The future of Industry

The future of Industry
• Labor most important factor
changing location of industry in
the 21st century
• Shifts within MDC
– US
– Europe
– Japan
• International Shifts
– Countries
– Distribution
– outsourcing
• Industry is shifting away
from traditional areas of
northwestern Europe and
northeastern United States
– In U.S. it has shifted west
and south
– In Europe, government has
encouraged relocation
toward economically
distressed areas
• NE U.S. lost 6 million jobs in
manufacturing between 1950-2009
– Especially large declines in NY and PA
• Once served as hub of clothing,
textiles, steel, and fabricated metal
• 2 million jobs added to the South and
West between 1950-2009
• Why the south?
– Right-to-work laws
• Enacted in South
• Requires a factory to maintain “openshop” and prohibits “closed-shop”
– Closed shop
» A company and union agree
that everyone must join a
– Open shop
» A union and company must
not negotiate a contract that
requires workers to join a
• Textile Production
– Also moved to south and west
• Lower wages
• Little interest in joining unions
• Manufacturing has shifted from NW
Europe to southern and eastern
– European government policies have
• EU provides assistance to
convergence regions and competitive
and employment regions
– Convergence= Eastern and Southern
– Competitive and Employment=
Western Europe’s traditional core
• Spain has had most manufacturing
growth since late 20th century
– Growth had been retarded by physical
and political isolation
• Regions east of Germany and west of
Russia have become industrial centers
since fall of Communism
– Called “Central Europe”
– Poland, Czech Republic, and Hungary
– Two attractive site and situation
• labor, market proximity
– Good value for money
• In 1970 nearly ½ of world industry
was in Europe and nearly 1/3rd was in
North America
– Today both regions only account for ¼
• Increasingly important industrial areas
– East Asia
• Rapid industrial growth in China
• Also includes Japan and South Korea
– South Asia
• Led by India
– Textiles, motor-vehicle production
– Important center for business
– Latin America
• Brazil leading industry country
• Closest low-wage region to the United
– Cost of shipping lower
– Maquiladoras
• Changing distributions
– Shift to new industrial regions can
be seen clearly in steel and
– MDCs losing production to these
key industries to LDCs
• Steel production declined in
MDCs 40% and increased in LDCs
by 60% between 1980 and 2008
– Labor-intensive industries have
been especially attractive
• U.S. apparel workers declined
from 900,000 in 1990 to 150,000
in 2009
• Outsourcing
– Transnational corporations have
been especially aggressive in using
low-cost labor in LDCs
– Operations that can utilize lowskill, low-wage workers will
relocate to LDCs despite increase
in transportation costs
– Selective transfer of jobs to LDCs
is known as the new international
division of labor
• TNCs corporations allocate
production to low-wage
countries through outsourcing
– Definition: turning over much of
the responsibility for production
to independent suppliers
• Outsourcing contrasts vertical
• Outsourcing has had a major
impact on the distribution of
– Each step scrutinized closely in
order to determine the optimal
• Definition:
– Foreign owned factories located in
• Spatial distribution:
– Located close to U.S. border/
major cities/ entry points
• Why Mexico?
Inexpensive labor costs
Mexico’s proximity to U.S. market
Improved transportation
• Reorganization/relocation of
economic activities (jobs) from
a national to a global scale
• LDCs now ideal for
manufacturing jobs
• Features:
– MDCs rely on lower-cost
production from LDCs
– Comparative advantage
– Offshoring/ outsourcing
– Trade agreements
• Consequences:
Unemployment in MDCs
Internal migration
International migration
• In LDCs
Added job opportunities
More gender equality
Increase in wage gap
Environment issues
• Two factors encouraging some
industries to located in
traditional regions
– Availability of skilled labor
– Rapid delivery to market
• Proximity to skilled labor
– Skilled labor often found in
traditional industrial regions
• Example: Computer Industry
– Traditional approach= Fordist
(mass production)
– Today = post- Fordist
• Teams
• Problem solving
• Leveling
• Just-in-time delivery
– Increased in importance
• BRIC??