Why locate industries in Britain?

What does Britain Import and Export?

Main Imports (goods brought into the country)

Main Exports(goods sent out of the country)

Manufactured goods e.g. clothing mainly from China and other countries in the Middle East

Manufactured goods e.g. cars, many cars in the UK are exported to the EU and Far East

Machinery ChemicalsFuels e.g. gas from Russia FoodFoodstuffs e.g. fruit – bananas, oranges, lemons, British products out of season e.g. strawberries.

Beverages e.g. beer, coca cola

Why? – Agriculture in the UK has decline due to mechanisation of farms – more machinery = less labour needed, and also due to quotas from the EU (Common Agricultural Policy). Agriculture now only employs 1.4% of the UK’s workforce and contributes only 0.9% to Britain’s wealth (GDP per capita, or Gross Domestic Product)

- Secondary industry was always strong in the UK and there are still many skilled and semi-skilled workers employed in the car industry for example. However, many secondary industries have moved their factories abroad, as it is cheaper to make products, buy raw materials and employ workers in LEDC’s e.g. steel industry. Foreign multi-national companies such as Toyota and Honda have set up factories here partly due to the large skills base of workers and the closeness to other car component companies in the UK (there are many small to medium sized car component factories, particularly in the West Midlands). Secondary industry in the UK now only employs 18.2% of the workforce and contributes 22.8% to the GDP.

- Tertiary industry, or providing a service for other people, is now the most

popular industry in the UK. This type of industry employs 80.4% of the UK’s workforce and contributes 76.2% to the GDP. Many people now work in offices, banks, shops, distribution warehouses and call centres. This is because the need for these services has increased, as the range of insurance products have increased, people have more money to spend in shops due to increased wages, and there is more demand for a greater range of goods.

What is globalisation?

Globalisation has resulted from many larger companies setting up businesses, such as factories in other countries. Therefore, there has been a large increase recently in the amount of trade over national boundaries.

Globalisation has many advantages. Businesses setting up factories or offices in other countries, particularly MEDCs, makes their products more accessible to those counties and therefore profits are increased. They also provide much needed work in

LEDC countries, which may earn workers slightly more money than they would earn in susbsitence agriculture (where the farmer only makes enough food for his family, with little else left to sell for profits). Multinationals may also bring much needed improvements to infrastructure to allow their goods to be easily transported to ports and airports for export. However, these rarely benefit people living in the LEDC.

However, many multinational companies (those that have their headquarters in one country, but have many other factories etc in other countries) take advantage of the host country. When multinational companies or transnational companies set up in an LEDC, they take advantage of the workers in that country, often employing them for poor wages. Working conditions are often poor and workers may have to work more than 10 hour days, 7 days a week. There are few rights for workers, with few holidays and no holiday pay, no concern for workers health and welfare, and sexual harassment of women employees. The profits made by the MNCs very rarely go into the country where the factory is located, but go back to the headquarters and the MEDC they are located in.

Examples of MNCs are Coca Cola, Toyota, Honda, Banana companies such as Dole and Del Monte and more recently the globalisation of call centres and IT services.

Why do multinational companies want to locate in the UK?

Although MNCs are often associated with setting up factories and offices in LEDCs, some MNCs have decided to locate in the UK. Japanese car companies such as Toyota and Honda have located factories in the UK. This is because many UK car companies such as Rover, have liquidated (gone bust) and have left many skilled car workers unemployed. Therefore there is a large available workforce in the UK to make cars. Also many car component factories based within the UK, particularly the West Midlands, which the MNCs can buy from. This is therefore called a positive multiplier effect – companies such as Toyota locating in the UK, are encouraging other car component firms, such as those that make exhausts, to set up, increasing employment opportunities and wealth for the country. The UK government has also encourage the MNCs to set up factories in the UK by offering grants and selling land at a competitive price. Export costs are also reduced. The EU places taxes on goods brought into the UK from other places. However, by setting up in the UK, the car companies such as Toyota can avoid having to pay these taxes, while still being able to sell to the EU, thus increasing their profits.