2. “Where is industry expanding?”
Industrialization
“Where is industry expanding?”

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

4. 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?

5. 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

6. 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

7. 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

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

9. 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

10. Colonial Pipeline brings oil and natural gas to the South

11. Manufacturing in the West
Completion of the L.A. harbor (1910) and Panama Canal (1914) allowed the West Coast to open up to processing
L.A. 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 L.A. through immigration, especially from Mexico and Asia

12. 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

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

14. Secondary Industrial Regions
South of the world’s primary industrial region
Industrial regions usually consist of several zones, each dominated by a particular kind of industry
Iron and steel zone
Coal mining in another
Textiles in a third
Thailand, Indonesia, Malaysia, and Vietnam share the economic growth in Pacific Realm
Most of the world’s industrial activity has traditionally been found in developed countries of the mid-latitudes

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

16. China
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 = 1,321,851,888 (2007)

18. 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

19. 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

20. Maquiladora Secondary manufacturing zone
Developed in northern Mexico near border with U.S.
Where manufactured products could be sent to U.S. free of import tariffs
U.S. companies established plants designated to transform imported, day free components or raw material in finished products
Owned by U.S.
Young women= cheaper wages

21. Maquiladora Continue
Factory that imports material and equipment on a duty-free and tariff-free basis for manufacturing and re-exports the assembled product
Variety of industries
Electronics, transportation, textiles, machinery
NAFTA
tax-free
Industry expanded more rapidly
Dense number of maquiladoras
Pollution
Hazardous waste
Lack proper waste management facilities and the ability to clean up disposal sites
Hazardous waste illegally disposed

22. Why are Location Factors Changing?

23. Proximity to Low Cost Labor
Labor is the site factor that is changing rapidly in the 21st Century
Textile and apparel industries are especially opening production in lower wage locations while shutting production in higher wage locations

24. Textile and Apparel Industry in the U.S.
Early 20th Century – heavily concentrated in the NE
Mid 20th Century – production moved to the SE
SE wages were low compared to the NE, but still high on a global scale
The number of apparel workers declined from 1.5 million in 1994 to 700,000 in 2003

25. Outsourcing
Transnational corporations have been very aggressive in using low cost labor in LDCs
Despite transportation cost
Jobs that require highly-skilled workers remain in MDCs

26. The New International Division of Labor
Transnational corporations outsource jobs to low wage countries
Productions is turned over to independent suppliers
This is the opposite of vertical integration – in which a company would control all phases of production
Example: Carmakers used to make their own parts, but now they outsource that responsibility to other companies

27. Renewed Attraction to Traditional Industrial Regions
Many industries now want skilled labor
Traditionally, factories required workers to perform the same task repeatedly
This is called a Fordist approach
Ford Assembly Line

28. New Work Rules Lean or Flexible Production (post-Fordist)
Three types of work rules for post-Fordist:
Teams
Problem Solving
Leveling
Examples: Computer manufacturing (CA), “high-end” clothing is made in the NE U.S.

29. Just-in-Time Delivery
Shipment of parts and materials to arrive at a factory moments before they are needed
Important for inputs for manufacturing
Saves money by reducing wasteful inventory
Suppliers must locate near customers

30. Computer Manufacturing
Dell and Gateway have reduced inventory by only producing upon demand (telephone or internet)
Two disruptions that could occur:
Labor unrest
Acts of God