What to do:  Get out stuff for notes.  Title: “Why are situation and site factors important?”

Discussion  How do you determine where to build a factory?

Site factors  Labor  Minimize costs  so LDC & NIC countries  Labor intensive industry: where labor makes up most of expenses  High wage: labor gets paid a lot but parts cost more

Site factors  Capital  Funds to establish new factories to expand existing ones.  Pick location based on availability of capital & labor can come to you  Ex. Silicon Valley

Site factors  Land  Factories need space  Early factories preferred cities (access to markets, labor, capital) but not much land  Multistory building  Now factories are suburban/rural areas  More space so one story & land is cheaper

Situation factors  Proximity  Cost of raw > cost of product  close to input  Bulk reducing  Cost of raw < cost of product  close to market  Bulk gaining

Inputs  Minerals  Non metallic  Metallic

Situation factors  Proximity to markets  Bulk-gaining industry  Ex. Fabricated parts & machines & beverage production  Single-market manufacturers  Ex. Cars & fashion  “Just in time” delivery  no need for storage  Perishable products  Ex. Food & newspapers  Processing & Internet has changed some of this

Transportation  Trucks  Short distance, one day or less, loaded/unloaded quickly  Trains  Few days, less stops than trucks, longer to load/unload, longer distance  Ships  Very long distances, slower, can cross oceans  Air  Most expensive, only for speedy delivery, small bulk

Containerization  Easily transferred from one mode of transportation to another  “Break of bulk” point—where it happens  Usually a shipping port or airport

Situation factors  Optimal locations for different steps can vary  Copper  Mining  Concentration  Smelting  Refining  Metal processors

Changing distribution  Global manufacturing is shifting to new industrial regions  Why?

Case Study  Motor vehicles Motor vehicles