CHAPTER 11 INDUSTRY

INTRO ¾ of world’s industrial production is located in four regions: NW Europe Eastern Europe Eastern North America East Asia Each is broken down further Less than 1% of Earth’s land is devoted to industry When compared to agriculture, industry is much more clustered in space 2 key factors in determining best location for a factory: Where the markets for the product are located Where the resources needed to make the product are located

Where is Industry Distributed? ISSUE #1 Where is Industry Distributed?

Manufacturing Value Added Fig. 11-1: The world’s major manufacturing regions are found in North America, Europe, and East Asia. Other manufacturing centers are also found elsewhere.

INDUSTRIAL DISTRICTS IN EUROPE (see KI#1 worksheets) WESTERN EUROPE EASTERN EUROPE UK Rhine-Ruhr Valley Mid-Rhine Northern Italy Central Industrial District St. Petersburg Volga Ural Kuznetsk Eastern Ukraine Silesia

Manufacturing Centers in Western Europe Fig. 11-2: The major manufacturing centers in Western Europe extend in a north-south band from Britain to Italy.

Manufacturing Centers in Eastern Europe and Russia Fig. 11-5: Major manufacturing centers are clustered in southern Poland, European Russia, and the Ukraine. Other centers were developed east of the Urals.

INDUSTRIAL DISTRICTS IN NORTH AMERICA (see KI#1 worksheets) CANADA New England Middle Atlantic Mohawk Valley Pittsburgh-Lake Erie Western Great Lakes St. Lawrence Valley-Ontario Peninsula

Industrial Regions of North America Fig. 11-6: The major industrial regions of North America are clustered in the northeast U.S. and southeastern Canada, although there are other important centers.

INDUSTRIAL DISTRICTS IN EAST ASIA (see KI#1 worksheets) Best asset is its large labor force Japan – emerged as an industrial power in the 1950s/1960s China – world’s 2nd largest manufacturer, largest labor force in manufacturing

Manufacturing Centers in East Asia Fig. 11-7: Many industries in China are clustered in three centers near the east coast. In Japan, production is clustered along the southeast coast.

Why Do Industries Have Different Distributions? ISSUE #2 Why Do Industries Have Different Distributions?

Industry seeks to maximize profits by limiting production costs Industry seeks to maximize profits by limiting production costs. Companies usually face two types of geographical costs: Site Factors Situation Factors (involve transporting materials to and from a factory) (result from the unique characteristics of a location)

SITUATION FACTORS IN + 1. PROXIMITY TO INPUTS 2. PROXIMITY TO MARKETS 3. TRANSPORT CHOICES

PROXIMITY TO INPUTS STEEL If the weight of an input is great, a factory may choose to locate near the input in order to cut down on transportation costs

COPPER CARTOON Draw a picture/visual representation depicting the various aspects of copper as a bulk-reducing industry. Your picture must contain a picture of a copper mine and the following: Concentration mills Smelters Refineries - Include a brief caption explaining the location of each as it relates to the copper mine

MAKE ARIZONA YOUR COPPER HEADQUARTERS!!!! The map on page 373 states that “In the United States, most plants that concentrate, smelt, and refine copper are in or near Arizona, where most copper mines are located.” Arizona has been hit very hard by recent economic woes, especially in regards to real estate. You have the opportunity to turn the tide by bringing commercial real estate to Arizona by attracting members of the copper industry to your state. Your job is to create a commercial highlighting why Arizona is such a great state for a company to establish their copper headquarters. You can be as creative as you want as long as you meet the guidelines.

GUIDELINES Your commercial must: Summarize each of the following processes: mining, concentrating, smelting, refining Explain why being located in Arizona helps with each process. (this is the meat of the commercial - sell, sell, sell!) Have an image (and text, music, slogan… accompanying it) for each of the above listed. Your creativity can really come here, use music, vids, pictures, jingles, slogans…… Due Date: Monday, March 21 - email to Mr. Oswald prior to the start of class

PROXIMITY TO INPUTS - STEEL Bulk-reducing industry Originally Iron and Steel mills clustered near the sources of these raw materials (iron ore and coal - see map on 374) Watts steam engine (1769) – increases iron production

Integrated Steel Mills Fig. 11-9: Integrated steel mills in the U.S. are clustered near the southern Great Lakes, which helped minimize transport costs of heavy raw materials.

U.S. STEEL INDUSTRY MID – 1800s – clustered in Pittsburgh and SW PA (why? what was there? – iron ore and coal) Gradually moves west (where and why? – Minnesota, Indiana, Illinois – discovery or iron ore but also changes in the steelmaking process which required more iron ore in proportion to coal) In first half of the 20th century most steel mills were built along the coasts (why did this change occur? – changes in transportation costs as more iron ore was imported and greater use of scrap iron, which was available near major cities on the coasts)

U.S STEEL cont. Many steel mills have recently closed Survivors benefit from access to markets more than access to inputs Goes against historical trend (why?)

Nucor Steel Minimills Fig. 11-10: Minimills produce steel from scrap metal, and they are distributed around the country near local markets. Nucor is the largest minimill operator.

PROXIMITY TO MARKETS For many, best location is closest to where the product is sold (ex. soda) - transportation costs are especially critical for these industries: 1. Bulk-gaining 2. Single Market 3. Perishable

PROXIMITY TO MARKETS cont. BULK-GAINING INDUSTRY FABRICATED METALS & MACHINERY Good examples are soft drinks Why is scotch whiskey an exception? Combines steel and other metals into more complex products (tv, refrigerators, air conditioners, motor vehicles) Assembly plants clustered in “auto alley” (why?) Recent change in location of assembly plants from coasts to interior due to changing market See insets on page 376

Location of Beer Breweries Fig. 11-11: Beer brewing is a bulk-gaining industry that needs to be located near consumers. Breweries of the two largest brewers are located near major population centers.

Chevrolet Assembly Plants, 1955 Fig. 11-12a: In 1955, GM assembled identical Chevrolets at ten final assembly plants located near major population centers.

Chevrolet Assembly Plants, 2007 Fig. 11-12b: In 2007, GM was producing a wider variety of vehicles, and production of various models was spread through the interior of the country.

PROXIMITY TO MARKETS cont. SINGLE MARKET MANUFACTURERS PERISHABLE PRODUCTS “ just in time products” Location to assembly plants, not markets, is most important Think of parts makers for cars Must be located near markets (think milk and Von Thunen) Not the case for frozen foods (cheese, butter) Not all perishables are food (newspaper – why?)

Motor Vehicle Parts Plants Fig. 11-13: U.S.-owned parts plants are clustered near the main final assembly plants. Foreign-owned plants tend to be located further south, where labor unions are weaker.

SHIP, RAIL, TRUCK OR AIR? You are responsible for this section (up to Site Factors) on your own

PICTURES Draw a picture that depicts an example of each of the following and include a brief caption explaining the picture: Proximity to Input (does not have to be steel, just needs to be bulk-reducing) Proximity to Market (needs to be gulk-gaining, single-market, and/or perishable) Transport Choice (boat, train, automobile, plane))

SITE FACTORS L A N D CAPITAL

LABOR 150 million manufacturing workers (China-20%, U.S. – 10%) Labor intensive vs. capital intensive (what is the difference?) Wages (> $20/hr. in MDCs, <$5/hr in LDCs) On a global scale ,labor is the most important site factor a lot of hard work does not always mean high pay

LABOR cont. TEXTILE & APPAREL SPINNING TEXTILE & APPAREL WEAVING Labor intensive; low wage (highly clustered in LDCs – see p.381) Spinsters and cottage industry before the Industrial Revolution Becomes clustered industry during the 1700s (spinning frames and mills, located near flowing water) Even more labor intensive than REALLY clustered in LDCs (they grow cotton and have low wages) Chemical industry changes textiles but also foods colors for clothing and preservation/canning for food

Cotton Yarn Production Fig. 11-14a: Production of cotton yarn from fiber is clustered in major cotton growing countries, including the U.S., China, India, Pakistan, and Russia.

Distribution of Cotton Yarn Production Fig. 11-14b: Three-quarters of cotton yarn is produced in less developed countries.

Woven Cotton Fabric Production Fig. 11-15a: Production of woven cotton fabric is labor intensive and is likely to be located in LDCs. China and India account for over 75% of world production.

LABOR cont. TEXTILE & APPAREL ASSEMBLY Textiles are assembled into 4 main products Garments, carpets, home products, industrial uses Most clothing articles are produced in Asia

Trouser Production Fig. 11-16a: Sewing cotton fabric into men’s and boys’ trousers is more likely to be located in developed countries, but much production now occurs in LDCs.

Distribution of Trouser Production Fig. 11-16b: The majority of trouser production is in MDCs, near customers.

LAND Not nearly as critical a factor as labor when considering only land (why not?) It is only a critical factor when it takes into account resources (natural and human)

LAND cont. Prior to IR many economic activities were located near rivers and forests (why?) During the IR they moved close to coalfields (clustered industry) During the 20th century electricity has become more important to industry (want to be near cheaper electricity)

CAPITAL Industries often borrow funds to build/expand (ex. motor vehicle industry in Michigan) Availability of capital was key factor in the evolution of Silicon Valley Ability to borrow has become increasingly important in LDCs

1. An industry in which a large percentage of wages and benefits goes to employees is a _________________ type of industry.

LABOR INTENSIVE

2. TEXTILE AND APPAREL INDUSTRY ACCOUNTS FOR _____ % OF WORLD MANUFACTURING EMPLOYMENT.

14%

3. BECAUSE IT IS LABOR INTENSIVE SPINNING IS DONE MOSTLY IN _____ (MDCs or LDCs)

LDCs

4. WHAT COUNTRY IS REPSONSIBLE FOR THE LARGEST PERCENTAGE OF THE WORLD’S COTTON THREAD AND WHAT IS THAT PERCENTAGE?

CHINA and 46%

5. TRUE/FALSE: ALMOST ALL SYNTHETIC FIBERS ARE NOW PRODUCED IN MDCs DUE TO THE TECHNOLOGY NEEDED TO PRODUCE THEM

FALSE, IT’S ABOUT 50/50 BETWEEN MDCs AND LDCs

6. TRUE/FALSE – WEAVING IS EVEN MORE LABOR INTENSIVE THAN SPINNING

TRUE

7. WHAT PERCENTAGE OF THE WORLD’S WOVEN COTTON IS PRODUCED IN LDCs?

86%

8. What two countries account for the largest percentage of the world’s woven cotton and what is that combined percentage?

CHINA (47%) AND INDIA (27%) 74%

9. LIST THE FOUR MAIN TYPES OF PRODUCTS INTO WHICH TEXTILES ARE ASSEMBLED.

GARMENTS, CARPETS, HOME PRODUCTS, INDUSTRIAL USES

10. TRUE/FALSE - THE RECENT TREND FOR WOOL PRODUCTION IS THAT MORE AND MORE IS BEING PRODUCED IN NORTH AMERICA AND EUROPE THAN IN ASIA

FALSE, JUST THE OPPOSITE

Where is Industry Expanding? (shift from MDCs to LDCs) ISSUE #3 Where is Industry Expanding? (shift from MDCs to LDCs)

INTRAREGIONAL SHIFT site and situation factors historically led to location of factories in cities (why?) Proximity to market Easier shipping on RRs Labor supply Source of capital Modern factories - suburban or rural (why?) Availability of space/land Cheaper land Access to highways more important than RRs

INTERREGIONAL SHIFT U.S. – manufacturing has shifted south and west Western Europe – shift towards “economically distressed peripheral areas” (southern and eastern Europe)

INTERREGIONAL cont. SOUTHERN & WESTERN U.S. WESTERN EUROPE NE – has lost 1 million manufacturing jobs in past 30 years Those jobs have grown by 1/6 in the S and W in same time (why?) Right to work laws Lower wages Improved infrastructure (roads) Climate Resources (water, oil, natural gas…) Shipping lanes Shift specifically towards southern and eastern Europe Difference with U.S. - European policies that have explicitly encouraged this relocation Spain – most rapid growth (motor vehicles)

Figure: 11-17 Title: Changing U.S. manufacturing. Caption: States traditionally associated with manufacturing, in the Northeast and Southern Great Lakes, as shown in Figure 11—6, accounted for two-thirds of the country's manufacturing in 1950, compared to only two-fifths in 2005.

Figure: 11-18 Title: European Union Structural Funds. Caption: The European Union provides subsidies in regions with economic difficulties because of declining industries.

NEW INDUSTRIAL REGIONS LATIN AMERICA CENTRAL EUROPE

ASIA China is the world’s largest manufacturer of textiles/apparel, steel and many household product – what assets does it have? Cheap labor and enormous consumer market Other Asian nations have removed barriers to manufacturing investment by multinationals Ex. Thailand Lowered tariff on imported vehicles Shift from self-sufficiency model to int’l trade Rich China Poor China

Steel Production, 1980 Fig. 11-19a: The U.S., Soviet Union, and Japan were the largest steel producers in 1980.

World Steel Production, 2005 Fig. 11-19b: By 2005, steel production had increased in developing countries but declined in the more developed countries.

Distribution of Steel Production 1980 & 2005 Fig. 11-20: Developed countries accounted for 80% of world production in 1980 but only 45% in 2005. LDCs increased from 20% to 55%. China is now the world’s largest producer.

Shanghai Steel Factory The Baoshan Iron Steel Company in Shanghai, China

LATIN AMERICA Mexico and Brazil are region’s leading manufacturers Clustered in Mexico City & Sao Paulo Bad policies and oil shortages (‘60s and ‘70s) hurt Mexico ‘80s – growth mainly in the north (maquiladora plants) ‘80s – ’90s – new policies increased growth (lower tariffs, NAFTA…) Mexico’s location to U.S. market is a big advantage 1964 Ford Falcon

CENTRAL EUROPE Since 1990 several countries between Germany and Russia have seen much growth (why?) Labor (middle ground compared to West and Asia and Latin America) Proximity to markets Specifically :Hungary, Czech Republic and Poland have seen the most development

Why are Location Factors Changing? ISSUE #4 Why are Location Factors Changing? (attraction of new regions and renewed attraction of traditional regions)

ATTRACTION OF NEW INDUSTRIAL REGIONS: PROXIMITY TO LOW-COST LABOR Labor is the site factor that is changing very dramatically in recent years Shift to low wage locations takes place within nations and between them (esp. in textile/apparel industry) Ex. In U.S. – textile industry locates in New York during the early 20th century (why?) then moves to southeast in the mid-20th century(why?) Many have moved manufacturing overseas due to even cheaper labor Decrease in apparel workers in U.S. and WE Apparel imports in U.S. have increased (from Latin America, China, other Asian nations)

Sock & Hosiery Manufacturing Fig. 11-21: Men’s and women’s socks and hosiery manufacturers usually locate near a low-cost labor force, such as found in the southeastern U.S.

Labor Cost per Hour MDCs and LDCs Fig. 11-22: Hourly wages can be under $1 in many LDCs compared to well over $10 in many MDCs.

U.S. Clothing Production 1994 - 2005 Fig. 11-23: The percent of U.S. made clothing has declined sharply since the 1990s while imports have increased.

OUTSOURCING Transnationals in particular seek cheaper labor Role of new international division of labor outsourcing vs. vertical integration Outsourcing’s impact on the distribution of manufacturing

RENEWED INTEREST IN TRADITIONAL REGIONS: PROXIMITY TO SKILLED LABOR Switch from Fordist to post-Fordist has increased need for more skilled labor Skilled labor is usually located in traditional industrial regions 3 types of post-Fordist work rules (teams, problem solving, leveling) Computer industry is good example of industry in traditional region Some textile/apparel still exists in traditional regions too “High end” requires more skill Efforts to attract jobs to traditional states in U.S. (startup NY commercial)

Computing Equipment Manufacture Fig. 11-24: High skill workers are needed for manufacture of computing equipment. California, the Northeast, and Texas are the major sites.

Women’s and Girls’ Apparel Fig 11-25: Products that require more skilled workers are still produced in or near New York City. Other items are produced in sites with lower cost labor.

JUST-IN-TIME DELIVERY This is especially important for delivery of inputs Ex. Parts for cars, computers Just-in-time delivery reduces money spent on wasteful inventory and size of factory U.S. % of economy spent on inventory has decreased by 50% in last 25 years Dell and Gateway have eliminated inventory (how? why?) Sometimes forces suppliers to hold inventory, not the shop (ex. Wal-Mart) Makes manufactures more susceptible to disruptions when they rely heavily on JITD Labor unrest “acts of God” (weather, acts of terror)

Fedex Sorting and Loading Packages picked up by Fedex are transferred to planes, flown to sorting centers, transferred to other planes and flown to other cities, then loaded onto trucks for delivery the next day.

Chapter 11 REVIEW

11.02 By the late nineteenth century, this country had made the least progress toward industrialization: 1. Russia 2. France 3. Germany 4. Belgium 5. United States

11.02 By the late nineteenth century, this country had made the least progress toward industrialization: 1. Russia 2. France 3. Germany 4. Belgium 5. United States

11.03 Industrialization in the United States began in 1. California 2. The Midwest 3. The Middle Atlantic states 4. New England 5. The South

11.03 Industrialization in the United States began in 1. California 2. The Midwest 3. The Middle Atlantic states 4. New England 5. The South

11.04 Beer brewing is 1. A bulk-gaining industry 2. A bulk-reducing industry 3. Unconcerned with bulk 4. Distributed fairly evenly around the United States 5. Unaffected by site factors

11.04 Beer brewing is 1. A bulk-gaining industry 2. A bulk-reducing industry 3. Unconcerned with bulk 4. Distributed fairly evenly around the United States 5. Unaffected by site factors

11.05 Which of the following statements about the manufacture of American cars is true? 1. There are relatively few plants in the South 2. Each plant focuses on only one or a few models 3. Plants are located near each major metropolitan area 4. Plants are more dispersed now than they were in the 1950s 5. American cars face little foreign competition

11.05 Which of the following statements about the manufacture of American cars is true? 1. There are relatively few plants in the South 2. Each plant focuses on only one or a few models 3. Plants are located near each major metropolitan area 4. Plants are more dispersed now than they were in the 1950s 5. American cars face little foreign competition

11.06 The cheapest way to transport goods over long distances is by 1. Air 2. Roadway 3. Rail 4. Water 5. None of these

11.06 The cheapest way to transport goods over long distances is by 1. Air 2. Roadway 3. Rail 4. Water 5. None of these

11.07 Which type of manufacturing requires the lowest level of skill? 1. Automobiles 2. Computers 3. Textiles 4. Airplanes 5. Consumer electronics

11.07 Which type of manufacturing requires the lowest level of skill? 1. Automobiles 2. Computers 3. Textiles 4. Airplanes 5. Consumer electronics

11.08 It is especially important for aluminum processors to locate near 1. Navigable rivers 2. Cheap electricity 3. Inexpensive labor 4. Major metropolitan areas 5. Beer breweries

11.08 It is especially important for aluminum processors to locate near 1. Navigable rivers 2. Cheap electricity 3. Inexpensive labor 4. Major metropolitan areas 5. Beer breweries

11.09 Within the United States, manufacturing has been most likely to shift in which of the following directions? 1. North 2. Northeast 3. East 4. South 5. Manufacturing has tended to stay in the Midwest and Northeast

11.09 Within the United States, manufacturing has been most likely to shift in which of the following directions? 1. North 2. Northeast 3. East 4. South 5. Manufacturing has tended to stay in the Midwest and Northeast

11.10 Outsourcing 1. Is one aspect of vertical integration 2. Has not yet become important for transnational corporations 3. Leads to an increase in manufacturing jobs in less developed countries 4. Is supported my most American politicians 5. Is prohibited by the World Trade Organization

11.10 Outsourcing 1. Is one aspect of vertical integration 2. Has not yet become important for transnational corporations 3. Leads to an increase in manufacturing jobs in less developed countries 4. Is supported my most American politicians 5. Is prohibited by the World Trade Organization