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Factors affecting Industrial Location
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Accessibility – Good in & out e.g. motorway access
Access for workforce
Access to airports to be global
Land – Cheap & flat
Room for expansion
Availability of skilled workforce
Location of raw materials
Services- power & water i.e. Infrastructure
Cost- tax, land costs, rates etc.
Government policy – influence location of industry.
Raw Materials
Near to raw materials due to immobility – transport inefficient
Today industry is footloose – grater efficiency and parts may be made elsewhere.
Industries with heavy, bulky materials & low costs locate near raw materials.
Power Supply
Early industry needed to be near power supply, however now more efficient. Often locate along
transport routes. With the National Grid power is transported cheaply and easily over the whole
country. Some industries may use HEP for cheap power e.g. Aluminium production in Canada.
Transport
Once a major consideration. Transport now more efficient with the use of containers. It now doesn’t
really matter where located due to ease of transport to markets. 2 types of transport costs:
1. Terminal costs – Time & equipment needed to store goods.
2. Long haul costs – Cost of actually moving goods.
Markets
Pull of markets now very important. Locate near new markets if
 Bulky products and many linking industries
 Perishable goods
 Market is very large
 The market is wealthy
Labour Supply
The cost of labour in the UK is high therefore mechanisation used. Labour generally immobile &
expect industry to come to them. Industry tries to locate where there are specific skills. Mechanisation
means they are freer to locate. Often locate near unskilled labour or high skilled for R&D. May want to
locate in a good environment to attract high-skilled, well-paid workers e.g. SE England. This is
particularly true for quaternary industry e.g. Microsoft in Seattle.
Capital
 Working Capital – money from profits, shareholders etc. Doesn’t usually affect location.
 Fixed capital – Buildings & equipment. Not mobile.
 Social Capital – Houses, shops, hospitals etc. which may attract industry.
Government Policy
Aim to even out differences in employment e.g. regional assistance in the UK. Try to encourage
industry to areas of high unemployment and restrict others. Offer grants by exemption from rates.
Government may control industry completely.
Land
19th C – Large areas of flat land needed. Today prefers cheap, uncongested land with better
accessibility. Government is trying to attract to inner city areas.
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Environment
People want to work in better environment so look for smaller towns near the country.
Chance Factors
E.g. Industries begun by individuals in their home town.
Industrial Location Models
2 main approaches to location theory in a “free market” or Capitalist system
1. The industrialist seeks the Lowest Cost Location – Weber
2. The industrialist seeks the area which will give the highest profit – Smith
Weber’s Model – Classical Location Theory
Weber was a German spatial economist who created his model in 1909.
Assumptions made:  There was a uniform transport system, culture, climate, economic & political situation
 Not all materials were evenly distributed across the plain
Ubiquitous – were evenly distributed
Localised – not evenly distributed, may be gross or pure
 Size and location of markets fixed
 Transport costs were a function of mass & distance moved.
 Labour found at fixed locations with the same rates and skills
 There was perfect competition so no industry would influence prices and revenue would be similar
The best site would be 1 with minimal production costs – Least Cost Location
MI= material Index
=Total weight of materials
Total weight of products
MI>1 – weight loss in manufacture
Raw materials said to be gross
Locate near to raw materials
MI<1 – Weight gain in manufacture
Locate near markets
MI=1 – Raw materials must be pure as its weight remains constant.
Can locate near market, raw materials or anywhere in between.
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Least Cost Location
Types of raw material (RM)
LCL at raw material
LCL at market
LCL at intermediate point
MI = material index
1. One gross localised RM,MI>1
yes
2. One raw material gaining weight or 1 ubiquitous RM MI<1
yes
3. One pure localised RM MI=1
yes
4. 2 ubiquitous RM (pure or gross)
yes
5. 2RM (1 ubiquitous, 1 pure)
yes
6. 2 RM (1 ubiquitous 1 gross)
any site depending on weight
yes
7. 2RM (both pure)
yes
8. 2RM (1 pure, 1 gross)
yes(if big weight loss)
yes(if small weight loss)
9. 2RM (both gross)
yes (at RM with greatest weight loss)
yes (equal weight loss)
1 Gross and localised
giving an MI>1
R
M
2 Either ubiquitous or
gaining weight in
manufacture MI<1
M R
M
5 One Ubiquitous and one
pure
3 Pure and localised
MI=1
M R
M
6 One Ubiquitous and one
gross
M
7 Two pure materials
Market
RM
1
LRM (pure)
U
U
(pure)
8 One pure, one gross
U
M
LRM (gross)
(gross)
PRM
Market
U
9 both gross
M
RM
RM
2
Market
(1) Equal
weight loss
for both RM
RM
Move
towards
gross if
heavy
GRM
<
weight
loss
RM
(2) One RM Bigger loss
more weight
than other.
RM loss
Smaller
Spatial Distribution of transport Costs
Isotim – A line joining all places with equal transport costs for moving either the raw material or the
product.
Market
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Isodapane – A line joining all places with equal total transport costs. (The sum of the costs of
transporting raw materials and products)
Effect of labour costs and agglomeration Economies
There were also factors that influence production costs in the Weber model.
Labour costs
This considered whether moving to an area of cheaper labour would offset the increase in transport
costs. He introduced the critical isodapane at the point where savings on labour costs equalled the loss
by greater transport costs. If cheap labour was within the critical Isodapane then it would be worth
moving there.
Agglomeration Economies
It would be profitable for 3 firms to locate within the intersection of their 3 isodapanes. However, it
would not be profitable to agglomerate if none of the isodapanes overlapped.
Criticisms of Weber’s model
 The model no longer relates to modern conditions e.g. improvements in transport, the changing
organisation of industry.
 Different countries may be at different stages of economic development
 The material index is crude and only works for primary industry or where there is a very high or
low index
 There are misconceptions in the assumptions
Price and demand change over time
There is no perfect competition
Decisions are not always rational
Transport costs vary
 Weber over-emphasised the importance of transport costs.
Benefits of the model
 Many TNCs seek cheap labour
 Iron & steel industries are in LCLs
 Agglomeration occurs in hi-Tec industry e.g. Cambridge Science Park
 The global importance of TNCs creates a rational being (maximising profits.)
Smith’s area of Maximum Profit
Put forward by Smith in 1971, suggesting profits are made anywhere where total revenue exceeded
total costs. There would therefore be a wider area where production is profitable. Firms rarely locate to
LCL but usually between the profit margins. Firms choose a sub-optimal location because they don’t
have perfect knowledge and don’t always act rationally. These are also called spatial margins. Often
people want satisfactory profits in exchange for better working conditions so are within the profit area.
Spatial margins of profitability

Variable sales, constant production costs.
Profit Margin
Cost of
Production
Revenue
Spatial
margin
Maximum
Revenue
Spatial
margin
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
Variable costs, constant sales
Cost of
Production
Revenue
Profit Margin
Spatial
margin

LCL
Spatial
margin
Variable costs, variable revenue
Cost of
Production
Profit Margin
Revenue
Spatial
margin
LCL
Spatial
margin
Problems
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The model may be too simple
It is possible to define perfect knowledge and ability
Can behaviour be due only to ability and knowledge?
Benefits
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Areal distribution – spatial margins are lines within which production is profitable.
Considerable value in predicting the constraints on locational choice where information on spatial
variations in cost and revenue are limited.
Used to show the effect of government legislation on industrial location.
Focuses on limits of freedom of locational choice for planners with imperfect ability and
knowledge rather than a point of maximum profit.
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Behavioural Models
Location is explained as much by social & cultural factors as by economic factors.
Criticises Least Cost Location as people’s behaviours vary. E.g. some want maximum profit; some
want a good standard of living. Some people aim for satisfactory location as they obtain “psychological
income”.
Behavioural Matrix
Consists of two axes.
 1 indicating ability
 The other the quantity and quality of information available.
With increasing knowledge and ability the decision-maker is more likely to make the right decisions.
Behavioural matrix accounts for the behaviour of the entrepreneur rather than the location so there may
be deviations from the LCL
Ability to use information.
Poor location
selected
Quality &
Quantity of
information
Optimum
location
selected
Structuralist Models
Location is explained by the underlying structures of society. Therefore location is driven by changes
in the National & World economy.