Weber’s Least Cost Theory of Industrial Location Model AP Human Geography

Review—Least Cost Theory Who? Alfred Weber (1868-1958) German Economic Geographer Published Theory of Location of Industries in 1909. “What is the best (most profitable) location for manufacturing plants?” “Just because I’m old doesn’t mean I don’t know what I’m talking about!”

Least Cost Theory 3 major factors that determine location of manufacturing 1. Transportation (most important) Raw materials (inputs) to factory Finished goods (outputs) to market Distance and weight most important factors. 2. Labor High labor costs reduce profit May locate farther from inputs/ market if cheap labor can make up for added transport costs. 3. Agglomeration Similar businesses cluster in the same area. Businesses support each other, reduce costs

Bulk Reducing Industry “Material Orientation”

Bulk-Reducing Industry

Bulk Gaining Industry “Market Orientation”

Bulk Gaining Industry

shorter distance to market Bulk Reducing Heavier input, shorter distance to plant Input Factory Market Input Factory Market Lighter output, longer distance to market, lo Lighter input, longer distance to plant. Bulk Gaining Heavier output, shorter distance to market

Single Market Manufacturers

Agglomeration, Chicago East Side Warehouses Auto Parts Manufacturers Ford Offices Assembly Plant

Perishable Products

Other important vocabulary Footloose industry Produces a lightweight produce that is very valuable….location not much of an issue because of the high price the product commands Technopole A region of many high tech businesses (agglomeration) Deglomeration Break of bulk point  location along a transport route where goods must be transferred from one carrier to another.

Other Important Models Hotelling Model Losch Model Theory developed by economist Harold Hotelling that suggests competitors, in trying to maximize sales, will seek to constrain each other's territory as much as possible which will therefore lead them to locate adjacent to one another in the middle of their collective customer base. ex: Two ice-cream vendors moving closer to each other. zone of profitability; firms will identify a zone of profitability (not just a point) where income will outpace costs ex: A place w/ low labor costs, easy travel, and resources.