1. Industry: Part I
APHG Copeland

2. Sectors of the Economy Pre-Industrial-primary activities
Industrial-secondary activities
Post-Industrial-tertiary activities

3. Where did the Industrial Revolution begin, and How did it Diffuse?
Key Question:
Where did the Industrial Revolution begin, and How did it Diffuse?

4. Industrial Revolution:
a series of inventions that brought new uses to known energy sources, new machines to improve efficiencies and enable other new inventions.
eg. steam engine
iron smelting
water pump

5. Beginning of Industrial Revolution
When and where did the industrial revolution begin?
In Great Britain in the mid to late 1700s
Why Great Britain?
Flow of capital
Second agricultural revolution
Mercantilism and cottage industries
Resources: coal, iron ore, and water power (lumber supply limited due to use in urban settings)

6. The Industrial Revolution
European domestic markets were growing, and a labor force was lacking in England
The steam-driven engine made up for the lack of available labor

7. Flow of Capital into Europe, 1775
Needed flow of capital in order to fuel the industrial revolution.

8. The Industrial Revolution
Freed from charcoal use, iron smelters could be concentrated near British coal fields
Transportation and communications were affected

9. Textiles Production:
Liverpool and Manchester
Iron Production:
Birmingham
Coal Mining:
Newcastle

10. The Industrial Revolution
The first steam-powered ocean-going vessel emerged-James Watt
England held a monopoly over products in world demand and the skills to make machines to manufacture them

11. Ironbridge, England World’s first bridge made entirely of cast iron,
constructed in late 1700s.

12. Iron Ore to Steel

13. Diffusion to Mainland Europe
In early 1800s, innovations diffused into mainland Europe.
Location criteria: proximity to coal fields
connection via water to a port
flow of capital
Later Diffusion
In late 1800s, innovations diffused to some regions without coal.
Location criteria: access to railroad

14. Diffusion of Industrial Revolution

15. Examine the map of diffusion of the Industrial Revolution into Europe and determine what other characteristics (aside from presence of coal) were necessary for industrialization to take hold in these regions.

16. How do Location Theories explain Industrial Location?
Key Question:
How do Location Theories explain Industrial Location?

17. The Paris Basin is the Industrial base of France
The Paris Basin is the Industrial base of France. Rouen (pictured here) is at the head of navigation point on the Seine River.

18. Location Theory
Location Theory – predicting where business will or should be located.
Considers:
Variable costs vs. Fixed costs (List)
Profit maximization (Revenue>Costs)
Friction of distance (time & cost increase due to increasing distance)
Transportation

19. Factors of Industrial Location: Raw Materials
Very few industries use raw materials
Most manufacturing is based on the further processing and shaping of materials already treated in some fashion
Transportation costs affect
industry location

20. Factors of Industrial Location: Power Supply (Energy)
Power supplies that are immobile or of low transferability may attract activities dependent on them
Current technology made less important
Industries requiring large amounts of energy still situated near the power source

21. Factors of Industrial Location: Labor
Spatial variable affecting location decisions and industrial development
3 major traditional considerations
price, skill, and amount
Labor Flexibility: highly
educated workers able
to apply themselves to a
wide variety of tasks
and functions

22. Factors of Industrial Location: Market
Goods are produced to supply a market demand
Size, nature, and distribution or markets is important in industrial location decisions
Ubiquitous industries (necessities, found everywhere)

23. Factors of Industrial Location: Transportation
Unifying thread of all factors of industrial location
Modern industry is immediately tied to transportation
Maximize profit by minimizing transportation costs
Use many different forms of transportation modes locate at break-of-bulk points (seaports, airports). If a manufacturer uses multiple b-o-b points, what does this do to the price of the product for the consumer?
Types of transportation: trucks, trains, airplanes, pipelines, ships

24. Alfred Weber
Created the classical model of industrial location theory in 1909 (Industrial Triangle)
Least-Cost Theory
Explains the optimum location of a manufacturing establishment in terms of minimizing three basic expenses
Transportation cost, labor, agglomeration

25. Least-Cost Industrial Triangle (Weber)

26. Least Cost Theory
Transportation: the site chosen must entail the lowest possible cost of
A) moving raw materials to the factory
B) finished products to the market. This, according to Weber, is the most important.
C) Is the item bulk-gaining or bulk-reducing?

27. Least Cost Theory
2) Labor: higher labor costs reduce profits, so a factory might do better farther from raw materials and markets if cheap labor is available
-ex: China – today

28. Least Cost Theory
3) Agglomeration: when a large number of enterprises cluster in the same area, they can provide assistance to each other through shared talents, services, and facilities
Ex. manufacturing plants need office furniture, strip malls, light industrial parks (consumer goods), heavy industrial parks (capital goods)

29. 5 Controlling Assumptions
Area is uniform physically, culturally, and technologically (isotropic, plain)
Manufacturing involves a single product to be shipped to a single market whose location is known
3. Inputs involve raw materials from more than one known source location

30. 5 Controlling Assumptions
Labor is infinitely available but immobile in location
Transportation routes connect origin and destination by the shortest path and directly reflect the weight of the items shipped and distance moved

31. Other Location Models Hotelling’s Law/Model
Location of an industry cannot be understood without reference to other industries of the same kind.
Theory:
Locational interdependence or sometimes referred to as the Principle of Minimum Differentiation- indicates that locational decisions are not made independently, but are influenced by the actions of others. Firms essentially create a duopoly-two firms control the market area. Because of their close proximity to one another, they compete through strategic pricing, slight product differentiation and consumer-driven benefits.

32. Other Locational Theories
The Nash Equilibrium (Game Theory)
If a competitor knows the choice to be made by their competition, they will act accordingly, giving them the best chance to succeed. A competitor must analyze the choices of competitors in order to provide one’s self with an advantage.
Ex. Two guys/one girl; Ice cream vendors on the beach (continued)

33. Other Location Models Losch’s Model
Manufacturing plants choose locations where they can maximize profit.
Theory:
Zone of Profitability