Chapter 7 Manufacturing
• Fundamental nature of manufacturing
processes
• Major manufacturing regions in the world
• Deindustrialization in the developed world
and the rise of manufacturing in the
developing world
• Sector specific dynamics
• The rise of flexible production systems,
business process outsourcing & downsizing
• (The product life cycle model is not in this
chapter again)
The Nature of Manufacturing
• Elements of the manufacturing process:
(a) product design, (b) assembling inputs,
(c) transforming the inputs, (d) marketing
the product
• Location decision – Weber model again
• Value added in each stage of production
Porter’s Value Chain
Firm Infrastructure
Human Resource Management
Technology Development
Support
Activities
Procurement
Primary
Activities
Inbound
Logistics
Outbound
Marketing
Logistics
and Sales
Operations
Upstream value activities
Service
Downstream value activities
Concentration of World Manufacturing
80% of Global Output in Three Regions
How current are these data?
Current role of China?
Global Distribution Manufacturing
Value Added
Rest of World
8%
North
America
26%
Other Asia
8%
U.S. – 22.4%
China
11%
Japan
14%
Europe
33%
Source: Calculated from NationMaster.com
Shares of Manufacturing Value Added
Source: World Bank World Development Indicators, 2011
Rise of
Maquiladoras –
Border & interior
Mexico
U.S. & Canadian
Manufacturing
Belt: Accounts
For about
Two-thirds of
Total
Manufacturing
Employment in
The U.S. and
Canada
A good
Overview
Of specialized
Versus market
Oriented
manufacturing
Specialization in the Regional
Distribution of Manufacturing
• Some cartograms – where area is
proportional to employment (using the
BEA Economic Area classifications)
• The first map shows the actual geometry
of the BEA Economic Areas
• The following maps depict industries
distributed broadly across the U.S., and
industries that are highly concentrated
• These are old maps, but for many lines of
manufacturing the data are probably
relevant
BEA Economic Areas – As of 1985
Other Manufacturing Regions
• Europe – Figure 7.5, Japan - Figure 7.9
• Globalization of manufacturing –
movement of capacity from U.S. &
Canada, Europe, and Japan to less
developed countries
• “The new international division of labor”
• “Anatomies of Job Loss”
U.S. Manufacturing Employment
Trend
2012
2013
xx
Change in U.S. Mfg.
Employment 1960-2000
Post-2000 Trends?
Deindustrialization in
industrialized countries
The Share of Mfg. may have fallen, but real mfg.
output is probably up in all these countries – see next slide for WA state
Real Output by Industry WA State
$35,000
Natural Resources
$30,000
Food Products
Output ($1972 in millions)
$25,000
Forest Products
Aerospace
$20,000
Other Manufacturing
$15,000
Construction
$10,000
Transport,
Communications &
Utilities
Trade
$5,000
FIRE
Services
$0
1967
1972
1982
1987
1997
2002
2007
Anatomies of Job-Loss:
disinvestment
Broad
Corporate
The “outfall”
Spatial
Structural
Trends
Agency
of restructuring
Macroscale
causal forces
in the global
Corporate responses
to global trends
Corporate competitive
Plant openings
Plant closings
economy
strategies
In-situ changes
outcomes
Events
on the
ground
Bluestone & Harrison - Deindustrialization of America:
“The core of B&H’s argument followed a restructuring approach
with the need to restore the drive to accumulate, producing,
through spatially distributed effects, a major reworking of the
role of U.S. cities and regions in the geographic distribution
of production.”
Impacts on Manufacturing Jobs in
U.S., Europe and Japan
• Job losses in manufacturing in all of these
regions
• Replacement has primarily been in
services
• Occupations created in the services are
frequently very different than occupations
lost in manufacturing, leading to high
unemployment rates and income
deterioration
Assets of Centers of Control
versus Peripheral Regions
Centers of Control
Peripheral Regions
• Key role in circulation;
realizing wealth
• Focal point for investment,
profits, interest
• Focus on forms of capital:
FIRE
• Occupational dominance
by professionals
• “Virtuous” multiplier
relationships driven by
above points
• Support networks of a
large cadre of service
workers in lower
occupational categories
• Key role in creating value
through labor pools &
resource endowment
• Compete with centers for
capital
• Capital transfers to core;
possible scarcity in periphery
No direct transference
• Multipliers chancy: impacts
only if investment comes to
them
• Employment fortunes
conditioned by “waves of
investment” and restructuring
Current Spatial Outcomes in the
U.S.
• Old centers are having their power erode
• New centers are rising, based on redistribution
– Charlotte NC - banking
or the rise of “new industrial spaces”
- Orlando-Melbourne (retirement)
- Las Vegas (entertainment)
- Seattle & Atlanta - technology based
manufacturing & information services
• The rural renaissance - retirement, footloose
entrepreneurs, recreation, rich people, niche mfg.,
IT, commuter air and courier services