.High-tech industries have been risky propositions—roughlytwo-thirds of them fail—but Silicon Valley financial institu-tions have continued to lend money to engineers with goodideas so that they can buy the software, communications,and networks they need to get started. One-fourth of all cap-ital in the United States is spent on new industries in theSilicon Valley.

The ability to borrow money has become a critical factor inthe distribution of industry in LDCs. Financial institutions inmany LDCs are short of funds, so new industries must seekloans from banks in MDCs. But enterprises may not get loans ifthey are located in a country that is perceived to have an unsta-ble political system, a high debt level, or ill-advised economicpolicies.

KEY ISSUE 4

Why Are LocationFactors Changing?

■ Attraction of New Industrial Regions■ Renewed Attraction of Traditional Industrial

Regions

Industry is on the move around the world. Changing site fac-tors have been especially important in stimulating industrialgrowth in new regions, internationally and within MDCs. Atthe same time, some industries remain in the traditionalregions, primarily because of changing situation factors. ■

Attraction of New Industrial RegionsLabor is the site factor that is changing especially dramaticallyin the twenty-first century. To minimize labor costs, some man-ufacturers are locating in places where prevailing wage rates arelower than in traditional industrial regions.

Changing Industrial DistributionWithin MDCsWithin MDCs, industry is shifting away from the traditionalindustrial areas of northwestern Europe and northeasternUnited States. In the United States, industry has shifted from thenortheast toward the south and west. In Europe, governmentpolicies have encouraged relocation toward economically dis-tressed peripheral areas.

why are site factors important? - themisterparsons...cotton. synthetics now account for...

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