The future of Industry

Labor most important factor changing location of industry in the 21 st century Shifts within MDC – US – Europe – Japan International Shifts – Countries – Distribution – outsourcing

Industry is shifting away from traditional areas of northwestern Europe and northeastern United States – In U.S. it has shifted west and south – In Europe, government has encouraged relocation toward economically distressed areas

NE U.S. lost 6 million jobs in manufacturing between – Especially large declines in NY and PA Once served as hub of clothing, textiles, steel, and fabricated metal manufacturing 2 million jobs added to the South and West between Why the south? – Right-to-work laws Enacted in South Requires a factory to maintain “open- shop” and prohibits “closed-shop” – Closed shop » A company and union agree that everyone must join a union – Open shop » A union and company must not negotiate a contract that requires workers to join a union Textile Production – Also moved to south and west Lower wages Little interest in joining unions

Manufacturing has shifted from NW Europe to southern and eastern Europe – European government policies have encouraged EU provides assistance to convergence regions and competitive and employment regions – Convergence= Eastern and Southern Europe – Competitive and Employment= Western Europe’s traditional core Spain has had most manufacturing growth since late 20 th century – Growth had been retarded by physical and political isolation Regions east of Germany and west of Russia have become industrial centers since fall of Communism – Called “Central Europe” – Poland, Czech Republic, and Hungary – Two attractive site and situation factors labor, market proximity – Good value for money

In 1970 nearly ½ of world industry was in Europe and nearly 1/3 rd was in North America – Today both regions only account for ¼ Increasingly important industrial areas – East Asia Rapid industrial growth in China Also includes Japan and South Korea – South Asia Led by India – Textiles, motor-vehicle production – Important center for business services – Latin America Brazil leading industry country Closest low-wage region to the United States – Cost of shipping lower – Maquiladoras

Changing distributions – Shift to new industrial regions can be seen clearly in steel and clothing – MDCs losing production to these key industries to LDCs Steel production declined in MDCs 40% and increased in LDCs by 60% between 1980 and 2008 – Labor-intensive industries have been especially attractive U.S. apparel workers declined from 900,000 in 1990 to 150,000 in 2009

Outsourcing – Transnational corporations have been especially aggressive in using low-cost labor in LDCs – Operations that can utilize low- skill, low-wage workers will relocate to LDCs despite increase in transportation costs – Selective transfer of jobs to LDCs is known as the new international division of labornew international division of labor TNCs corporations allocate production to low-wage countries through outsourcing – Definition: turning over much of the responsibility for production to independent suppliers Outsourcing contrasts vertical integration Outsourcing has had a major impact on the distribution of manufacturing impact – Each step scrutinized closely in order to determine the optimal location

Definition: – Foreign owned factories located in Mexico Spatial distribution: – Located close to U.S. border/ major cities/ entry points Why Mexico? – Inexpensive labor costs – NAFTA – Mexico’s proximity to U.S. market – Improved transportation

Reorganization/relocation of economic activities (jobs) from a national to a global scale LDCs now ideal for manufacturing jobs Features: – MDCs rely on lower-cost production from LDCs – Comparative advantage – Offshoring/ outsourcing – Trade agreements Consequences: – Unemployment in MDCs – Deindustrialization – Internal migration – International migration In LDCs – Added job opportunities – More gender equality – Increase in wage gap – Migration – Environment issues – westernization

Two factors encouraging some industries to located in traditional regions – Availability of skilled labor – Rapid delivery to market Proximity to skilled laborskilled labor – Skilled labor often found in traditional industrial regions Example: Computer Industry – Traditional approach= Fordist (mass production) – Today = post- Fordist Teams Problem solving Leveling Just-in-time delivery – Increased in importance

BRIC?? – Brazil – Russia – India – China