Why are SITUATION and SITE FACTORS important? Key issue 2 Why are SITUATION and SITE FACTORS important?

Geographers try to explain why one location is more profitable for factories than another.

Companies use two geographic factors to choose locations for factories: SITUATION Factors involve the costs of transporting raw materials and finished goods. SITE Factors involve the unique characteristics of particular location.

‘INPUTS’ are the materials needed for production, like ores or component parts. CAR COMPONENTS IRON ORE

The farther something is transported, the higher the cost The farther something is transported, the higher the cost. Thus factories are located as close as possible to either inputs or markets.

If the cost of bringing raw materials to the factory is HIGHER than that of transporting finished goods, the factory is optimally located close to INPUTS.

If the cost of transporting finished goods is HIGHER than inputs, the factory is optimally located as close to the customer (market) as possible.

CERTAIN INDUSTRIES TRY TO LOCATE CLOSE TO MARKETS: BULK-GAINING Industries SINGLE-MARKET Industries PERISHABLE Industries

BULK-GAINING industries are those whose finished products are heavier than inputs (weight is added during production).

The heaviest part of any drink is water. Because water is available everywhere, beverage producers can ship lighter raw ingredients (bottles, syrups) to factories close to population centers (markets).

LOCATION OF BEER BOTTLING PLANTS IN THE UNITED STATES.

$20 million Coke bottling plant in the Gaza Strip, Palestine

Potato chips are good example of this. BULK GAINING can also refer to an industry whose final products are HARDER TO SHIP than inputs. STABLE INPUTS Fragile & Bulky Product Potato chips are good example of this.

Producers like Frito-Lay have factories all over the country. FIGURE 11-11 PERISHABLE PRODUCTS Potato chips are best consumed when fresh, and they are much bulkier after they have been sliced, fried until they curl, and placed in large air-filled bags. As a result, most are produced relatively close to the market.

These industries locate close to customers to reduce shipping costs. SINGLE-MARKET Industries are those cater to a very limited number of purchasers, like a single industry or company. These industries locate close to customers to reduce shipping costs.

Workers making seats for Fiat 500Ls Car components are often built on contract by small manufacturers for large auto companies. Workers making seats for Fiat 500Ls Component factories are located as close as possible to CAR ASSEMBLY PLANTS.

The world’s largest zipper manufacturer, YKK, has one customer – the garment industry. YKK produces zippers in factories all over the world, wherever major apparel industries can be found.

THINK VON THUNEN’S MODEL! Producers of PERISHABLE products need to locate near consumers/markets to maintain the freshness of their products. THINK VON THUNEN’S MODEL!

Newspapers are PERISHABLE Newspapers are PERISHABLE. Their content is time-sensitive and can be outdated after only one day. National newspapers, like the New York Times, are produced in locations around the county to reduce shipping lag.

TONS of inputs are used to make small quantities of steel. BULK REDUCING industries are those whose finished products are lighter/have less volume than inputs. TONS of inputs are used to make small quantities of steel.

Metals are very useful for manufacturing because they are (mostly) malleable, durable, and can conduct electricity. Because each has slightly different properties, different metals are useful for different purposes.

Be sure to learn the INDUSTRIAL USES and PLACES OF ORIGIN of each of the metals discussed in Key Issue 2!

INDUSTRIAL METAL TERMS: FERROUS- Metals/Alloys containing IRON NON-FERROUS- Metals/Alloys NOT containing iron ALLOYS- A combination of one or more metals to adopt desirable properties (corrosion resistance, durability, etc.)

CHINA is a leading producer of nearly every rare-earth mineral. RARE EARTH minerals are substances vital to industry which are found only in minute quantities in the world CHINA is a leading producer of nearly every rare-earth mineral.

The main four modes are TRUCK, TRAIN, BOAT, & PLANE. SHIPPING is an important cost for manufacturers, and they choose a MODE OF TRANSPORT to match their situation and needs. The main four modes are TRUCK, TRAIN, BOAT, & PLANE.

TRUCK TRANSPORTATION Trucks are most often used for short-distance delivery, where their fast loading/unloading can be taken advantage of. Most economical for deliveries within the same day.  

TRAIN TRANSPORTATION Trains are most often used for multi-day shipping across wide expanses, like from the East to West coast. Though expensive to load and unload, they do not need to stop during their journey, and run very efficiently.

SHIP TRANSPORTATION Ships are used to transport materials long distances if they are not time-sensitive, as it takes much longer than land transport. They can cross the oceans and carry vast amounts of goods in a single load.  

PLANE TRANSPORTATION Air is the most expensive form of transport by far, so it is used for high-value, low-bulk, time-sensitive goods. The USPS and other mail/delivery carriers use air transport for their fastest shipping options.

The cost per mile decreases at different rates for each of the four modes, because loading and unloading expenses differ by mode of transportation.  

Companies that use multiple transport modes utilize break-of-bulk points, which are locations where rapid transfer among different modes is possible.

As technologies and industries change, so do situations factors As technologies and industries change, so do situations factors. An example is the evolution of the STEEL INDUSTRY from 1850 to today.

From the mid-19th through the early 20th century, American steel mills were located near inputs. As different inputs became more or less important, centers of production shifted.  

Since the mid-20th century, proximity to MARKETS has become more important than proximity to inputs. Finished steel is increasingly likely to be imported, and US production is increasingly focused on RECYCLING SCRAPS.

Steel minimill w/ mountain of scrap Factories producing steel from raw materials are called INTEGRATED MILLS; those recycling steel mostly from scraps are called MINIMILLS. Steel minimill w/ mountain of scrap

FIGURE 11-15 INTEGRATED STEEL MILLS IN THE UNITED STATES Integrated steel mills are highly clustered near the southern Great Lakes, especially Lake Erie and Lake Michigan. Historically, the most critical factor in situating a steel mill was to minimize transportation cost for raw materials, especially heavy, bulky iron ore and coal. In recent years, many integrated steel mills have closed. Most surviving mills are in the Midwest to maximize access to consumers.

While the US was the world’s top steel producer in 1980, China holds that distinction today. FIGURE 11-18 WORLD STEEL PRODUCTION, 1980 AND 2010 The leading steel producer in 1980 was the United States, and in 2010 it was China.

Car manufacturers attempt to locate their factories close to profitable markets. While cars were historically assembled in corporate-base countries (Germany, Japan) and shipped abroad by boat, today they are assembled in factories across the world close to markets.

MASSIVE TOYOTA PLANT IN BURNASTON, UK Most cars driven in any of the three major industrial regions were built/assembled in that region. MASSIVE TOYOTA PLANT IN BURNASTON, UK FIGURE 11-20 ASSEMBLY PLANT IN EUROPE Toyota’s factory near Burnaston, in the United Kingdom, is surrounded by farmland.

Most US auto production occurs in an area known as AUTO ALLEY, from Michigan to the US South. Foreign carmakers take advantage of CHEAP LABOR in the South and Mexico; American carmakers focus production near their bases in Michigan and surrounding states.

Like in America’s AUTO ALLEY, auto manufacturers choose different sites for different reasons in EUROPE. Some utilize skilled labor & high industry in Northern Europe; others choose to utilize much cheaper labor in Southern/Eastern Europe. FIGURE 11-22 MOTOR VEHICLE PRODUCTION IN EUROPE Within Europe, most vehicles are produced in an east–west corridor centered on Germany.

LABOR CAPITAL LAND SITE FACTORS Other than transportation costs (situation factors), THREE SITE FACTORS also largely determine where an industry will be located. These include: LABOR CAPITAL LAND

LABOR For some industries, reducing labor costs is key to profitability. They will locate wherever labor costs (wages, other compensation) are lowest.

LABOR-INTENSIVE industries are those where labor costs represent a very high percentage of their expenses. The opposite- where labor costs are a relatively low percentage- are CAPITAL-INTENSIVE industries.

CAPITAL Huge amounts of money are needed to construct and expand factories; industries locate wherever access to funds is most ready.

DETROIT AUTO INDUSTRY SILICON VALLEY Some famous industrial regions developed because of the willingness of local lenders to invest. Two Examples include: DETROIT AUTO INDUSTRY SILICON VALLEY

DETROIT’S AUTO INDUSTRY Lenders in Michigan were willing to invest heavily in the startup auto industry, while those on the East Coast closed their wallets to early auto investment.   You could get a Ford Model T in any color you wanted – as long as it was black! FIGURE 11-24 LABOR AS A SITE FACTOR: MANUFACTURING WAGES The chart shows average hourly wages for workers in manufacturing in the 14 countries with the largest industrial production in 2010.

SILICON VALLEY, the center of US technological innovation, takes advantage of the highly-skilled workforce in California’s Bay Area. INVESTORS REWARD COMPANIES LOCATING HERE WITH CAPITAL FOR OPERATIONS AND EXPANSION

LAND Most early industries located in cities, where there was access to markets, labor, and to important nodes of early transportation – rail and ship. Many early factories were multi-story buildings IN the city- called ‘vertical production.’

Today, factories are designed on a single level, with an efficient stream of operations; materials enter one end, finished products exit the other.

Sprawling single-level factories require much more land than multi-level urban factories, so the land must be cheaper to buy. This factor- along with increasing reliance on TRUCK transportation- has moved most newer factories into the SUBURBS.