Manufacturing & Industrial Location
Theory – Chapter 10
 Questions
 5 lectures left!
 Location Theory
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Weberian location theory
Alfred Weber, 1909
One market, two localized Gross RMs
 Let’s assume two localized Gross RM
sources, S1 & S2
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Gross RMs, 50% weight loss for each
S1, S2, or M =
$4
Alfred Weber, 1909
One market, two localized Gross RMs
 Least cost location is likely to be some
intermediate point
 Location is ‘pulled’ towards site of greatest
weight loss
 Varignon frame
Varignon Frame
Source: P. Dicken and P.E. Lloyd Location in Space 3rd edition 1990 Harper&Row
Alfred Weber, 1909
Labour costs: Isotims
 Labour costs as
“distortion” to basic
transport costs pattern
 Isotim
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Line of equal transport
cost for any material,
RM or FP
“X” has cost of $3.
Alfred Weber, 1909
Labour costs - Isodapanes
 Isodapane
 Line of total transport costs
 Determined by summing the value of all isotims at a point
 And joining all points of equal total transport costs
Alfred Weber, 1909
Labour costs – Critical Isodapane
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Lower labour cost locations OR
Cheaper locations due to agglomeration economies
Total cost saving of $n per unit
Do these locations lie within Critical Isodapane? i.e. $n isodapane
If yes, move!
(Assume no spatial inertia)
Alfred Weber, 1909
Overlapping critical isodapanes
 Agglomeration
economies
What is wrong with Weberian
industrial location theory?
 Single point markets
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Geographic variation in demand
 Over emphasis on transport
 Terminal costs ignored
 Labour is mobile yet localized
 Vast number of component inputs for most
manufacturing
 Single plant independent firms is unrealistic
Isard’s Substitution Principle
 P. 220
 Skip it!
Spatial Margins to
Profitability
 Slopes could be very
gradual
 Noneconomic factors
may prompt
nonoptimum location
within margins
 Firms may not have
data to determine the
optimum
Manufacturing: Regional Patterns
and Issues
 Manufacturing in Canada
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Tariff
Import substitution
Protect infant industries
Foster industrialization and create industrial
jobs
Linkages with other Canadian manufacturers
3rd Plank of the National Policy of 1869
Implications of the Tariff
for Canadian Manufacturing
 Industrialization benefits for southern Ontario and
Quebec, rapid urban –industrial growth
 Deindustrialization of Maritimes 1870s and 1880s
 Higher costs due to tariff and low Canadian productivity
were a small price to pay for Ontario & Quebec
 The seeds of
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Western alienation
Sir John A. &
Conservatives!
Implications of the Tariff
for Canadian Manufacturing
 Foreign ownership
 Tariff factories
 Branch plant economy
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Technological dependency
High costs, low productivity
Not competitive on world markets
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No mandate to export
Main links to U.S. not Canada!
 By 1980s, NTBs more significant
Free Trade
 CUSFTA – 1 Jan 1989
 NAFTA – 1 Jan 1994
 Foreign location no longer a condition of entry
 Rationalization/specialization
 Canada maintains positive balance of trade
 Increases dependency: imports and exports
 Weak C$ has been key to success
 Dispute resolution mechanism