Factors o’ Industrial Spatial Outcomes

What is the goal of every business? TO MAKE A PROFIT!!!! Therefore, one must minimize their business’ costs and locate in the “least-cost location”.

Industries that use a great deal of power will concentrate around very cheap sources of power. Industrial production in Europe is centered around coal and iron deposits because almost all industry was dependent on coal and steel in the beginning of the industrial revolution. Power Supply

Labor Where labor is cheap, factories will go. Where labor is plentiful, factories will go. Where labor is skilled, factories will go. Where labor is flexible, factories will go. Labor

Transportation Cut back on your transportation costs!!!!!!! Mode of Transport Benefits Drawbacks Line Cost Terminal Cost Container Shipping Highly efficient – water has little friction Requires access to sea port with deep water – good over long distances Rail roads Also energy efficient Dependent on access to Rail road – good over medium distances Trucks Easy access to everything via roads Energy Inefficient Cut back on your transportation costs!!!!!!! Transportation

Transportation Cut back on your transportation costs!!!!!!! Mode of Transport Benefits Drawbacks Line Cost Terminal Cost Container Shipping Highly efficient – water has little friction Requires access to sea port with deep water – good over long distances Low High Rail roads Also energy efficient Dependent on access to Rail road – good over medium distances Medium Trucks Easy access to everything via roads Energy Inefficient – good over short distances Cut back on your transportation costs!!!!!!! Transportation

All industrial production is based on raw materials, so some consideration of these is important in factory placement Industries that work with heavy materials will naturally be more materially oriented Industries whose products lose weight will naturally be more materially oriented. Raw Materials

Market oriented industries are weight gaining at the point of production. Example: Water bottling. Putting a factory close to market brings down…….. Market

Material vs. Market Orientation There are two basic transportation costs in factory production: Raw materials to factory Factory to market The goal of a business is to minimize those transportation costs. Material vs. Market Orientation

Definition of Market orientation: The costs of transportation from factory to market are higher, so the factory is close to the market. Definition of material orientation: The costs of transportation from material source to factory are higher, so the factory is close to the material source.

Market or Material? Soda Bottling Nickel Smelting Iron Casting Tractors Furniture Market or Material?

Ubiquitous and Footloose Industries Ubiquitous industries must be located everywhere because their products are highly perishable – they go bad within one day or less. These are the most market oriented industries. Footloose industries make products that are super light and easy to ship, so they may be located anywhere on earth. These are the least market or material oriented industries. They have neither orientation. EXAMPLES?? Ubiquitous and Footloose Industries

Having one industry all in one place, and especially around several groups of industries, has the following benefits: LIE a. Available labor pool b. Infrastructure c. Easy access to supplies When the costs of this exceed the benefits, this will lead to deglomeration. Example: tech in San Francisco vs. Austin. Agglomeration

What industry is agglomerated in Houston? And why? (L,I,E) What industry is agglomerated in Los Angeles? What industry is agglomerated in North Carolina? Agglomeration

Just in Time Production Just in Time Production means you have a small inventory that you restock constantly. If a business does this, they will need to be close to their suppliers, and suppliers will in turn need to be close to them. Further cycle of agglomeration. Just in Time Production

Comparative Advantage Some countries produce things much more efficiently than others. Outsourcing and offshoring (hiring someone in a foreign country) have greatly improved the standard of living for NICs. Companies with Flexible production have taken advantage of global sources of labor. Many liberals dislike these processes, claiming that they exploit workers and harm the environment. Both liberals and conservatives dislike that jobs are going overseas. Comparative Advantage

Imposed Considerations When considering where to place a factory, one must consider local laws and policies. Land use Zoning Environmental quality standards Area development inducements Taxes/Tariffs Social considerations Imposed Considerations

Theories – Weberian Analysis Draw the triangle Theories – Weberian Analysis

Theories – Hotelling Model Draw the beach Theories – Hotelling Model

Why is Encore Wire, a Copper Manufacturer, located in Mckinney? Why did Toyota move to Plano? Why are iphones assembled in China? Why are car manufacturers selling to the U.S. market located in Mexico, the American Southeast, and the Rust Belt? Closing Thoughts

Industrialized Areas of the Earth Western Europe NE US Eastern Europe East Asia Industrialized Areas of the Earth

Is this industrial center market or materially oriented? Both? Why? What factors have contributed to this region losing many industrial jobs in the last 100 years?

What factors have contributed to this region losing many industrial jobs in the last 40 years?

Eastern Europe!

What factors have caused most industry in China to be located in Eastern China?