Specific examples
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I.
Purpose of using these specific examples in this module
1
These specific examples aim at helping students to understand the change in locational pattern
as well as the issues created by the global shift of manufacturing industry, including solutions
that can be adopted to solve the problems.
2
Students can acquire an overview of the global location of manufacturing industry and to
understand the global shift in industrial functions and locational pattern.
II. Curriculum tailoring for students of different abilities
1.
Every student should be provided with a brief introduction of the global manufacturing
activities, in particular the location pattern of the major industrial belts and the general factors
affecting industrial location and development.
2.
For the more able students, teachers can make use of the specific examples to conduct a more
in-depth study of the change in locational pattern as well as the issues created by the global
shift. In addition to this, teachers can also probe questions to stimulate students’ discussion on
the sustainable development of the manufacturing industry in the specific examples.
III. How to make use of the information provided in this folder?
1.
The information given in this folder provides teachers with some key and more updated
information and facts relating to the changing industrial location and functions in Guangdong,
the United Kingdom and the Great Lakes Region. By providing more concrete examples,
students’ understanding and motivation can be enhanced.
2.
Teachers are advised to adopt the information provided in this folder to tailor-make some
learning materials according to the ability and interest of the students.
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I.
Some facts about Guangdong
Guangdong is a province on the South China Sea coast of China. The province covers an area
of more than 212,000 square kilometres and has a population of 86.36 million in2013.
II. Industrial development in Guangdong
Since the start of the Reform and Opening Up in 1978, Guangdong has undergone rapid
industrial development. The share of the manufacturing industries to the Gross Domestic Product
(GDP) increased from 24% in 1979 to about 47% in 2012 in Guangdong Province. Statistical data
on the development of the manufacturing industry from 1978 to 2012 showed a significant increase
in the contribution made by the manufacturing industry to Guangdong’s economy in the period.
Year
Share of the manufacturing industries to GDP
1979
24%
1989
34.4%
1999
42%
2009
45.7%
2012
46.5%
Table 1
Share of Manufacturing Industries to Gross Domestic Product
Light industry has always been of importance in Guangdong. Apart from handicrafts, food
processing and the manufacture of textiles are the two major light industries of Guangdong. Most of
these industries are clustered in Guangzhou, Dongguan, Shunde and Shantou. On the other hand,
major heavy industry in Guangdong includes metal processing, the manufacture of machinery,
shipbuilding and ship-repairing and the production of automobile.
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III. Recent Changes
1. Move to inland provinces
Recently, more and more manufacturing industries in Guangdong have moved their plants to
or setting up new plants in the inland provinces away from the south-eastern coastal areas.
The improved transportation network in the inland provinces Yunan and the preferential
policies offered by the central government have attracted many factory owners to relocate
their plants to these inland provinces.
The following are a few examples of the inland migration of the manufacturing industries in
Guangdong:
Foxconn moved major production line to North China’s Langfang
In 2010, Foxconn planned to move its major production line from Shenzhen to
Zhengzhou to reduce labour costs.
Dell might move plant to save labour costs
Dell planned to move its manufacturing plant from the coastal city of Xiamen to the
central or western regions of China such as Chengdu after wages increased in China’s
coastal cities.
Pfizer looked inland for less costly talent pool
Due to the higher cost of talent in China’s coastal regions, some multinational
companies relocated to untapped inland cities for equally skilled, but less expensive
brainpower. As the world’s largest pharmaceutical firm, Pfizer will build a new
operation at Wuhan, Hubei for its global research and development project.
2. Develop hi-tech industries
During the past years, the provincial government of Guangdong has promoted industrial
restructuring. It encourages the region to ‘empty the bird cage for new birds to settle
down’. It is about eliminating old industries and introducing some advanced ones. The
region aims to develop high-tech, capital-intensive and high-end manufacturing industries.
Pharmaceutical, electronics, telecommunications, computers and other business machines
will be the future core of Guangdong’s hi-tech manufacturing industry.
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3. Promote sustainable development
China is focusing its efforts on sustainable development after its economy has experienced
a rapid growth over the last thirty years. To further promote sustainable development in the
industrial sector, the Chinese government has provided funding and other resources to
assist its capacity building, technology transfer, and information publication, etc. These
efforts and assistance have led to many successful projects and significant achievements.
The establishment of the Eco-industrial Park at Yinnashan, in Mei County is one of the
examples.
IV. Problems encountered by the manufacturing industry in the Guangdong Province
1. Labour shortage
Since 2004, the Guangdong province has been encountering labour shortage. There are a
variety of explanations for the labour shortage problem. Ageing population, poor working
conditions, low wages, improving economic conditions in other less developed inland provinces are
all reasons for it. Above all, that the major reasons are the less attractive salary and deteriorating
work conditions in the manufacturing sector. In addition, with the development of manufacturing
industry in inland provinces, rural dwellers are no longer interested in working in the coastal
regions far away from their homes. The coastal provinces are losing their power to suck workers
from their hinterland.
2. Rise in production cost
Increases in land prices and taxes, as well as stricter environmental and safety regulations all
play a part in causing a rise in the production cost of manufacturing industry in China. The
production cost of manufacturing industry rises sharply in the coastal provinces. The biggest
contributing factor is labour cost.
In 2012, an investment bank released a survey of over 200 Hong Kong-based manufacturers
operating in the Pearl River Delta. It is found that wages have already risen by 10% in 2012. For
example, Foxconn, a Taiwanese contract manufacturer that makes Apple's iPads in Shenzhen, put
up salaries by 16-25% in 2011.
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3. Stricter pollution control
In the past decades, due to the rapid industrial and urban development, the pollution problems
in Guangdong province have been serious. The provincial government of Guangdong has
implemented stricter pollution control requirements and standards in order to improve the situation.
If those existing production facilities fail to meet the requirements and standards, they will be
forced to close or move. Factories that continue to stay in the province must invest in more
environmentally friendly manufacturing systems. Such policies have increased the cost of
production.
References:
1.
Guangdong Statistical Yearbooks
http://www.gdstats.gov.cn/tjsj/default.htm
2.
Guangdong Statistical Yearbook 2013
http://www.gdstats.gov.cn/tjnj/2013
3.
Yinnashan Eco-industrial Park
http://www.mashpedia.com/videoplayer.php?q=hk0Bobv-5V8
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Since the mid-1970s, the UK has experienced great changes in manufacturing industry. The
functions and locations of the manufacturing industry in the UK have been changing over times.
I.
Locational changes of the manufacturing industries in the UK
In the 19th century, the main manufacturing industries were based on the use of coal and
imported raw materials, such as iron ore and cotton. A main concern of the industries was the
ability to export the finished products to other countries, particularly Britain’s former colonies. For
these reasons, the major industrial areas were either on the major British coalfields or at ports on
deep-water estuaries. Examples of such industries include:
 Textiles-woolen cloth in West Yorkshire and cotton cloth in Lancashire
 Steel in Sheffield
 Shipbuilding in Newcastle
Figure 1
Location of traditional industries in the UK
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In recent decades, the UK manufacturing industries have shifted its emphasis from textile and
steel-related industries to the high-tech industries that require a highly skilled and qualified
workforce to carry out research and development (R&D). The accessibility to raw materials
becomes less important in affecting industrial location. Instead the new high-tech industries
concentrated in areas where skilled and well educated workforce can be attracted to work, or is
available locally, under favourable government manpower resource policies. These high-tech
industries are often described as ‘footloose’ because they are not tied to certain locations. At a local
scale, they are commonly located at new industrial parks on the edges of towns, or alongside
motorways with efficient transport. The following are the major new industrial areas in UK:
 ‘Silicon glen’ in central Scotland
 The Cambridge area

Many small light industrial estates in ‘rural’ areas, e.g. East Anglia and Sussex.
Figure 2
Location of new industries in the UK
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II.
Functional changes of the manufacturing industries in the UK
As globalization speeds up, the manufacturing has changed significantly. Much of the
activity in modern day manufacturing is characterized by high levels of technological
innovation and investment in skills, knowledge and intangible investment such as branding,
software and marketing.
The majority of manufacturing industries in the UK in the recent decades have been
high-tech industries, such as computers and computer-related equipment, telecommunications
and biotechnology/ pharmaceuticals.
Many traditional industries, for example the car assembly, have advanced by adopting
new technologies and working practices to develop new products and to upgrade existing
models through research and development (R&D).
III.
Reasons for the changes in the manufacturing industries in the UK:
1. The provision of subsidies and economic infrastructure by the UK government has
attracted massive investment by transnational companies from Japan, South Korea and
Germany. In the case of motor vehicle industry, many Japanese car manufacturers have
come to Britain and built huge new plants, the three largest being Nissan, Toyota and
Honda. The factory of Nissan at Washington in northeast England is the largest single
investment by a Japanese company. Provision of similar subsidies and incentives by
different levels of governments has encouraged overseas and home investment in various
areas of the UK.
2. The improvement of transport network has been a major factor in influencing the shifting
location of manufacturing industry in UK. The latest rise of high-tech industries is closely
related to the swift movement of people, raw materials and products. For example, a large
Toyota plant was built next to the A38 trunk road at Burnaston in North Derbyshirem and
a Honda assembly plant is located at Swindon on the M4 corridor.
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3. Some industries tend to locate next to university campuses. This facilitates the industry to
cooperate with academic organisation to conduct research and development projects.
Moreover, universities also provide sufficient supply of manpower and technical support
to the industry. An example of this is the Cambridge Science Park.
4. The beautiful environment of the green areas in the rural areas of UK has attracted some
enterprises to develop their business there. In UK, many business organisations and
science parks have been built on greenfield sites in the suburbs with relatively low cost of
land and attractive environment.
References:
1.
Andy Palmer, Nigel Yates (2005). Advanced Geography. Oxford: Philip Allan Updates.
2.
David Redfern, Malcolm Skinner (2003). Advanced Geography. Oxford: Philip Allan Updates.
3.
BIS Economics Paper No. 10A
Manufacturing in the UK: An economic analysis of the sector (December 2010)
Department for Business Innovation & Skills
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/31785/10-1333manufacturing-in-the-UK-an-economic-analysis-of-the-sector.pdf
4.
The future of UK manufacturing: Reports of its death are greatly exaggerated
Observations, analysis and recommendations – April 2009
PriceWaterHouseCoopers
http://www.pwc.co.uk/assets/pdf/ukmanufacturing-300309.pdf
5.
BIS Economics Paper No. 18
Industrial Strategy: UK Sector Analysis (Septeber 2012)
Department for Business Innovation Skills
http://www.bis.gov.uk/assets/BISCore/economics-and-statistics/docs/I/12-1140-industrial-strat
egy-uk-sector-analysis.pdf
6.
The guardian - manufacturing data
http://www.guardian.co.uk/business/manufacturingdata
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I.
Industrial development and changing industrial location in the Great Lakes Region
The US Great Lakes Region is located in the northeastern part of US. It is made up of the area
around five lakes, namely Lake Superior, Lake Michigan, Lake Huron, Lake Erie and Lake Ontario
(Figure 3). It covers the states of Ohio, Indiana, Michigan, Wisconsin and Illinois. With the region
having rich natural resources such as copper, iron and gold, and the lakes providing good water
transportation, industry developed rapidly in this region. In the early years, there were industries
like lumber production, steel mills and shipbuilding. In the late 1890’s automobile industry started
in the area. The most famous automobile city is Detroit where Ford is the famous brand. Such
development further attracted more industries such as those which provided parts for automobiles.
Other services such as banks and trading firms were also attracted. This produced the agglomeration
economies and the area has been developed into a big manufacturing belt. More industries like
publishing and printing, chemicals, furniture, garment and agricultural machinery were also
attracted but auto manufacturing and steel production continued to be the most important industries
in the region.
Figure 3
The location of the Great Lakes
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Figure 4 shows the number of manufacturing jobs in the Great Lakes Region. It can be seen
that the number of manufacturing jobs has been decreasing since 2000. This is because more and
more industries have moved out from the region. Most of them have been moved to other countries.
The major reason for this phenomenon is due to the lower production cost in the less developed
countries such as Malaysia, China and Thailand. In addition, these countries offer incentives for
foreign enterprises to set up factories in their countries. They also do not have a strict environmental
control. With the growing globalization trend in manufacturing industry, US local industries lost
their competitive power as production costs will be cheaper if produced outside the USA.
Manufacturing jobs in the Great Lakes
Region 1969-2009
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Number (millions)
5
4
3
2
0
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
1
Year
Figure 4
Number of manufacturing jobs in the Great Lakes Region (1969-2009)
For the automobile industries, they moved out of the region because of some other reasons.
The headquarters of the firm is still in charge of the research and design of motor vehicles, and the
management of the whole production process and procedures. However, suppliers of parts have
taken a more important role in the design of parts. They established their own design centers close
to different markets of motor vehicles so that they can easily alter the design to fit the specific
requirements of the local market. Besides, since the parts are large, heavy and fragile, their
transportation costs are high. Therefore, automobile firms will set up regional assembly plants in
different places to serve the respective local markets.
In view of all these changes in production, many factories in the Great Lakes Region have
been moved out or ceased production. As a result, many factory workers were unemployed. It has
also produced chain reaction affecting other related industries and services. The local economy is
worsened with the decrease in salary on the whole.
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II. Measures taken to develop the Great Lakes Region in a more sustainable way
1.
Revitalizing industrial development in the Great Lakes Region
In order to revitalize industrial development in the region, the federal government
has provided subsidies for the development of new types of industry. Industrial
development in the Great Lakes Regions shifts from the traditional manufacturing sectors to
new high–technology industries and services. For example, in 2009, the US Federal
Government injected US $2.5 billion to assist the production of lithium-ion batteries which
can be used in mobile phones, laptops and hybrid automobiles. The industry has quickly
developed because there is already a pool of skilled and well educated workers available in
the region. Such development created a lot of job opportunities because the manufacturing
of lithium-ion batteries needs to employ a lot of people, including scientists to conduct
research and development to improve industrial materials, contractors to supply machinery
for production, as well as designers, engineers and machine operators for the operation of
the factories. It is estimated that the manufacturing of lithium-ion batteries employed about
65% of America’s scientists and engineers.
Besides local industrial development, some transnational companies (TNC) are also
attracted to re-establish their manufacturing plants in the region. For example, Toyota of
Japan has set up their assembly plants in the Great Lakes Region in order to avoid the heavy
tariff that they needed to be paid if produced abroad. They can also tailor-made their
products to suit local demand. The arrival of TNCs decreases unemployment and injects
capital to stimulate the local economy. Local people with more disposable income will
create a demand for more housing, transport, and services. All these promote the growth of
the local economy in different sectors.
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2.
Development of other types of economic activities
In order to sustain the economic development of the Great Lakes Region, the state
governments of the region search for different ways to boost the economy of the region.
Since the Great Lakes have beautiful scenery, beaches and water resources, tourism begins
to develop. The state governments put in a lot of effort to keep the water in the Great
Lakes clean to facilitate the development of tourism and its associated services. Industries
are required to invest more to lower the level of pollution. For example, the British
Petroleum (BP) spent about $1.4 billion in their $3.8 billion construction cost on
environmental controls.
3.
New trends in industrial development
Although many industries have moved out of the Great Lakes in searching for
low-cost location, such trend has been changing in recent years. More manufacturing
industries are coming back as the favourable factors of some of the overseas production
centres are diminishing. For example, China has been a country where most TNCs have
established their factories. However, the wages in China is rising. Average wages increases
by 150% from 1999 to 2006. From 2005 to 2010, average wages in China rose by 19% per
year while wages in US rose by 4% only. When comparing the labour productivity
between China and US, the labour productivity in China is obviously lower. So the
efficiency in the productivity of labour in US may outweigh the saving from labour cost.
This may affect the choice of location for those industries whose labour cost does not
occupy a large proportion in their total cost. For the other low-cost locations such as
Vietnam, Thailand and Indonesia, although their labour cost is lower than that of China,
their infrastructure and supply network is poorer and labour productivity is even lower. So
these countries may only favour the location of those labour-intensive industries that
require less skilled workers.
As recent manufacturing has placed more importance on the contact with
customers so that the design of products can be tailored to suit local demand, US can be an
increasingly attractive option for industry as it is close to the markets in North America.
Therefore, there is a trend that more industries are moving back to the Great Lakes.
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References:
1. About our Great Lakes: Economy
http://www.glerl.noaa.gov/pr/ourlakes/economy.html
2. A leaner, more skilled US manufacturing workforce
http://www.newyorkfed.org/research/current_issues/ci/2-2.pdf
3. Bearing the Brunt: Manufacturing job loss in the Great Lakes Region, 1995-2005
http://www.brookings.edu/research/reports/2006/07/useconomics-wial
4. Chicago: Economy
http://www.city-data.com/us-cities/The-Midwest/Chicago-Economy.html
5. Chicago’s Southeast side Industrial History
http://naturalsystems.uchicago.edu/urbanecosystems/calumet/cdrom/photos%20and%20maps/R
od's%20SE%20Side%20Hist%20slide%20show3.pdf
6. Encyclopedia of Chicago – Economic Geography
http://www.encyclopedia.chicagohistory.org/pages/409.html
7. Federal Reserve Bank of Chicago: Great Lakes’ manufacturing job loss in perspective
http://midwest.chicagofedblogs.org/archives/2012/02/great_lakes_man.html
8. Globalization of the automotive industry: main features and trends
http://www.econ.kuleuven.be/public/n07057/cv/smvg09ijtlid.pdf
9. Great Lakes see a future beyond industry
http://usatoday30.usatoday.com/news/nation/2007-12-03-GreatLakes_N.htm?loc=interstitialskip
10. History of Michigan – Industrial development
http://history.howstuffworks.com/american-history/history-of-michigan3.htm
11. Made in America, Again: Why manufacturing will return to the US
http://doingwhatmatters.cccco.edu/portals/6/docs/Made%20in%20America%20Again.pdf
12. Manufacturing isn’t dead in the Great Lakes Bay Region
http://www.nexteer.com/in-the-news/manufacturing-isnt-dead-in-the-great-lakes-bay-region
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13. The New York Times: Does America need manufacturing?
http://www.nytimes.com/2011/08/28/magazine/does-america-need-manufacturing.html?pagewa
nted=all&_r=0
14. Vital to our nation’s economy: Great Lakes jobs 2011 report
http://www.fws.gov/glri/documents/11-203-Great-Lakes-Jobs-report[1].pdf
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