Why Are Location Factors Changing? Chapter 11.4

Attraction of New Industrial Regions  Companies are moving to locations where labor wage rates are lower

Changing Industrial Distribution Within MDCs  From NE to the south and west of USA  Europe  government policies are encouraging relocation to economically distressed peripheral areas

Interregional Shift in the USA  Interregional meaning…  Post Civil War factory locations= North  South lacked infrastructure  Weak road and railway networks, lack of electricity  1930s= attempt by the gov’t to put policies in place to help the south  Right-to-work laws  Textile production

“Right-to-work”  Law in Southern states that requires a factory to have an “open shop” rather than a “closed shop”  Closed shop= a company and union agree that everyone must join the union to work for the company  Open shop= you do not have to join the union to work for the factory  Makes it difficult to organize unions and easy to keep unions out.  Who would like this?

“Right-to-work”  Shows support for antiunion attitudes  Number of union members is much lower in the South  Industries move to the south looking for people who will work for less than in the north

Textile Production  Opening in lower wage locations and closing in higher wage locations  Northeast: NYC Garment District  Southeast: small towns of Appalachian, Piedmont, and Ozark Mtns and western NC and SC and northern Georgia and Alabama  Little interest in joining unions in the south  Interstate highway system: access to markets

Interregional Shifts in Europe  EU provides assistance to two regions:  Convergence Regions: Eastern and Southern Europe b/c this area lags behind in income  Competitive and Employment Regions: Western Europe’s core industrial area b/c they’ve experienced job loss  Central Europe: east of Germany and west of Russia  Attractive labor and market proximity  Less skilled and cheaper than west  More skilled and more expensive than east  Close to wealthy Western European markets

International Shifts in Industry  East Asia  South Asia  Latin America

International Shifts in Industry  Changing distributions:  New industrial regions manufacturing steel and clothing  1980 MDC produced 80% of the worlds steel, LDCs 20%  MDC= 40% and LDC= 60%  Apparel sold in the USA switched from domestic-made to foreign-made  Why? It’s cheaper and easy to import

Outsourcing  Companies figure out what jobs can be outsourced to low-skilled LDC workers, while keeping high-skilled jobs for MDC workers: new international division of labor  Outsourcing: turning over much of the responsibility for production to independent suppliers  This takes away a companies ability to control the entire process known as vertical integration  Every step in the production process is examined closely to figure out the best location  iPhones: “Assembled in the USA”

Renewed Attraction of Traditional Industrial Regions  Proximity to skilled workers  Fordist vs. Post-Fordist  Mass production  Lean production  Post-Fordist:  Teams  Problem Solving  Leveling  Rapid delivery to market  Just in time delivery  Problems= disruptions= Labor unrest and “Acts of God”