Key Issue #3: “Where is industry expanding?” Industrialization Key Issue #3: “Where is industry expanding?”

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

Where could you locate this factory for maximum profit?

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

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 LA harbor (1910) and Panama Canal (1914) allowed the West Coast to open up to processing LA 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 LA 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 Spain

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

China Chinese Population = 1,343,239,923 (2012) 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 = 1,343,239,923 (2012)

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

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