industry

Industry

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Definition Industry – The

manufacturing of goods in a factory

Globalization has changed focus, location

Maquiladora – Factories built by U.S. companies in Mexico Near the border Lower labor costs Consumers: price is more

important than originhttp://media.web.britannica.com/eb-media/42/100842-004-

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Origins of Industry Industrial Revolution

– Improvements in industrial technology that transformed the process of manufacturing goods N. England/Scotland in

the late 1700s Replaced cottage

industries (home-based manufacturing)

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Origins cont’d Key: steam engine

(1769, James Watt) Could concentrate

whole process in one building

Industries impacted: iron, coal, transportation, textiles, chemicals, food processing

Result: high productivity, better living standards

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Europe ¼ of world’s

industrial output Emerged during the

1800s/early 1900s Key areas:

United Kingdom Rhine-Ruhr Valley

(most important area, iron/steel)

Mid-Rhine (Germany) Po Basin (Italy)

http://homepage.smc.edu/buckley_alan/ps7/europe_industry_1850a.gif

Europe cont’d N.E. Spain (fastest-

growing, focus: textiles) Moscow (fabrics) St. Petersburg

(shipbuilding) Volga (petroleum,

natural gas) Urals (minerals) Kuznetsk (coal/iron) Donetsk (Ukraine, coal,

iron, natural gas) Silesia (Poland, steel)

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North America Arrived later, but grew

faster than in Europe Focus: N.E. U.S., S.E.

Canada Regions:

New England (oldest, textiles)

Middle Atlantic (largest) Mohawk Valley (food

processing) Pittsburgh/Lake Erie (steel) Western Great Lakes (cars) S. California (clothing) S.E. Ontario (steel, cars)

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East Asia Key resource: people Japan

Growth – 1950s/1960s Focus: motor vehicles,

electronics China

Largest supply of low-cost labor

Focus: textiles, steel, household goods

1990s - allowed transnational companies in, led to rapid economic growth

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Situation Factors

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Definition The transport of

materials to and from a factory Key factor in

determining why industries locate in particular places

Goal: minimize cost of transporting inputs (parts/resources) to factory, and finished goods to consumers

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Bulk-Reducing Industry Industry in which

inputs weigh more than the final product

Example: Copper Several steps in

production (mining, smelting, refining)

Need economical energy source for most steps

2/3 of U.S. copper comes from Arizona (proximity to mines is most important)

http://www.mining-technology.com/projects/bingham/images/bing9.jpg

Bulk-Reducing cont’d

Example: Steel Manufactured by

removing impurities and adding elements (manganese, chromium)

Steel mills have been replaced by minimills, which use scrap metal

Proximity to markets is now more important than inputs

http://menofsteelrecycling.com/steelplant.jpg

Bulk-Gaining Industry Making something

that gains volume or weight during production

Example: fabricated metals Brings metals together

and transforms them into a complex product

Most plants locate near markets due to shipping costs

http://www.feida-usa-supply.com/Fabricated%20Metal%20Parts.jpg

Bulk-Gaining cont’d Markets for fabricated

metal: TVs, refrigerators, air conditioners, motor vehicles

Beverage production Empty cans/bottles are

filled with liquid, shipped to consumers

Weight adds to shipping costs, so plants are located near markets

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Other Industries Single-Market

Manufacturers Specializers with only

1-2 customers Ex. Motor vehicle parts

Perishable Product Manufacturers Ex. Bread, milk,

newspapers Both industries must

locate close to customers

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How to Transport? Truck – short-distance,

best for one-day delivery Train – Longer distance,

no need for stops Ship – Low cost, cross-

continental Air – High cost, for small,

high-value packages Break-of-Bulk Point

Location where transfer of travel modes is possible

Cost rises with additional break-of-bulk points

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Site Factors

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Definition

The unique characteristics of a location

Three traditional production factors: Labor Land Capital

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Labor

The most important site factor

Labor-intensive industry Industry in which

wages and other compensation paid to employees constitutes a high percentage of company expenses

Found mainly in LDCs

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Labor cont’d Example: textiles

(woven fabrics) Step one: spinning

Done mainly in LDCs (China = 2/3 of cotton thread)

Synthetic fibers used in recent years (rayon, nylon, polyester)

Child labor is commonly used

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Labor cont’d Weaving

93% of weaving is done in LDCs

Low labor costs offset shipping costs

Assembly 4 types of products

(garments, carpets, home products, industrial products)

Assembled close to consumers (in MDCs)

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Land New factories need

lots of space (one-story facility)

Likely location: suburban or rural sites

Proximity to major highways is most important Past: railways Present: Semi-trucks

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Land cont’d Environment

Mild climates, year-round activities can also influence site selection

Also: access to affordable electricity▪ Ex. Alcoa▪ World’s largest aluminum

producer▪ Relies heavily on

hydroelectric power▪ Constructed its own dams

to produce power

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Capital Key source: borrowed

money Industries located

near available capital ‘Auto Alley’ – Michigan,

Indiana, Illinois Silicon Valley –

California (1/4 of all U.S. capital is spent here)

LDCs have great difficulty obtaining capital

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