Industry: Vocabulary
Agglomeration
• The clustering of productive activities and
people for mutual advantage.
• Examples: Hollywood (agglomeration of
film making firms)Sillicon Valley (hi-tech
firms)NY/Wall Street (Finance firms)
basic industry
• The basic industry is an industry that
brings money into the economy by
providing a service to people outside the
community.
• Examples: Commercial fruit orchards in
Orange country, steel mills (formerly in
Pittsburgh), hotels in Pismo.
bid-rent theory
• the price and demand for real estate
changes as the distance towards the
Central Business District increases.
• Example: rents in lower Manhattan are
very high. Less in Brooklyn.
break-of-bulk
• A location where goods are transferred
from one form of transport to another. This
frequently involves the goods being
repackaged into smaller quantities (their
“bulk” is “broken up.”
• Example: Long Beach port where goods
transferred from ship to truck and train
brownfield
• a property which has the presence or
potential to be a hazardous waste,
pollutant or contaminant
• Example: mines, steel mills, dry cleaning
establishments, gas stations which
produced high levels of subsurface
contaminants during prior operations.
bulk-gaining industry
• An industry in which the final product
weighs more or comprises a greater
volume than the inputs.
• Examples: Soft-drink bottling industry,
Fabricated metals industry (automobiles,
refrigerators, etc.)
bulk-reducing industry
• An industry in which the final product
weighs less or comprises a lower volume
than the inputs.
• Copper, steel, paper industries
comparative advantage
• the ability of an individual, firm, or country
to produce a good or service at a lower
opportunity cost than other producers.
• Examples: producing oranges at lower
cost in Florida than Georgia due to site
factors (labor, climate)
cottage industry
• Manufacturing based in homes rather than
in a factory, commonly found before the
Industrial Revolution.
• Example: n/a
deindustrialization
• The decline of primary and secondary
industry, accompanied by a rise of the
service sectors of the industrial economy.
• Example: loss of secondary industry
(manufacturing job) in the U.S. Rust Belt
to outsourcing.
economies of scale
• Increase In Effiency Of Production As The
Number Of Goods Being Produced
Increases
• Ford Motor company and the Model A
export processing zone (EPZ)
• Special area(s) of a country where some
normal trade barriers are eliminated and
bureaucratic requirements are lowered in
hopes of attracting new business and
foreign investments.
• Maquiladoras along the U.S./Mexico
border.
footloose industry
• An industry whose location is not strongly
influenced by access to materials and/or
markets, and can operate in a wide range
of locations. Usually industries with
lightweight products.
• Examples: diamonds, hi-tech (computer
chips)
Fordism
• Form of mass production in which each
worker is assigned one specific task to
perform repeatedly.
• Automobile assembly lines (under Henry
Ford!)
just-in-time production
• Method of inventory whereby companies
keep on hand just what they need for
near-term production, planning so that
what they need for longer-term production
will arrive only when needed.
• Example: Automobile parts arriving only
when needed, grocery store products
arriving and put directly on shelves for sale
industrial inertia
• when an industry stays in a location even
after the advantages for locating there
have ceased to exist
• Examples: survival of the steel works in
Sheffield due to the prestige of Sheffield
cutlery, delay in shift to non carbon based
energy sources
Industrial Revolution
• A series of improvements in industrial
technology that transformed the process of
manufacturing goods from hand made to
machine made. English midlands, late 18th
century.
• Example: n/a
infrastructure
• the underlying framework of services and
amenities needed to facilitate productive
activity
• Examples: power grid, roads, highways,
airports, water, sewage systems, fiber
optic cables, telephone…
maquiladora
• Factories in a special economic zone on
Mexico's northern border with the United
States built to take advantage of low cost
labor and tax and tariff incentives.
new international division of labor
• Phenomenon whereby corporations and
others can draw from labor markets
around the world, made possible by the
compression of time and space through
innovation in communication and
transportation systems.
• Example: refrigerators! (Made first in U.S.
rust belt, then U.S. South, then Mexico,
then Asia.)
nonbasic industry
• Industries that sell their products primarily
to consumers in the community
• Grocery stores, dry cleaners, barber shops
outsourcing
• A decision by a corporation to turn over
much of the responsibility for production to
independent suppliers, often overseas
• Automobile industry
Post-Fordism
• Fast, flexible production to meet rapidly
changing niche markets
• Also includes workers working in teams
and are on equal terms with managers
• Associated often with outsourcing around
the world (rather than one big central
assembly line factory as in Fordism)
site factors in industrial location
• Location factors related to the costs of
factors of production inside the plant, such
as land, labor, and capital
• Example: n/a
situation factors in industrial
location
• Location factors related to the
transportation of material into and from a
factory
• Example: how far a factory or production
facility is from a) raw materials and b)
market
secondary vs. primary industry
location
• Primary (extractive industries: farming,
mining, forestry) are located in rural areas
• Secondary (manufacturing industries) are
located either close to raw materials or
markets.
Transportation Comparison: Truck,
Train, Ship, Air?
• Short distance (less than a day): Truck best
because terminal (loading, unloading) costs are
lowest. For long distances cost of paying driver
to rest adds up.
• Medium distance: train (higher terminal cost
than trucks but drivers don’t have to rest)
• Long distance: ship (lowest overall cost per mile)
• Air: Very expensive (jet fuel cost) so only if it
absolutely, positively has to get their overnight.
Weber's Least Cost Theory
• Model developed by Alfred Weber
according to which the location of
manufacturing establishments is
determined by the minimization three
critical expenses: labor, agglomeration and
ESPECIALLY: transportation.
• Hint: Weber was TALL (Transportation,
Agglomeration, LLabor
(I actually have
no idea if he
was tall or not.)
Hotelling’s Model of Locational
Interdependence
(aka “why are gas stations and coffee shops always right
next to each other?”)
Model of the locational interdependence of industry
developed by Harold Hotelling stressing that the
location of industries can't be understood without
reference to the location of other industries of like
kind. Used ice cream vendor on beach example.
Two ice cream vendors on the
beach. What is the optimal
location for each to optimize sales
1. Each vendor sets up so that
their market shares are equal.
2. Vendor A realizes if he moves
next to vendor B, he will sell to
all of the customers to his left,
capturing 75% of the market.
3. The next day, both vendors
realize that setting up in the
center of the beach is the only
way of keeping the other
vendor from “stealing” part of
their market share.