weber notes 2014
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Slide 1
Weber and Industrial Location Theory
Industrial Activity and Geographic Location
Economic Geography
Economic geographers investigate the reasons behind the location of an economic activity
Location Theory
Attempts to explain the pattern of the location of an economic activity in terms of influential factors
The Location Decision (1)
Primary Industries
Because these deal with the extraction of resources, primary industries must be located where the resources are
The Location Decision (1)
Secondary Industries
less dependent on resource location
raw materials can be transported if profits outweigh the costs of transportation
The Location Decision (2)
Alfred Weber: 1868-1958
German
The Von Thunen of economic geography
Least Cost Theory
Accounted for the location of a manufacturing plant in terms of the owners desire to maximize three costs
The Location Decision (3)
Transportation (most important)
moving raw materials to factory and finished goods to market
Labor
High labor costs reduce margin of profit
current economic boom on Pacific rim
Agglomeration
number of similar enterprises clustered in the same area
Shared talents, services and facilities
when excessive, can lead to high rents, rising wages, circulation problems
Weber
Some argued that Webers model did not adequately account for variations in costs over time
Substitution principle: when one cost decreases can endure higher costs in another area (fixed vs variable costs)
Model suggests that one particular site (point vs area) would be optimal but the business could flourish in more than one area
Taxation policies are not accounted for by Weber
Factors of Industrial Location (1)
Transportation
Raw materials to factory and finished products to market
steel plants along Atlantic seaboard because iron shipped in from Venezuela
Europes coal and iron ore regions
Iron smelters built near coal fields
Japans colonial expansion into E Asia (China/Korea) due to raw materials
European colonization for resources, periphery to core
http://www.epa.gov/sectors/sectorinfo/sectorprofiles/ironsteel/map.html
Piedmont: foot of the mountains; from Italian pied (foot) monte (hill)
Factors of Industrial Location (1)
Transportation
highly developed industrial areas are places that are served most efficiently by transportation facilities
alternative systems
container systems, break of bulk
for most goods, truck is cheaper over shorter distances, railroads cheaper over medium distances, and ships cheapest over longest distances
must consider loading/unloading, actual transportation (cost of transportation increases with distance at a decreasing rate), and weight and volume
Worlds largest container ship
Intermodal Facility: Portland, Oregon
Factors of Industrial Location (2)
Labor
a large, low-wage trainable labor force will attract manufacturers
Japans postwar success based on skills and low wages of workforce, low quality high quantity initially
China emerged with large labor force in 80s
Taiwan and South Korea emerged to challenge Japan in mid 90s due to cheaper labor
Four Tigers today
See page 377 in book
Factors of Industrial Location (3)
Infrastructure
transportation, telephone, utilities, banks, postal, hotel
China-inadequate local and regional infrastructure
Vietnam-inadequate power, water, transportation
Factors of Industrial Location (4)
Energy
used to be much more important than it is today
early British textile mills had to locate near water power
rarely a problem today, except industries needing a huge amount of energy--- metal processing and chemical industries may locate near hydropower (TVA or Pacific Northwest)
Map showing location of chemical manufacturing facilities.
Other Factors
agglomeration
political stability
regional receptiveness to investment
taxation policies
environmental conditions (Hollywood)
Silicon Valley
High Tech Heaven, headquartered in San Jose California, 50 miles south of San Francisco
Stanford University
Silicon is main ingredient in computer chip making
2nd most abundant element in Earths crust (ubiquitous)
IBM, Netscape, Apple, Yahoo!, Intel, Sony, Microsoft