Weber’s Least Cost Theory of Industrial Location Model AP Human Geography

Who? Alfred Weber (1868-1958) German Economic Geographer Published Theory of Location of Industries in 1909. “What is the best (most profitable) location for manufacturing plants?” “Just because I’m old doesn’t mean I don’t know what I’m talking about!”

3 major factors that determine location of manufacturing 1. Transportation (most important) Raw materials (inputs) to factory Finished goods (outputs) to market Distance and weight most important factors. 2. Labor High labor costs reduce profit May locate farther from inputs/ market if cheap labor can make up for added transport costs. 3. Agglomeration Similar businesses cluster in the same area. Businesses support each other, reduce costs

Bulk Reducing Industry “Material Orientation” Inputs weight more that final product. Weight is lost during the production process Cost of shipping inputs to factory > cost of shipping outputs to market. Therefore, factory is located near raw materials/ inputs. Examples: copper, steel, lumber

Bulk-Reducing Industry

Bulk Reducing Examples Copper Steel Finished copper bar weighs less than the copper ore used to make the product Several steps in the copper process that are bulk reducing Most foundries also need to be located close to energy sources (part of inputs) Steel is an alloy of iron, manufactured by removing the impurities Two inputs for steel are iron ore and coal, weighs more than the final product U.S. steel production location has changed b/c of changing inputs Today, more concerned with being close to markets

Bulk Gaining Examples Fabricated Metals Beverage Production Factory brings together metals (like steel) as inputs and transforms them into a more complex product Located near markets because products are much bigger Largest market for fabricated metal and machinery is motor vehicles ¾’s of vehicles sold in the U.S. are assembled in the U.S. http://www.msnbc.msn.com/id/3032619/#42140012 Empty cans or bottles given to producer and filled with beverage- thus adding bulk/weight Water- heavy to transport, #1 ingredient in beverage

Bulk Gaining Industry

Bulk Gaining Industry “Market Orientation” Finished product weighs more than the inputs. Weight is gained during the production process. Cost of shipping outputs to market > cost of shipping inputs to factory. Therefore, factory is located near the market. Examples: Automobiles, beverages

shorter distance to market Bulk Reducing Heavier input, shorter distance to plant Input Factory Market Input Factory Market Lighter output, longer distance to market, lo Lighter input, longer distance to plant. Bulk Gaining Heavier output, shorter distance to market

The Connection? Bulk gaining or reducing? Agglomeration

Single Market Manufacturers Factories that produce products for 1 or 2 customers. Ex. “We build the seats for Ford cars” Finished seats are shipped to assembly plant. Agglomerate near the larger plant. This allows for “Just In Time” delivery. Parts are sent to factory right as they are needed…reduces need for warehouse space.

Agglomeration, Chicago East Side Warehouses Auto Parts Manufacturers Ford Offices Assembly Plant

Perishable Products Must be located near market Short shelf live/ fast expiration Bread Goes bad within the week Newspaper Good only for 24 hrs. “Yesterday’s News!”

Other important vocabulary Footloose industry Produces a lightweight produce that is very valuable….location not much of an issue! Computer chips Technopole A region of many high tech businesses (agglomeration) Silicon Valley, CA Deglomeration The “unclumping” of similar businesses due to over crowding.

Maquiladora What is it? In Mexico, a maquiladora (Spanish pronunciation: [makilaˈðoɾa]) or maquila (IPA: [maˈkila])[1] is a manufacturing operation in a free trade zone (FTZ), where factories import material and equipment on a duty-free and tariff-free basis for assembly, processing, or manufacturing and then export the assembled, processed and/or manufactured products, sometimes back to the raw materials' country of origin.

Why? NAFTA North American Free Trade Agreement No tariffs between Canada, US and Mexico (North America) Became law in January 1994 (signed by Bill Clinton) Fear- many US firms will relocate to Mexico due to cheaper labor costs and less environmental laws

Trends in US “Rust Belt” Areas in North that were once industrial but due to internal migrations to South and West factories sit empty

Population Shifts

Population Shift

Detroit Depopulation