Deindustrialization in the U.S. and its Global Impact Mr. Keller Danbury HS – Danbury, CT

Primary activities The extraction of natural resources:

Secondary activities Processing and manufacturing of materials U.S. Manufacturing BeltImpact of Globalization

Tertiary activities Sales, exchange, trading goods and services U.S. stock exchange Call Center in India

Off-shore financial centers

Quaternary activities Processing knowledge and information New York Public Library

Quinary activities Economic activity involving the highest levels of decision making in a society or economy.

Silicon Valley Silicon Valley, California Bay Area Silicon Valley, California

Place in Economic Geography Where firms come from is important. As firms expand … – they stitch together places – they create global interdependency

Principles of location Raw materials Labor supply and cost Processing costs Markets Transport costs Government policies Human behavior Need to address with students: Weber’s Least Cost Locational Theory of Industrial Location

Geography of the Steel Industry U.S. U.K.

Industrialization in Europe Resource dependency (“Banana Republic,” “Oil state,” etc.)

Global economic processes Spread and deepening of investment, trade and production flows Agglomeration of trade and production sites – (e.g., free trade zones, global cities)

Agglomeration (clustering of an industry) Availability of ancillary (service) industries Infrastructure (fixed social capital) “Forward linkages” to markets

Agglomeration diseconomies Traffic, pollution, full waste dumps High rent and taxes Labor shortages and turmoil

The rise of the manufacturing belt: What was the region’s new label in the 1980s? Rust Belt! – Explaining the decline of industries…..

In Crisis, Wheels Coming Off for Detroit Automakers Oct 9, 2008 Washington Post The situation in Detroit looked bleak before the current economic crisis; now, it looks apocalyptic. GM’s stock fell 31% yesterday. Adjust for inflation, and the company is worth far less now than it was after the 1929 crash. “It’s devastating,” said Michigan Gov. Jennifer Granholm. “Companies that are already slammed by globalization are being slammed by the credit crunch.” Automakers are among the first hurt by any economic downturn, since people cut big purchases first. Ford and Chrysler have each seen sales drop more than 30% over the past year. That could mean even more pain for workers, and Michigan has already lost almost 400,000 manufacturing jobs since “We're in uncharted waters,” said one GM analyst. “Right now there's so much uncertainty, plans are being revised constantly.”

“American” cars? Japanese Nissan plant In Tennessee Jaguar made in UK by Ford Geo Metro made in Japan, marketed by GM

U.S. and Japanese Owned Motor Vehicle Parts Plants *Think about how technology has changed the way we look at this!

New International Division of Labor Specialization in particular kinds of economic activities … – of different people – of different regions Geographic division of labor – “Spatial justice” How fairly are the world’s resources distributed geographically? APHG exam question

Deindustrialization in the Core Relative decline in industrial employment – Automation and “runaway shops” Reinvestment in higher profit areas – Sunbelt states (non-union) – Semi-periphery and Periphery

Foreign Competition While U.S. companies continued to make these through the 1970s….. The Japanese were Selling us these! Economic Structure US economy by industry (x1000)

View clips from Michael Moore’s Roger & Me – impact on Flint, MI

Major Manufacturing Region and its Sub-Parts Collapse of Manufacturing = Rust Belt Replaced in Boston, Pittsburgh by high-tech industries

Deindustrialization: A Manifestation of Creative Destruction (or “where do new industries come from?”)

Creative destruction: the process of industrial transformation that accompanies radical innovation. So what…. – Deindustrialization in one location suggests that growth is occurring in a separate location Capital is not destroyed, it is displaced. Joseph Schumpeter – the Father of *Creative Destruction *see Knox text. President Reagan – also liked the idea !

Bethlehem Steel

Different types of industry have different site and situation needs Movement of jobs and people to the Sunbelt