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Industry

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Industry as a system (p168)

By Hasaam Uldin and Aman Sahota.

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A diagram showing the way most systems work.

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Profits

a profit is only made if the cost of inputs and processes isless than the money earned from the outputs.

For example a factory uses 1000 to get raw materials tomake a car and spends a further 500 on wages and 100

on transportation. There is also a cost of 100 for thedisposal of waste products.

Therefore, for the factory to make a profit the car must besold for more than 1700.

See figure 2

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Types of manufacturing industry.

manufacuring industries use raw materials and/or partspurchased from companies to make products.

three types - Heavy, light and high tech industries.industries.

footloose industries - light and high tech industries.

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Heavy industry.

Often large scale industries. often have big plants in large areas of land - can often scar

the landscape. necessary industries because they are the providers of

materials to light industries. often require much money to get set up so they need big

investments. Steel, oil refining, ship building and smelting.

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Light and High-tech industries.

Known as footlooseindustries because of theirgreater freedom of locationbecause of smallerfactories and

products. light industries make

products that will likely besold to individuals.

secondary industry. often operate in industrial

parks. produce high value/low

weight products.

examples - gadgets,clothes and to s.

High tech industry is

quaternary. make high value products

using technology. invest in research and

development.

small enough to be locatedon units in business parks.

examples - computers,microprocessors,

communicationsequipment.

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Factors affecting industrial locationpages 170-171

By Tom Mitchell-Hewitt andMatthew Strachan

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Overview

To maximise profits businesses must chose a location with thegreatest number of positive factors- different locations havedifferent inputs and outputs of different importance. Thesedepend on the type of industry.Generally, heavy industries need to be close to raw materialsand their market to be profitable due to high transport costs.Whereas footloose industries have greater freedom to chosetheir location dependant on the nature of the industry.

Page 170-1

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Transport

Movement of: Raw materials to factory Manufactured goods from

factory to marketBoth can be done land (road& rail), water (sea and canals)and air (only if the cargo is ofhigh value)

Heavy, bulky or comparitivelylow value raw matierals areused in heavy industry and socheaper/bulk transport is

needed- eg, cargo ferries andrail networksFaster transport is moreimportant for consumer goodsas they are sold/bought ingreater quantities

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Other Communications

Increases in: Fax Phone Internet communication

Better information exchangeallows for less need for officework or near-market jobs, aspeople can work from home

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Capital

Money invested in: Buildings Machinery Wages for workers

Invested by: Banks Shareholders Governments

Heavy or high-tech industriesrequire large investments soareas willing to provide capitalare more likely to be chosen

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Raw Materials

Any materials that are neededto be processed. eg: Wood Oil Metal agricultural produce

- all are more bulky and lessvaluable than manufacturedgoods

Heavy industry locate closerto raw materials as heavyindustries use lots ofmaterials, and the raw

materials are often expensiveto transport

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Site

Any possible site must haveits cost, availability andgradient checked- cheap,flatter land

generally preferred as it iseasier to develop

Heavy industries need largeareas of cheap land todevelop, while lighterindustries use less land and

so are less tied down by costs

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Market

This reflects The size Location Wealth of buyers

Dispersial of market(concentrated ordispersed)

Heavy industries or industriesthat manufacture heavygoods need to be locatednear the market due to high

transport costs whereas thelighter industries only need amajor transport link near by toeasily retain profitability

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Government

Positives: Lowering restrictions Providing industrial

locationsNegatives Refusal of planning

permisions Business taxes

Govenment incentives canoften incite more and biggerindustries.These are often reserved for

areas of high unemploymentto encourage a revival in localindustries.

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Labour

The area must have: High quantity Well-qualified workforce Low enough average

wages to maintian profit

If any of these are too low orhigh then buisnesses will bereluctant to set up there as itwill lower profits and if the

extra cost is not accountablefor then they will just look forsomewhere else.

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Energy

All industries need energy,to operate machinery,manufacture goods andprocess raw materials

Energy from coal, oil, gasstations

Heavy industries need moreelectricity so locate where asource is closest- conversely,lighter industries can locate

more freely as electricityis accessible in most places

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Heavy Industry By the

Teesside

By Mitchell and Cameron

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Heavy Industry

Heavy industries have beenlocated around the estuaryof the river tees for over acentury

They are a dominantfeature of the landscape (fig5 pg169)

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Background to Steel-making at Teesside

Iron and steel industriesdeveloped along the southbank betweenMiddlesborough and Redcar

This was because the raw

materials and fuel supplieswere readily available

Iron ore, coal and limestoneweighed muh more than theiron and steel produced

It was more economicallyviable for the resources to betransported to a closerlocation

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Steel-Making at Teesside in the 1990s

Of the early advantagesfor steel-making, only thelimestone remains

British Steel, however, still

recognises that teesidehas many locationaladvantages

This has lead to largeinvestments in new plants

and machinery Most steel is made in the

Redcar works (grid square5625 on fig 2 pg 173)

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Transport along the Teesside

Transport is one of the

key factors which causedthe Teesside to becomeheavily industrialised

The river Tees is very

wide (around 1km)meaning large ships canbring in vast quantities ofraw materials from

wherever it is mosteconomically viable

It also means that a lot of

steel can be exported tomany areas of the world,bringing in money so thatthe industry can further

expand

F tl I d t i

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Footloose Industries

In new industrial regions, the industrial structure is dominated by

footloose industries, which are most likely to be located next tomotorways.

They contain growth industries, which are sometimes referred to assunrise industries.

Many of these sunrise industries can be found along motorwaycorridors, such as the M11, M23, M3 and M4. There is a greatconcentration in the M4 corridor between London and Reading.

Industries located here are normally light industries manufacturinggoods such as small electronics, car parts and food. High-techindustries engaged in research and processing for computers andtelecommunications can also be found here.

pg 174-175

General advantages for the growth of light industries

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General advantages for the growth of light industries

Transport is an important factor for the location of light industries,which is why they locate close to motorways.

Because they use or assemble light parts which are not bulky,transport to market is more important than access to raw materials.

The wealthiest and most concentrated market is in Greater London,

because this is very close to a large market.

There are also motorways and raillinks very nearby which give quickaccess to other markets in otherparts of the country.

These also provide quick accessto the channel tunnel, ports andairports for access to international

markets. pg 174-175

Specific ad antages for high tech ind stries

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Specific advantages for high-tech industries

Labouris a key locational factor for high-tech industries. It is very important tohave highly skilled research scientists and engineers available.

It is useful to have some universities nearby, to provide a pool of graduates whocan be employed by the companies.

Aerospace research around the Bristol area has attracted some high-techcompanies to locate there.

pg 174-175

Close by luxuries such as thecountryside, shopping centres andairports help attract skilled (high paid)workers who can afford these luxuries.

The offices try to be in easy reach ofLondon, so employees can visit the cityfor sporting events, exhibitions, shoppingand shows.

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pg 174-175

Th Rhi R h R i

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The Rhine-Ruhr Region

Background Information The North Rhine-Westphalia has a population of 18million

people and is the richest of the German states. The river Rhine flows through this region towards its western

edge. In this western region, the largest city is Cologne, with apopulation of roughly 1million.

There is the single greatest concentration of industry in thiscity than anywhere else in the European Union.

The river Rhine covers areas within the Rhine valley and theRuhr coalfield.

Sukhvir Lyall and John LutwycheThe Rhine-Ruhr Region P176-177

Map of the Rhine-Ruhr region

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ukhvir Lyall and John Lutwychehe Rhine-Ruhr P176-177

Map of the Rhine Ruhr region

Types of Industry in the Rhine Ruhr

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Types of Industry in the Rhine-Ruhr For more than 100 years, the economy of the region has

been dominated by its primary industry in coal mining. This has led to secondary industries being created which

need coal, such as textiles, smelting metals, heavyengineering, steelmaking and chemicals.

The industries that have been added today include oil

refining, whereas heavy industries still remain essential.

Regarding consumer industries, the most important is foodprocessing.

Sukhvir Lyall and John LutwycheThe Rhine-Ruhr Region P176-177

Factors for the Growth of Industry in the

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Factors for the Growth of Industry in theRhine Ruhr

Europe's largest energy supply is based in the Ruhr coalfield and

contains massive reserves. There are different varieties of coal including high-quality coking

coal. A pull factor for heavy industries over the years has been the

amount and quality of coal available.

Heavy industries use large consumptions of energy, but by locatingin the Ruhr they save considerable amounts of money on transportcosts.

Also, for the chemical industry coal is important as it is a rawmaterial and various products can

be made from it.

The concentration of metal-smelting and steel industries in the areabetween Dortmund and Duisburgmade it possible to create their ownmarket.

ukhvir Lyall and John Lutwychehe Rhine-Ruhr Region P176-177

The Ruhr Harbour

Factors for the growth of industry

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g ycontinued ...

Industries such as heavy engineering that use metals and industries such astextiles that need factories and machines set up in the Rhine-Ruhr region.

However the smaller companies found more benefit with setting up in thestate where the largest and richest market was in Germany with a populationof over 300 million people.

The River Rhine is also a key part of the industries. This is because it can beused for water transport.

It is used as a highway for barge traffic and as a link to the North Sea and theworld of shipping.

Moving heavy raw materials, up to 9000 tonnes at a time is much cheaperthan using other transport means such as road or rail. Also there arecanals which tail off from the river and lead

to different cities such asDortmund.

The River Rhine increases theadvantages of the regionbeing a key part of industry inthe world of today.

Duisberg

Industrial Change in the Rhine-Ruhr

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gSince 1950

Since the 1950's, many coalmining and industrial regions in

Europe have been in decline.However, the decline in theRhine-Ruhr region has not been as sudden, mainly because of: the important transport links along the River Rhine, which

means that goods can be easily transported to and from theregion

the central position of the Rhine-Ruhr within the EU the quality and sheer amount of Ruhr coal available, which

was still available in huge amounts even after 150 years ofcoal mining in the area

the productivity and prosperity of German industry


Industrial hange in the Rhine-Ruhr

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gSince 1950

However, there still have been changes in the Rhine Ruhr

region, for example:

there has been a decline in the number of workers inprimary industries such as coal-mining, where numbershave dropped from 500,000 to 100,000 since 1950.

non traditional manufacturing industries are now well

established within the area, such as motor vehiclemanufacture which has rose from sixteenth to fifth in order ofimportance in the area since 1950

there has been a rise in the significance of the tertiary sector

of industry. For example, the city of Cologne is now a mediaand telecommunications centre, with many people employedin these areas.


Problems In the Rhine Ruhr Region

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Problems In the Rhine-Ruhr RegionThere have been a lot of problems in the Rhine-Ruhr region,mainly to do with its reliance on coal mining industries. There has been a lot of unemployment, and it has not

always been possible replace all the jobs that have been lost There is still an overdependence on mining and heavy

industry, which still needs to lose workers, especially with

machinery doing the work of many men

The environment of the Rhine-Ruhr area has shown theeffects of over 100 years of heavy industry and mining.There have been many schemes to landscape waste tips,clean up water courses and preserving green areas, but the

work is still not complete

ukhvir Lyall and John Lutwychee Rhine-Ruhr Region P176-177

Newly Industrialised Countries

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Newly Industrialised Countries

Newly Industrialised Countries are exactly that, LEDCs whohave recently increased their effectivity in the secondarysector of industry, manufacture

NICs are usually those countries in which manufacture of

good that are sold in MEDCs occur

The "Made in China" attribute is an example of MEDC use ofan NIC, China.

Other NICs are Brazil, India and South Korea (South Korealess so, as it moves into the MEDC category)

Why LEDCs for investment?

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Why LEDCs for investment?

Cheaper Labouro Wages are lower on average than MEDCs; about $1/hr in

the NICs, whereas the average is several levels ofmagnitude higher in MEDCs.

The governments support the investment that MEDCs maketo benefit their economies.

Why LEDCs grew so fast

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Why LEDCs grew so fast.

During the 1970s many large companies based in NorthAmerica moved their labour base to LEDCs because:

This gave the companies a cheap work force.

Easy transport, so distribution was made more efficient withaccess to the sea and roads. The countries had no home market of their own so relied

havily on the people who invested in them. During the 1970s the most impressive growth was in South

America.

Since the 1970s

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Since the 1970s

Since the growth in South America, other countries such asJapan and parts of Europe, invested heavily in countriessuch as Hong Kong, Singapore,Taiwan and South Korea.

These countries have maintained their significant growth

rates and are known as 'Tiger Economies'.

Other NICs trying to match these countries are Malasyia,Thailand, Philippines and Indonesia.

Problems with Rapid Development

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Problems with Rapid Development

When the MEDC countries first invested in the countries,they tried to produce as many goods as possible for theleast possible amount of money.

This now leads to strikes over unsatisfactory wages and

faulty goods.

With all the heavy industry and Heavy Goods Vechiles, thereare problems with traffic congestion and Air pollution.

With the economies of the NICs being built upon the MEDCs

if there is a low rate of growth in the MEDC then the NICsare going to lose some of their financial backing andsomeone to sell the goods to. This lead to a crisis in SouthKoreain 1997/1998.

Colonialism and Dependency

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Colonialism and Dependency

A major problem experienced by the NICs in the past hasleft a rapidly growing economy and the countries homemarket is too small to cope with the large export of goods,leaving them dependent on the MEDC country that invested

in them.

An example of this is Brazil But in countries that have broken away from the colonies

such as Hong Kong, they are now a supreme trading

country, for the same reasons why countries like Britaininvested in them in the first place; access to continental Asiaand Europe and they also have access to the ocean.

They nolonger rely upon any other countries.

Why NICs may not be able to Eclipse

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Why NICs may not be able to Eclipsethe Core-Nations.

The NICs may not be able to over take countries such asRussia and America because of what the economies of thecountries are built upon. The core-nations' economies are built upon the exports of

natural materials. Which is something other nations need tokeep their countries going, which is why America isrecovering so quickly from the recession.

Where as the economies of the NICs is built upon importingmaterials then exporting a product, the well known phrase of

made in China, showing their production power in goodeconomic times. But in poor economic times people can liveon the bare minimum, so no longer have a need for theproducts being made in Asia and South America.

How fast Asian based NICs have grown

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How fast Asian based NICs have grown

In 1960 the Asian NICs accounted for 5% of the total LEDCexports.

In 1980 this figure had risen to 10% By 1989 this figure had risen to 32.1% And now India alone has a figure of 35% I think that this reflects the growth of NICs and also how fast

they have grown during the time of Boom.

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Industries in LEDCs

By Navdeep Bhamra &Jaipal Gahir

pg 178 - 179

Primary Activities in LEDCs pg 178 - 179

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y pg

Agriculture, i.e. farmingis the most dominantactvity within the primarysector.

This is mirrored in 50%of workforce employed inthis area.

Sub-Saharan Africa pg 178 - 179

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Farming is the way of life for

most people.

Mali - trading, craft industryand food processing are allrestricted within the capital city

of Bamako. However, some trading is

completed in Timbuktu.(Tombouctou)

The River Niger isconveniently placed for thisreason.

South America pg 178 - 179

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South America pg 178 - 179

The employment inagriculture has beenplotted against the wealthof the country.

Negative relationship As the wealth of the

country increase, thepercentage employeddecreases.

Fig 1 - Relationship between wealth and

employment in agriculture in South America.

Newly Industrialised Countries pg 178 - 179

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y

In some LEDC's, secondary and

tertiary sectors are becoming moreimportant. Examples: Mexico, Brazil, South

Korea and Malaysia.

Cause: A sufficient growth inindustry causing a substantialcontribution to the economy.

In addition to this the worldmanufacturing share for LEDCshas also increased.

Multi-National Corporations pg 178 - 179

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p

Large companies which havebusiness interests in many othercountries.

E.g. Mining, Plantation, Farmingand Manufacturing.

Headquarters Locations: usuallyin MEDCs

However, where there is apotential market, there is a keylocation to set up operations.

Headquarters and Brands of Multi-

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nationals

Pros and Cons

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Technology, Knowledge,

Expertise and Skills. Industries, Manufacture,

Engineering Transport Infrastructure Jobs

Exports

Multiplier Effect & SpinOffs.

Few Jobs Low Wages Taxes and Profits Industries = Export

Dependent Limited Range Of Industry

Pollution and Poor Safety

Experiences of Multi-Nationals pg 178 - 179

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Countries' experiences with multi-nationals have been varied.

In some LEDCs, multi-nationals haveset up manufacturing industries, andhave profited remarkably, for exampleReebok in India.

However, areas in plantations havebrought little to a country's economyand workers.

However, these statements areGENERALISED.

Changes in Industrial Location in the

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UK

The growth of out-of-town locations Areas in need of government assistance The USA was the starting place of out-of-town locations

growing in abundance. It now affects big cities in LEDCs inAsia and South America.

Poorer areas need to be improved in all EU countries in

order for that country to develop.

g 182 - 183By Robert Rossiter and George Zeng

The Growth of Out-of-Town Locations

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Manufacturing industry hastraditionally been located near to

town- and city-centres. When these sites are cleared for

new buildings, the remaining landleft behind is called a brownfieldsite (pictured right).

Modern footloose industries do not

find these sites attractive to buildupon; they prefergreenfield sites.

g 182 - 183

Greenfield site are areas of ruralopen land that have never beenbuilt on They are located more

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built on. They are located morecommonly in the rural-urbanfringe.

Advantages of building on a greenfield site are cheaper land; morespace; closer to motorways;reduced traffic congestion; easierto landscape to create a pleasantenvironment.

Factories, offices, shoppingcentres, houses and roads - all ofthese compete for greenfieldsites. This raises issues about theGreen Belt and its preservation.

g 182 - 183

A greenfield site - note the lack ofconstruction on the land

The new industrial areas that areconstructed in and aroundurban areas have a variety of

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urban areas have a variety ofnames, depending upon thenature of the industry located

there. If the majority of tenants are

manufacturing companies, thearea is referred to as an industrialestate.

g 182 - 183

An example of an industrial estate in Salford, justoutside of Manchester

Business parks tend to bedominated by offices and researchestablishments However they

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establishments. However, theycould also have a combination oflight manufacturing industries;

service industries; retail outlets;leisure complexes and distributionwarehouses.

The projected image for 'Lakeside', which will provide 76,000sq feet of lettable office space in the Birmingham BusinessPark

g 182 - 183

As with the growth of out-of-townlocations, the idea ofscienceparks also came from the USA

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parks also came from the USA. Science parks have a direct link to

a University, where research is

undertaken. The pleasant workingenvironment is so that successfulbusiness opportunities are derivedfrom the research carried outthere. There are roughly 40science parks in the UK.

g 182 - 183

An aerial view of the Cambridge Science Park -one of the first, largest and most successfulscience parks in the UK

Areas in Need of GovernmentA i t

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Assistance

Coal was the dominant fuel for 200years up to the 1950s in the UK. Itwas used in many manufacturingindustries.

Many industries went to the coalfields as coal was hard and

expensive to transport. Therefore,areas rich with coal such as SouthWales and Lancashire were full ofindustry.

Today, there is little need of coalas a fuel in industry, but the areas

highlighted in the diagram stillcontain many manufacturingindustries.

Traditional heavyindustry

g 182 - 183

Traditional industrial regions inBritain (fig3 p183)

However today's light and high-

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However, today s light and hightech industries are more attractedto the motorways instead of the

coal fields. Heavy industry has declined rapidlyin Britain recently. Industries fail tocompete with the more modernisedand more profitable industries inthe east.

For example, the shipbuildingindustry in Britain has mainlymoved to East Asian shipyardssuch as those in Japan and SouthKorea. South Korea produces overhalf the Gross tonnage of ships in

the world.

g 182 - 183

East Asian shipbuilding

An example of the shift in manufacturing industry

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Some heavy industry did survive inBritain however. One example issteel, but it has undergone hugechanges in order to compete withthe East.

Steel industries are onlyconcentrated in four places in

Britain today, many old steelworkshave closed down. Only the mostprofitable locations with thegreatest advantages still havesteel-making. From the case studyon pages 172-173, one of the

locations where steel-making isstill active is Teesside.

The steel output on Teesside hasincreased from1971 to 1995, butthe number of employees in steelworks has fallen dramatically. Thisshows that to compete with moreprofitable eastern steel industries,modern technology must be usedand fewer workers must be hired.

g 182 - 183

Without coalmining and otherindustries, northern and westernparts of Britain have suffered.

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The growing number and range offootloose industries prefersouthern and eastern Britain whereunemployment rates are lower. Inthese areas, there is nogovernment assistance.

The UK government and the EUprovide financial and other forms

of assistance to areas with joblosses. Therefore, industries are

sometimes attracted to theseareas where a political factorcomes to play. Central Scotland,

north-east England and SouthWales would become industrialdeserts without it.

Assisted areas on the UK in 1996(Fig 6 on page 183)

g 182 - 183

How the Government provideassistance

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assistance

There are a number of ways the government and the EU provide assistanceto areas with job losses. The government can offer sweeteners like a capital investment, cheaper land

or less taxes.

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The Globalisation of Industry

Alex Weir

Industry is international...

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Industrial countries do not only trade in homemarkets, but in global ones as well.

As well as setting up local factories, larger

companies set up factories in other countries,where the locational attractions are greater.

GlobalisationI t f i d t th

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In terms of industry, theUK is not as it seems.

It is not an island cut offfrom the rest of Europe,but a member of theEU.This allows for big,multi-nationalcompanies like Ford tooperate in the EU as if itwas one big country.

Globalisation of companies in LEDC's

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This was evident in the 1990s mainly, when companies inLEDCs, especially South Korea, realised they had togloabalise if they were to sustain growth.

Examples of this are:Samsung, who make microwaves in TeesideLG who chose South Wales for their proposed investment.

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