Chap 11: Industry
Envs 204
Industry -- Defined
INDUSTRY -- Production of goods, especially
through manufacturing techniques, and a group
of firms with similar technical structures for
production.
a. Method of adding value such as man-made
value, from motive force,or other outside
source to create a final product
b. Includes factory system, limited stock
companies, integrated activities, specialization,
scale economies,...
11.1 Industrial Revolution
• “The root of the Industrial Revolution was
technology involving several inventions
that transformed the way in which goods
were manufactured”
– Unprecedented expansion of output and
productivity
– Substantial increase in standard of living
– Resulted in a Demographic Boom and
Transition (In the Western World)
Good 2 minute overviews
http://www.history.com/topics/industrial-revolution/videos/the-industrial-revolition?m=528e394da93ae&s=undefined&f=1&free=false
http://www.youtube.com/watch?v=aO3AW0JAHmU – 2minute overview
http://www.youtube.com/watch?v=E_tFFQyEu_Q&feature=related – 2 minute
view of child labor with musical background
http://www.youtube.com/watch?v=JhF_zVrZ3RQ BBC 1 hour documentary
Industrial Revolution
• Resulted in and from new social,
economic, and political
inventions/organization and developments
– not just industrial ones
• Changes were gradual
• Diffused outward across the globe from
England after 1750
• Diffusion continues today
Change & Impacts
1. Industrial Revolution -- completely
changed
a)
b)
c)
d)
How goods were produced.
How economy was organized
How people worked & organized
How goods were consumed
- formerly “folk” based activities became
“economic” based (much like the change
from folk to popular customs)
Hearth Areas
2. Hearth Area
- England
after 1750's
a. Key
Invention Steam
Engine -non-natural
power
source
Diffusion
Diffusion to and impact on other industries
 Coal -- key new input, why??? Hint birth of the
“energy slave”
 Iron Production -- vastly increased why???
 Transportation & Spatial Interaction -- both
infrastructure and technology changes the world’s
spatial geography (resulted in a time-space
compression – speeds up diffusion)
 Textiles – becomes first leading industry
 Engineering – emerges from the inventors of these
new technologies
 Food Processing – necessary input to support urban
labor concentration
Diffusion of Railroad Technology –
Time-Space Compression
• Hierarchical
diffusion – note
nodes from
which it
spreads
• Contagious
diffusion –
spaces in
between nodes
Diffusion
• Relocation – immigration brought new
technologies to distant locations
– Also the British attempted to limit this by forbidding
skilled textile “engineers” from emigrating
• Hierarchical – between Major centers of
commerce like London, Paris, Berlin, NYC
• Contagious – exponential outward
expansion as everyone wants to
participate – both production & consump.
11.2 Distribution of Industry
Tools
• Hearth Area
• Diffusion
– Relocation – follows immigration
– Hierarchical – transferred between major
metro areas
– Contagious – acceptance expotential
– Stimulous – principles most easily shared
11.2 Distribution of Industry
Tools cont…
• Pattern
– High clustering in few countries at first
– Clustering apparent even at present
• High density concentration = efficiency
• Spatial Interaction
– Space-Time compresion results from process
11.2 Distribution of Industry
Tools cont…
Site & Situation – both key to eventual sitting
of activities
• Site Factors include: resources, labor,
capital (human and monetary), land, and
markets
– China today focuses on cheap Labor
• Situation Factors focus mainly on long
distance transportation routes
– Coastal China today
11.2 Distribution of Industry
Tools cont…
• Resources & Markets
– Each exerts influence on locating industry
Major Centers in Europe
Major Centers in East Asia
Manufacturing
Zones in China
Click here
Major Centers in US &
Canada
Turning to Robots for
Manufacturing click
here
http://tlc.discovery.com/videos/understandingrobots-mass-customization.html
11.3 Situation – Transport Costs
Think Networks for Trade
• Bulk Reducing Activities
– Locate near raw material
– By reducing bulk final cost reduced
– Example Copper smelting
• Bulk Gaining Activities
– Locate near final market
– Add bulk at last minute – less trans cost
– Example Beer production
11.3 Situation Factors
Bulk Gaining
11.4 Changes in Steel Location
• 1770s Near Energy Source – locate
iron/steel forges in mountain valleys
and use wood/charcoal
• 1850s Near Energy Source –
coalfields because greatest bulk
– Pittsburgh favored
• 1890s In between coal and iron ore
– Lake Erie sites favored
• 1910s Move closer to markets as
coal requirements drop
– South Lake Michigan favored
• 1950s Move closer to East Coast
– More dependent on foreign iron inputs &
local markets
• Today – foreign sites & major US
Market sites
–
–
Foreign producers lower labor cost in integrated
mills
Major markets switch to scrap iron as input and
mini-mills
Steel has changed from
bulk reducing to market
sensitive locations in the
USA while moving to Labor
sensitive locations
internationally
11.4 Changes in Steel Location
• 1770s Near Energy Source – locate
iron/steel forges in mountain valleys
and use wood/charcoal
• 1850s Near Energy Source –
coalfields because greatest bulk
– Pittsburgh favored
• 1890s In between coal and iron ore
– Lake Erie sites favored
• 1910s Move closer to markets as
coal requirements drop
– South Lake Michigan favored
• Today – foreign sites & major US
Market sites
–
–
Foreign producers lower labor cost in integrated
mills
Major markets switch to scrap iron as input and
mini-mills
http://www.youtube.com/watch?v=_hlfqggGOZw&feature=related
Steel has changed from
bulk reducing to market
sensitive locations in the
USA while moving to Labor
sensitive locations
internationally
Creative Destruction?
http://www.youtube.com/
watch?v=V-wRygi2PaQ
http://www.youtube.com/w
atch?v=7O3ye1h60qU
http://www.youtube.com/watc
h?v=Pr3EJ-I1vaU
Site vs Situation for Steel
• 1770s Near Energy Source – Site condition dominates
– Energy & Bog Iron very close – site
– Transport of output to market -- situation
• 1850s Near Energy Source – Site condition dominates
– What Site conditions favored Pittsburgh?
• 1890s In between coal and iron ore – Situation condition
dominates
– What Situation conditions favored Lake Erie ports?
• 1910s Move closer to markets as coal requirements drop & iron
increases – Site conditions dominate
– What Site condition favored South Lake Michigan? Favored
• 1950s Move closer to East Coast change to foreign supplies –
Situation conditions dominate
– More dependent on foreign iron inputs & local markets
• Today – foreign mills & major US Market sites – Site conditions
dominate
– What Site conditions favors LDC Foreign producers for
integrated mills?
– What Site conditions favor large urban markets like Seattle for
mini-mills?
Migration to lower
cost developing
nations
Side note: ownership of mills
even in MDCs also migrates to
LDCs like China and India
Modern Mini Mill
http://www.youtube.com/watch?v=v0F5ITivFzo
Some Mini Mills in US & Mexico
Tend to favor Site Conditions – Locate close to
markets and scrap iron/steel sources
11.5 Auto Production
Situation Sensitive – Why?
Changing pattern
of plants to
reflect just-intime system &
unionization
Situation based
Network of
assembly
Site based lower
cost Southern
Labor
Auto Alley: Focused on I65 and I75
Example of Just-in-time delivery and assembly
70% of the value in a car
comes from independent
suppliers
Situation: Over time auto
suppliers and assemblers
have migrated to the center
of the country to minimize
distribution cost of final
products
Site: Suppliers and
assemblers have also
migrated south to lower cost
labor
New Car Plant Locates in Indiana
11.6 Transport Modes
Break of Bulk Point
• Place where move from one mode of
transport to another – good place to
process goods
– Seaport, airport, rail yard…
– Opportunity for further processing before
sending on
– Example wheat from farms may be
assembled at a port for export and milled
there into flour
Just-In-Time Production
• Low stockpiles at assembly plant
• Multiple suppliers concentrate in same
region
• Japanese automakers developed this
system due to small land area for factories
James Rubenstein
talks about Auto
Production – video
30 12:15 minutes
“Just in time”
example – truck
seats click here
http://www.youtube.com/watch?v=JTJLhWGVQQs
Mode of Transport
• Variations based on cost & speed
•
•
•
•
High
Cost
High
Speed
Air
Truck
Rail
Boat
Just in time
possible
Low
Cost
Low
Speed
Just in case or
large stockpiles
11.7 Site Factors
Site: Three of most important
Factors
• Labor – currently most important in labor
intensive industries like textiles
• Land – causes industry to migrate to the edge of
urban areas – looking for “green field” sites
encouraging sprawling single floor factories
• Capital – can either be locally available or from
outside
– FDI – foreign direct investment – such as capital flows
to China
– Venture Capital – readily available in Silicon Valley
Textile & Apparel Spinning:
Labor intensive mainly
done in LDCs
Woven Cotton: Dominated by low cost labor and readily
available raw materials in China and India
11.8 Textile & Apparel Production
Production of Men’s & Boy’s Trousers:
Higher skill then weaving, currently
migrating to LDCs
Labor-Intensive Industries
Labor-intensive Industries
• Consideration
– Balance of lowest cost per hour of labor
versus skills embodied in labor
– And transportation cost versus timeliness of
delivery
– Example cheap to make Christmas toys in
China, but if early supplies sell out difficult to
restock due to the distance
Decline in
Labor
Intensive
Clothing in
USA
Migration of
“skilled”
textile jobs
abroad
Comparative Labor Costs for
Clothing Manufacturing
Note how Indonesia could be
the next large textile producer
Notice where Pakistan
falls
11.9 Emerging Industrial
Regions
• US Shifts
– From high labor cost/protection areas to low
areas
• Movement out of US
– Outsourcing
– China as workshop of the world
– BRICS as possible future manufacturing
centers
Santa’s Helpers
http://www.youtube.com/watch?v=MQh2CZZK1YU