“Where is industry expanding?” Industrialization “Where is industry expanding?”

Changing Distributions Within PEDs Intraregional Shifts in Manufacturing: Historically – factors located inside cities Situation – proximity to market Site – lots of labor and sources for capital Increasing Site Problem – obtaining enough land for manufacturing

Modern Factories Likely to be suburban or rural Require large tracts of land Land is cheaper outside of a city Location near highways is more important than railways Factories cluster in industrial parks near suburban highway junctions Where is this GM plant located?

Interregional Shifts in Manufacturing Manufacturing has shifted towards the South and West in the United States In Western Europe, governments have encouraged relocation toward economically distressed areas Result = the distribution of manufacturing is less clustered

Southern and Western U.S. The NE U.S. has lost 1 million manufacturing jobs in the last few decades Manufacturing jobs have grown by 1/6 in the South and West since the early 70’s

Right-to-work laws A right-to-work law requires a factory to maintain a so-called “open shop” and prohibits a “union shop” A “union shop” = a company and union agree that everyone must join the union in order to work Southern states have made it difficult for unions to organize workers, collect dues, and bargain with employers

A “union shop” – Workers in the Garment Industry Strike

More Recently – The Issue in Wisconsin

Manufacturing in the South Steel, textiles, tobacco products, and furniture industries are scattered across the South The Gulf Coast has become an important industrial leader because of oil and natural gas Katrina threatened oil supply by cutting power to the refineries in Mississippi

Colonial Pipeline brings oil and natural gas to the South

Manufacturing in the West Completion of the L.A. harbor (1910) and Panama Canal (1914) allowed the West Coast to open up to processing L.A. is the country’s leading producer of textiles and second largest of furniture and food processing A large pool of unorganized workers has been assembled in L.A. through immigration, especially from Mexico and Asia

Interregional Shifts in Western Europe Manufacturing has diffused from traditional centers in NW Europe to southern and eastern Europe European governments have explicitly encouraged this industrial relocation Western Europeans used incentives to lure industry into poorer regions The EU assists in lagging regions

New Industrial Regions Example – Steel: In 1980, 80% of the world’s steel was produced in PEDs In 2005, just 45% is produced in PEDs China = the world’s largest steel producer

Secondary Industrial Regions South of the world’s primary industrial region Industrial regions usually consist of several zones, each dominated by a particular kind of industry Iron and steel zone Coal mining in another Textiles in a third Thailand, Indonesia, Malaysia, and Vietnam share the economic growth in Pacific Realm Most of the world’s industrial activity has traditionally been found in developed countries of the mid-latitudes

“Central” Europe Poland, Czech Republic, and Hungary have had the most industrial growth Central Europe offers two assets: Labor Market proximity

China The largest manufacturer of textiles, steel, and household products Two principal assets: Largest supply of low-cost labor The world’s largest market Chinese Population = 1,321,851,888 (2007)

Other Asian Countries Thailand – set a 120% tariff on imported vehicles in 1974; lowered to 20% in the 90s India – liberalization program in 1991 eliminated many restrictions on foreign investment

Latin America Mexico and Brazil are the two leading industrial centers in Latin America Manufacturing is clustered in the largest city: Mexico City and Sao Paulo – proximity to the major market North American Free Trade Agreement (NAFTA) – eliminated restrictions on trade Average wage = $400 per month

Maquiladora Secondary manufacturing zone Developed in northern Mexico near border with U.S. Where manufactured products could be sent to U.S. free of import tariffs U.S. companies established plants designated to transform imported, duty-free components or raw material in finished products Owned by U.S. Young women= cheaper wages

Maquiladora Continued Factory that imports material and equipment on a duty-free and tariff-free basis for manufacturing and re-exports the assembled product Variety of industries Electronics, transportation, textiles, machinery NAFTA tax-free Industry expanded more rapidly Dense number of maquiladoras Pollution Hazardous waste Lots of jobs Sometimes lack proper waste management facilities and the ability to clean up disposal sites Hazardous waste illegally disposed

Why are Location Factors Changing?

Proximity to Low Cost Labor Labor is the site factor that is changing rapidly in the 21st Century Textile and apparel industries are especially opening production in lower wage locations while shutting production in higher wage locations

Textile and Apparel Industry in the U.S. Early 20th Century – heavily concentrated in the NE Mid 20th Century – production moved to the SE SE wages were low compared to the NE, but still high on a global scale The number of US apparel workers declined from 1.5 million in 1994 to 700,000 in 2003

Outsourcing Transnational corporations have been very aggressive in using low cost labor in PINGs Despite transportation cost, often still cheaper for companies to manufacture abroad Jobs that require highly-skilled workers remain in PEDs

The New International Division of Labor Transnational corporations outsource jobs to low wage countries Productions is turned over to independent suppliers This is the opposite of vertical integration – in which a company would control all phases of production Example: Carmakers used to make their own parts, but now they outsource that responsibility to other companies

Renewed Attraction to Traditional Industrial Regions Many industries now want skilled labor Traditionally, factories required workers to perform the same task repeatedly Fordist approach Ford Assembly Line

New Work Rules Lean or Flexible Production (post-Fordist) Three types of work rules for post-Fordist: Teams Problem Solving Leveling Examples: Computer manufacturing (CA), “high-end” clothing is made in the NE U.S.

Just-in-Time Delivery Shipment of parts and materials to arrive at a factory moments before they are needed Important for inputs for manufacturing Saves money by reducing wasteful inventory Suppliers must locate near customers

Computer Manufacturing Dell and Gateway have reduced inventory by only producing upon demand (telephone or internet) Two disruptions that could occur: Labor unrest Acts of God