AIM: How do site and situation factors affect the development of industrial businesses?

Site Factors Situation Factors Involve transporting materials to and from a factory. A firm seeks a location that minimizes the cost of transporting inputs to the factory and finished goods to the consumers. Site Factors Result from the unique characteristics of a location. Land, labor, and capital are the three traditional production factors that may vary among locations.

A) Situation Factors Manufacturers buy resources and materials from companies and individuals. (energy, machinery, and supporting services.) Then they produce a product and sell it to other companies and individuals for a profit.

All manufacturers must make a big decision before building their factory. Should the factory be closer to the source of the materials or closer to the possible consumers of the finished product?

All industry requires some inputs Raw Materials Parts or materials made by other companies

Bulk Reducing Industry An industry where the final product weighs a lot less than the original inputs. Examples?

Copper Industry Must be located near the source of the inputs Copper Concentration is a bulk-reducing industry the final product weighs a lot less than the inputs. Why?

Steps First, ore is removed from the mines. Most copper ore in the United is considered low grade. Less than 0.7% of the material mined is actually copper. The rest is gangue or waste material. Ore

Step 2 Second, mills concentrate the copper. The mills crush the ore and mix it with water and chemicals. Once this process is done, they have produced Copper Concentrate. It is about 25% copper.

Step 3 Thirdly, Copper Concentrate is sent as an input to Smelters. They produce Matte (60%), blister copper (97%) and anode copper (99%)

Step 4 Finally, the copper is sent back to refineries where it is further treated and turned into copper cathodes (99.99%) copper.

Steel Production Another bulk-reducing industry Steel is an alloy of iron where impurities such as silicon, phosphorus, sulfur and manganese are removed while adding limestone and chromium. Empire Iron Mine, Michigan

There are a number of traditional steel centers in the United States A) Pittsburgh – Iron ore and coal deposits both exist in high quantities in the area around Western Pennsylvania. Major area in 19th century.

There are a number of traditional steel centers in the United States B) Lake Erie - Towards the end of the 1800s Steel Mills opened in cities like Cleveland, Youngstown, Toledo and Detroit because rich iron ore deposits were found in the Mesabi range in Minnesota. Cheap shipping costs through the Great Lakes fueled growth.

There are a number of traditional steel centers in the United States C) Around 1900, mills popped up around Lake Michigan in Gary Indiana, Chicago and other communities

There are a number of traditional steel centers in the United States D) In the first half of the 20th century, more Steel Mills opened on the coasts because we started importing iron ore from Canada and Venezuela. Baltimore Steel Mill 

Today Steel production has become an industry that relies more on market location than location to raw materials. We still have plants on the coasts and around Lake Michigan. We have also seen the growth of Minimills. Steel Minimills rely on one main input (scrap metal)

Location near markets The cost of transporting goods to consumers is a critical locational factor for three types of industries: bulk-gaining, single-market, and perishable.

Bulk Gaining Industry Makes something that gains volume or Weight during production. Examples Soft Drink Bottling – Syrup and Water are mixed together and put in cans and bottles. (Beer and soda) Fabricated Metals and Machinery (refrigerators, air conditioners, televisions, cars) Steel fabricators traditionally locate near markets.

Beer Brewery Locations

A typical passenger car Weighs 3300 pounds 54% steel 11% iron 8% plastic 7% aluminum 6% fluids and lubricants 4% rubber 3% glass 6% other materials

Chevrolet Assembly Plants 1955

Single-Market Manufacturers Ex: manufacturers of parts for motor vehicles. Usually clustered around customers. Specialize in “just-in-time” delivery

Perishable Products Must be located near their markets. Food producers such as milk bottlers and bakers. Newspapers -morning newspapers published between 9pm and 6am.

Why might a manufacturer favor ships, rails trucks or air to distribute their goods? Firms often seek the lowest-cost mode of transport. The farther something is transported, the lower is the cost per kilometer. Trucks – short distance delivery, can be loaded and unloaded quickly and more cheaply than trains Trains – longer distance Ships – attractive if a water route is available. Very cheap. Air – most expensive, but fastest.