1. Location, Location, Location

2. Site vs. Situation Situation factors: involve transporting materials to and from a factory –Minimize cost of transporting inputs to the factory & finished goods to the consumers Site factors: related to the costs of factors of production inside the plant –Land, labor, capital

3. Situation factors

4. 4 Basic Concepts of Spatial Interaction 1.Complementarity: There must be some form of Supply and Demand Caused by variations in world resources 2.Transferability: Factors = the Cost of moving a particular item and the ability of the item to bear the cost

5. 1909 Alfred Weber’s model – owners of manufacturing plants seek to minimize costs through: –1) Transportation, and – 2) labor –3) agglomeration Least Cost Theory

6. –Weight-losing case: final product weighs less than raw materials; location closer to source –Copper industry: only 0.7% of mined is copper, rest is waste (gangue) Then concentration process (crush, grind, mix, filter, dry) results are about 25% copper Then smelting to reduce impurities Least Cost Theory

7. –Bulk-reducing industry (steel is too) –Where should the concentration plant be in relation to the mine and the customer? Least Cost Theory

8. Soft drink bottling –Empty cans or bottles –Syrup concentrate –Water –=finished product Bulk-gaining industry (fabricated metals – cars, refrigerators) Where should the bottler be located in relation to the can manufacturer and the customer?

9. Least Cost Theory What cost should be the “least” possible?

10. Perishable Products Must locate near market But not an issue of bulk-reducing or bulk- gaining

11. Labor Intensive Industries Textiles Jewelry Toys Sawmilling and planing Footwear

12. Energy Intensive Industries Aluminum Fertilizer Cement Pulp and paper

13. Footloose Industries Micro-chips

14. Break-of-Bulk Points The location where transfer among transportation modes is possible Costs rise each time cargo has to be loaded and unloaded –Ship –Rail –Truck, or –Air

15. Site factors

16. Location Models Weber’s Model Manufacturing plants will locate where costs are the least (least cost theory) Theory: Least Cost Theory Costs: Transportation, Labor, Agglomeration Hotelling’s Model Location of an industry cannot be understood without reference to other industries of the same kind. Theory: Locational interdependence Losch’s Model Manufacturing plants choose locations where they can maximize profit. Theory: Zone of Profitability

17. Hotelling’s Model Harold Hotelling (1895-1973) Locational Interdependence Originally locate near customers – but will gravitate to each other to maximize profits The costs for some customers will be greater if the 2 sellers cluster – further to walk. Also fewer customers aware of service. But can’t move for fear of losing customers.

18. Changing Markets Outsourcing New international division of labor –Moving industry to low-cost labor Just-in-time Delivery Post-Fordist system – more flexible, less mass produced (time-space compression) deindustrialization

19. High tech corridors – area designated by local or state government to benefit from lower taxes and higher technology infrastructure (Silicon Valley) Technopole – area planned for high tech where agglomeration built on synergy among tech companies occur (from Dulles Airport – DC has AOL, MCI, Orbital Sciences)

20. Formal economy Informal economy