Chp. 11 Industry Key Issue 3 & 4 Where is industry expanding? Why are location factors changing?

Key issue 3 where is industry expanding?

“The Story of stuff” As we watch the video, create a continuum/timeline that explains “the story of stuff”. What is “planned obsolescence”? What might happen if we stick to a “linear model”? http://storyofstuff.org/movies/story-of-stuff/

Changes Since 1970’s, manufacturing has decreased in MDC’s and increased in LDC’s MDC’s factories are in periphery instead of city center Located in less traditional regions

Changes Cities used to offer the largest market, convenient transportation, opportunities for capital, and a labor force. Problems arose over cities providing adequate land suitable for manufacturing: Factories were multistory building, raw materials had to be hoisted up and down many floors. Modern factories are more likely to be in suburban and rural areas in one story buildings Factories cover more land, but the availability is more abundant making the cost cheaper Also have efficient highway systems now

Kia Motors Plant in West Point, Ga

Changes Right to work laws in the South = no unions States that aren’t “right to work” have industries that require union membership to be employed. Right to Work states

NEW industrial regions: asia China: leader in steel, textiles, and household products. Assets: low cost labor & large market. 1990’s gov’t policy opened China to foreign investment (outsourcing). Has created large “wealth gaps” (have’s vs. have not’s) in China. India’s move from Self Sufficiency to International Trade in the 1990’s has increased growth there as well.

SEZ’s: Special economic zones In LDC’s…a modern economic area where laws favor a global economy and may be different than the laws of the LDC. The creation of special economic zones by the host country may be motivated by the desire to attract foreign direct investment (FDI The benefits a company gains by being in a Special Economic Zone may mean it can produce and trade goods at a globally competitive price, often having laws that are more lenient in terms of trade. In some countries the zones have been criticized for being little more than labor camps, where labor rights are denied for workers. Many in China, Bangladesh, Mexico (Maquiladoras are an example), Cambodia, Vietnam, and India

New Industrial regions: Latin America Mexico and Brazil are leaders 1960’s to 1980’s: rules and oil shortages caused industry/foreign investment to decline foreign companies are only allowed to use Latin American raw materials Products were outdated 1990’s-today: NAFTA encourages industry. Maquiladoras??? What is “free trade” vs “protectionism”?

BRICS New economic alliance between Brazil, Russia, India, China, and South Africa These countries control 1/4th the world’s land and 2/5th the population, but only 1/6th the GDP Want to become largest trading bloc. Combine labor force (C & I) and inputs (R & B) = STRONG

New industrial regions: “central” Europe Fall of communism brought foreign investment. Attractive because of less skilled/cheaper labor AND proximity to the north western European market (site & situation) Poland, Hungary, Czech Republic are the big 3.

Key issue 4 why are location factors changing?

Attraction of New Industrial Regions Labor is main site factor To minimize labor costs, some manufacturers are locating in places where wage rates are lower than traditional industrial regions Textile and Apparel Industry shift locations within a country or to another country U.S: started in Northeast early 1900s (why?)…moved to Southeast (why?) Fig. 11-18: Hosiery manufacturers usually locate near a low-cost labor force, such as found in the southeastern U.S.

Modern Production pg. 390 Outsourcing – moving individual steps in the production process (of a good or a service) to a supplier, who focuses their production and offers a cost savings. New International Division of Labor– Selective transfer of some jobs to LDC’s Offshore – Outsourced work that is located outside of the country.

Labor cost per hour in clothing manufacturing Figure: 11-22 Title: Labor cost per hour, clothing manufacturing. Caption: Wages are in the teens in more developed countries, compared to under a dollar in some less developed countries.

Figure: 11-23 Title: Clothing produced in the United States. Caption: The percentage of everyday clothing accounted for by domestic production has decreased sharply in the United States since the 1990s. Conversely, the percentage accounted for by imports has increased sharply.

Foot Loose industries Footloose industry is a general term for an industry that can be placed and located at any location without effect from factors such as resources or transport…in other words, geography does not matter.

Renewed Attraction of traditional Industrial Regions Why would industries remain in traditional regions when there is the lure of low-cost labor elsewhere? Availability of skilled labor and rapid delivery to market Henry Ford Henry Ford was an American industrialist, the founder of the Ford Motor Company, and developed the assembly line technique of mass production Henry Ford introduced the assembly line production of automobiles which resulted in agglomeration of auto production in the Detroit and Great Lakes area-now known as the rust belt. Bretton Woods agreement industrial countries adopted the gold standard-value of currency pegged to the value of gold-basis for prosperity and mass production by large corporations

Renewed Attraction of traditional Industrial Regions pg. 391 Fordist – dominant mode of mass production during the twentieth century, production of consumer goods at a single site. Post-Fordist – current mode of production with a more flexible set of production practices in which goods are not mass produced. Production is accelerated and dispersed around the globe by multinational companies that shift production, outsourcing it around the world. Henry Ford introduced the assembly line production of automobiles which resulted in agglomeration of auto production in the Detroit and Great Lakes area-now known as the rust belt. Bretton Woods agreement industrial countries adopted the gold standard-value of currency pegged to the value of gold-basis for prosperity and mass production by large corporations Post-Fordist company: Toyota

Time-Space Compression Just-in-time delivery rather than keeping a large inventory of components or products, companies keep just what they need for short-term production and new parts are shipped quickly when needed. Global division of labor corporations can draw from labor around the globe for different components of production. Containers await shipment in China Bottom Container ship from Europe enter Halifax, Canada’s harbor Major corporations: General Motors, Union Carbide, Exxon and others take advantage of the low transport costs, expanding information technology and favorable government regulations to outsource jobs to specific locations. Multinational Corporations move labor-intensive manufacturing to peripheral countries where laobr is cheap Core manufacturing is increasingly automated

Time-Space Compression David Harvey coined the term for the idea that the world is moving at a faster pace due to capitalism and greater connectivity of transportation and communication systems. This has altered the division of labor When the world was less connected, goods were produced close to market or point of consumption. Through improvements in transportation and communications technologies, many places in the world are more connected than ever before and proximity to market is less important David Harvey coined the term Time-Space Compression-the idea the the world is moving at a faster pace due to capitalism and the greater connectivity of transportation and communication systems. Time-Space Compression has altered the division of labor-when world was less connected, goods were produced close to market or point of consumption.

Watch “America revealed: Made in the USA” (53 minutes) Answer the questions in your packet as we do so. https://www.youtube.com/watch?v=fLam68- _d8c&index=2&list=PLRvvF3j_A8obitZHV4v0jqPB GXd3UD5uo