Chapter 11
“Industry”
Industry – Manufacturing of goods in a factory
Money - People – Raw Materials – Machines - Product
Past - Cottage Industry - products made at home
James Watt - Steam Engine - Industrial Revolution
1700 - United Kingdom - Hearth Region - Diffusion to:
1800 - Europe and North America
1900 - Rest of the world
Industrial Revolution Hearths
The Industrial Revolution originated in areas of northern England. Factories often
clustered near coalfields.
•2 main industries diffused with the industrial revolution:
•Iron and Textiles
Iron Industry
•Iron ore is mined - ore is melted (smelted) - pour iron
into molds that can be transported - now called Pig Iron
•Pig iron is shipped to be re-melted into something
useful
•If iron needs to be purified - called rolling or puddling
•Could be used to make steel with addition of Coal
•Coal - bulky so factories located near the coal and iron
ore mines
•Engineering became an important field - hundreds of
new machines were invented to create products
•Transportation took on a new meaning - canals and railways
were built to transport: people, products and raw materials
•Economics was developing
Textile Industry
•Spinning yarn - turns the short threads from cotton plants into
continuous yarn needed to weave cloth. Carding is the
untwisting of the fibers prior to spinning.
•A lot of energy was needed - more than humans could supply
- along comes the Steam Engine
•All processes to make cloth could now be housed in one
building - The Factory
•Bleaching and Colouring was in demand - Chemicals!
•Chemicals were created to colour Cotton and Wool
•Later comes synthetic cloth - Dacron, Orlon and Nylon
Food Processing
•Preserving food was the key
•In the past - dry it, ferment it, pickle it
•1810 - boiling and then canning first with glass then with tin
now with aluminum
Change in
Worldwide
Steel
Production
Industry is concentrated in four main areas of the world
North America
•North east US - Boston (cotton), New York (financial),
Buffalo (food processing), Pittsburgh (steel), Detroit
(automobiles)
•South east Canada - Great Lakes (steel, textiles, food
processing) - helped also by power from Niagara Falls
•Today industry is moving South and West
•South - ‘right to work’ states - no unions - Texas
•West - Technology - computers - Silicon valley, L. A. San
Francisco and San Diego
Western Europe
•Rhine-Ruhr Valley - iron and steel - Rotterdam
•Mid-Rhine - Finance and Commerce - cars
•United Kingdom - Iron and steel
•Northern Italy - Po river, textiles
Eastern Europe
•Moscow - Central Industrial District - textiles
•St. Petersburg - shipbuilding
•Eastern Ukraine - coal and steel
•Ural mountains - minerals, chemicals
•Kuznetsk - manufacturing, coal, iron and steel
•Silesia - steel
East Asia
•Japan, China, South Korea, Taiwan
•All the above have a large hard working labour force
•High quality goods at a low cost
•Electronics and automobiles
See the following maps!
Manufacturing Regions
The world’s major manufacturing regions are found in North America, Europe, and
East Asia. Other manufacturing centers are also found elsewhere.
Industrial Regions of North America
The major industrial regions of North America are clustered in the northeast U.S. and
southeastern Canada, although there are other important centers.
Manufacturing Centers in Western Europe
The major manufacturing centers in Western Europe extend in a north-south band
from Britain to Italy.
Manufacturing Centers in East Asia
Many industries in East Asia are clustered in three centers near the east coast. In
Japan, production is clustered along the southeast coast.
Global Steel
Production
Change
Location of Industry
Situation Factors: Transporting materials to and from a
factory. Minimize cost of transporting inputs to the factory
and finished goods to the consumer. Situation factor looks
at how the location of the factory will interact with where
the market is, where the raw material is and how you are
going to transport the raw materials and product. Choices
are do - I locate near my inputs (raw materials)? Do I
locate near my Market? How do I transport?
Site Factors: The characteristics of the actual location of
the factory. The land, labour and capital factors that go into
locating a factory. Site factor looks at the actual location of
the factory building. Choices are: Is there a skilled or
unskilled labour force that I can hire from? Are banks going
to lend me money? Can I locate downtown or in an
industrial suburb?
Maximize Profit by Minimizing Costs!
Wal-Mart
Location
A company that obtains all inputs from one source and
sells all products to one customer can easily compute the
optimal location for its factory.
If the cost of transporting the product (output) exceeds
the cost of transporting inputs - then locate near your
customer (market) and so on…..
Situation Factors
Location near inputs
Usually bulky goods, goods that are difficult to transport
because of size, weight, quantity or shape.
Minerals, wood, animals
Eg. Copper - heavy and bulky
Bulk Reducing Industry - The final product weighs less than
its inputs
Steel and iron ore are also bulk reducing. These need to be
near large energy sources as well.
Because of this Mini-Mills have been set up. These deal
with scrap metal and can be located near markets.
Location near markets
Bulk Gaining Industry - Products that gain volume or weight
during production
Eg. Soft Drinks - empty cans or bottles are brought to the
bottler and filled and then shipped
Water is another but it is available near the customer
Empty containers have volume but gain weight when
product is added.
Electronics are Bulk Gaining as well as automobiles. Make
parts and then assemble near your market. The US
automobile industry is today locating in the middle of the US
to distribute both to the West and East of the US
Agglomeration
(Alfred Weber) - People and activities tend to
concentrate in a location to share facilities and
services for mutual benefit. Suppliers of
components are at an economic advantage to
locate close to a major firm and minimize
transportation costs. Automobile industry is a
perfect examples. Click here to read more about
Alfred Weber.
Agglomeration - note how the parts plants locate
near the assembly plants.
Auto-Alley
2010
Hosiery and Sock Production
Hosiery manufacturers usually locate near a low-cost labor force, such
as found in the southeastern U.S.
Knit Outerwear Manufacturing
Knit outerwear requires more skilled workers, and much manufacturing is
still clustered in or near New York City.
Electronic Computer Industry
Computer and parts manufacturing requires highly skilled workers and
capital. It is clustered in the Northeast and the West Coast.
Single Market Industry
•High style fashion - New York, Paris, Rome
•Buyers converge to these cities
•Where the buyers come to you - Airline industry, Video
gaming - exhibitions and conventions
Just in time manufacturing - parts are shipped to the
assembly plant days before they are needed - no more
need to stock pile in warehouses. Industries that are
involved in parts locate near the assembly plants
Perishable Products
•Rapid transportation
•Very near markets
•Eg. Food, milk, eggs, bread
•This is where frozen foods, canned foods, preserved
foods make locating away from market possible.
•Fruit - picked while still ripening - ripen during transport.
•Newspapers are perishable and locate near markets Effect of Internet
•Newspapers can now go National and do not have to be
local since they can be read by a wide audience on the
Internet.
Ship, Rail, Truck, Air???
The further something is shipped the lower the cost per
KM.
Trucks - short distances (relative), door to door service,
easy to unload
Trains - longer distances and bulkier goods
Ships - Cheapest, very long distances, must be used to
cross the oceans and some seas, very bulky good.
Air - fastest, most expensive, only high value goods,
consumer pays dearly for air transport
Break of Bulk Points
Where a mode of transport changes for a good. Costs
rises each time products have to be loaded and
unloaded into different modes of transport.
Seaports, airports, train yards are all break of bulk
points
Discuss how containers changed transporting of goods!
Site Factors
Land, labour and Capital
Japan’s economic growth depends on Site not situation.
Japan has no raw materials.
Land
Factories - urban, suburban, rural locations
Factories - large amount of land - usually one storey, look
for cheap land, near an infrastructure (power, roads,
communication)
Labour
Labour cost is a high expense
Skilled and unskilled
Unskilled
Textile and Clothing – Labour Intensive
Spinning the cotton is located near the crop - Situation
Weaving is labour intensive so it locates near the market site
LDCs supply unskilled labour - low labour costs out way
the cost of transportation
Skilled labour
Education and training is required
Industries concentrate near cities with major universities
---------------------------------------------------------------------------Fordist - a worker performs a specific task over and over
again - assembly line worker
Post-fordist - a worker performs a specific task and after a
time period moves to another task - keep worker interested
and more productive.
Capital
Location near banks to borrowing money
Publicly owned companies near stock market
Finance companies and insurance companies locate in
cities with a well established banking system
Cities and even countries offer financial incentives like
tax-breaks, grants, low-cost loans to attract industry.
Site Selection for Saturn
Read the
description
on page
385
GM considered a variety of economic and geographic factors when it searched
for a site for producing the new Saturn in 1985. The plant was eventually located
in Spring Hill, TN.
Companies do not have to follow an ‘Optimum Location’
plan
Footloose industries locate anywhere no matter of site
and situation.
Work at home industries - called Cottage industries
Personal preferences - owner decides to locate where he
was born, went to school or location has an historical
significance - Microsoft in Seattle - Bill Gates was born
there
You can do a lot of business through Fax or email
The internet has created Footloose industries
See the last slide
Problems that industries face
Global supply is greater that global demand
•In the past  industrial growth  increase in pop.  increase
demand  increase production  increase in pop again
•Today - population is not growing - markets are saturated and
stagnant
•TVs, phones, computers - invent a new gimmick every couple
of months
•TV - HD - Blu-ray? – Flat Screen or LCD or Plasma?
•Phones - blue-tooth, GPS, iphone, mp3, movies
•Computers - Dual core
•Gaming - PS 2 to PS 3, Xbox to Xbox 360 - add-ons - Guitar
Hero, Rock Band, new online maps
•Price Drop of consoles and games, online gaming
•Anything to increase sales and pro-long the life span of the
product
•Today we pay more for quality and expect the product to last
longer
•Since we pay a lot we tend to hang on to a product longer as
well
•Some companies in order to lower the price have made the
products ‘cheaper’ (eg. use of plastic instead of metal)– pay
less but the product will not last as long – eg. Appliances, TV’s
etc.
Increased capacity to produce products has increased
worldwide
•The industrial revolution is diffusing to new countries who want
to develop by producing
•Countries also want to develop their own industry regardless
of over production - keep their economy going
•If a country does not have steel it can use plastic
•In the past MDCs produced 90% of goods while the LDCs
produced only 10%
•Today the LDCs produce 40% and the MDCs 60%
•BUT we have no-one to sell to - that is why China is
important
•In the past we had colonies to sell to
Trading Blocks
•In order for some MDCs to be competitive in a global market
some countries try and protect their domestic industry by placing
tariffs or quotas on imported goods
•LDCs are constantly looking for new markets
•The US placed quotas on how many cars Japan could import. In
order to get around this Japan placed its plants in Canada and
the US and began making cars here.
•This is the reason for the existence of Trans-national - Mutinational companies
Globalization?
•Groups of countries are forming associations that create large
Economies of Scale through a shared economy
•Western Europe - EU or European Union
•North America - NAFTA - North American Free Trade
Association
•These remove tariffs, increase the market and decrease the
cost therefore allowing the member countries to be more
competitive in a global market.
•The movement that make Countries create these
associations for mutual economic benefit is called
Supranationalism
•This movement brings countries together for a common goal.
Sometimes this is called a Centripetal Force. Centripetal
forces can be a major event that makes a country rally around
- 911, Olympics etc.
•When there is a movement to disband or break up a country
or a region (eg. Quebec) we call this movement Devolution or
it is considered a Centrifugal Force. Centrifugal forces can
involve war, civil unrest, protests etc.
Regional Disparities - MDCs
Many countries are finding that internally it is not the entire
country that is producing. Most countries have rich regions and
poor regions. So some of the profit from the rich regions has to
go and help the poor regions.
Europe - Northern Italy - rich, Southern Italy - poor
- France - Paris region - rich, South and West - poor
Canada - Ontario, Quebec, B.C., Alberta - rich, Maritimes - poor
USA - Northeast - rich, South - poor
There are incentives now to locate industry in these regions to
spread the production around so to speak
Casa Del Mezzogiorno - help southern Italy
Magiladora - Mexico/USA - a little different
Side Note - Canadian Regional Differences
What is unusual
about what this
map is
displaying?
Regional Inequalities in selected countries
Maquiladoras
LDC problems
Africa, Asia and Latin America - shift from agricultural
economies BUT some old problems
1. Distance to markets - they are far away from us
2. Inadequate infrastructure - they lack transportation,
communication, factories, energy, skilled workers and
education
There are no new markets to sell to. They have to sell to
themselves.
Key - Attract Trans-nationals with 1. Access to Raw
Materials and 2. Offer cheap abundant labour
New International Division of Labour
One final note: Tourism, Eco-Tourism - Invisible Trade
•For many parts of the world, tourism can offer prospects
of economic development.
•One in every 15 workers, worldwide, is occupied in
transporting, feeding, housing, guiding, or amusing
tourists.
Eco-Tourism
• an activity which, in addition to following the goals of
“sustainable tourism,” also:
(1) contributes to the conservation of an area’s natural
and cultural heritage;
(2) includes local indigenous communities in its
planning;
(3) interprets the natural and cultural heritage of the
destination to the visitor; and
(4) is aimed at small sized groups.
How has the internet changed the way industries
do business and locate?
Think of shopping and ordering on-line.
Think of downloading.
Is the ‘store’ becoming obsolete?
What is a distribution center?
What happens to the cost of the product is
purchased on-line? Eg. Purchasing books on-line.
Transportation is key and who pays for shipping?
Vocabulary List
Outsourcing
Ozone depletion
Plant location (supplies, “just in time” delivery)
Postindustrial
Refrigeration
Resource crisis
Resource orientation
Special economic zones (China)
Specialized economic zones
Substitution principle
Threshold/range
Time-space compression
Topocide
Trade (complementarity)
Transnational corporation
Ubiquitous
Variable costs
Weber, Alfred
Weight-gaining
Weight-losing
World cities
Industrialization
Acid rain
Agglomeration
Agglomeration economies
Air pollution
Aluminum industry
- (factors of production, location)
Assembly line production/Fordism
Bid rent theory
Break-of-bulk point
Canadian industrial heartland
Carrier efficiency
Comparative advantage
Cumulative causation
Deglomeration
Deindustrialization
Economic sectors
Economies of scale
Ecotourism
Energy resources
Entrepôt
Export processing zone
Fixed costs
Footloose industry
Four Tigers
Greenhouse effect
Growth poles
Heartland/rimland
Industrial location theory
Industrial regions (place, fuel source, characteristics)
Industrial Revolution
Industry (receding, growing)
Infrastructure
International division of labor
Labor-intensive
Least-cost location
Major manufacturing regions
Manufacturing exports
Manufacturing/warehouse location
- (industrial parks, agglomeration, shared services,
zoning, transportation, taxes, environmental considerations)
Maquiladora
Market orientation
Multiplier effect
NAFTA