1. Why Do Industries Have Different Distributions?
Maximize profits by minimizing production costs!

3. Industrial Location
Goal of industry is to maximize profit and minimize production costs!
The two main factors that industry considers are: situation & site
Situation factors: transport of materials to and from a factory
Location near inputs (materials)
Location near markets
Transport choices

4. Situation Factors
Involves the transporting of materials to and from a factory.
An industry seeks a location that minimizes the cost of transporting inputs (materials needed) to the factory and finished goods to the consumers
The further something is transported…the higher the cost…time and distance is $$$!!!

5. Where should the pencil industry locate their factory?

6. Bulk-gaining/ Bulk-reducing demonstration
becomes
becomes

7. If cost of transporting finished product is more expensive than the cost of transporting the materials needed to make it, the optimal plant location is near consumer
Product factory
Materials
Consumer

8. If cost of transporting materials is more than the cost of transporting the final product, the optimal plant location is near materials
Materials
Consumer
Product factory

9. Proximity to Inputs: Bulk-Reducing Industry
Final product weighs less than the inputs
Copper
Steel…mini-mills use scrap metal = easier
Main copper production in U.S.

10. Copper Industry in North America
Copper mining, concentration, smelting, and refining are examples of bulk-reducing industries. Many are located near the copper mines in Arizona.

11. Integrated Steel Mills
Integrated steel mills in the U.S. are clustered near the southern Great Lakes, which helped minimize transport costs of heavy raw materials.

12. Steel Minimills
Mini-mills produce steel from scrap metal, and they are distributed around the country near local markets. These are the two largest mini-mill operators.

13. Change in Steel Production, 1973–2002
Steel production has generally declined in MDCs and increased in LDCs, especially in China, India, Brazil, and South Korea.
The increase has been especially dramatic in CHINA.

14. Proximity to Market: Bulk-Gaining Industry
Something gains volume or weight during production.
Soft drink bottling: bottle is lightweight, add liquid is gets heavier…liquid is expensive to transport…production is near consumer (market)
Fabricated products: tv’s, refrigerators, AC, and AUTOMOBILES!

15. Location of Beer Breweries
Beer brewing is a bulk-gaining industry that needs to be located near consumers. Breweries of the two largest brewers are located near major population centers.

16. Proximity to Market: Bulk-Gaining Industry
Perishable Products:
Milkshed: refrigerated trucks
Can you think of some items that perish, or are time sensitive that are not food???

17. Transportation: the further it goes, the higher the cost
Water: cheapest if available and the product is traveling a long distance.
Rail: cheapest by land, if available and traveling long distances.
Truck: easy to load and unload, so useful if shorter distances.
Air: most expensive, but used sometimes if time is of the essence.

18. Break-of-Bulk Points
Cost rises each time inputs or products are transferred from on more of transportation to another, but….
Companies that use multiple transport modes locate a break-of-bulk point
Transfer from a ship to a train is possible because it will save money.

19. Site Factors Result from the unique characteristics of a location
Land, labor, and capital are the 3 traditional production factors that may vary among locations

20. Weber’s Law of Industrial Location Also known as Weber’s Least Cost Theory
Read handout as a class and answer the following questions:
Does this remind you of another model?
What four factors determine location of industry?
What is a footloose industry? Give an example.
What is agglomeration? Give an example.
When is agglomeration a negative? What happens then (vocab word)?
If “C” is the market and K is factory, which diagram shows:
A bulk gaining industry?
A bulk reducing industry?
A possible footloose industry?

21. Weber’s Law of Industrial Location Also known as Weber’s Least Cost Theory
If “C” is the market, M are the materials, and K is factory, which diagram shows:
A bulk gaining industry? (weight-gaining processes)
A bulk reducing industry? (weight-losing processes)
A possible footloose industry?

22. Motor Vehicle Parts Plants
U.S.-owned parts plants are clustered near the main final assembly plants. Foreign-owned plants tend to be located further south, where labor unions are weaker or non-existent….(right to work laws in South = labor union membership no required for hire

23. Car Plant Location activity and reading.

24. Minimizing shipping, auto alley, waterways
SITUATION
Minimizing shipping, auto alley, waterways
Minimizing costs to get their inputs (engine & transmission, Ohio)
SITE land
Rural location for large plant (property values), near a highway & railway
SITE labor
Near large populations for labor supply, far enough away from competitors for labor…1 hr or a little more form urban areas
SITE capital
Tax cuts, financial support

25. Chevrolet Assembly Plants, 1955
In 1955, GM assembled identical Chevrolets at ten final assembly plants located near major population centers.

26. Chevrolet Assembly Plants, 2003
In 2003, GM was producing a wider variety of vehicles, and production of various models was spread through the middle of the country.

27. Electronic Computer Industry
Computer and parts manufacturing requires highly skilled workers and capital. It is clustered in the Northeast and the West Coast. Places like Silicon Valley in Northern California.