1. Topic 7 – Location of Manufacturing
A – World Manufacturing
B – Manufacturing Systems
C – Flexible Manufacturing
Source: Frederick P. Stutz and Barney Warf (2012) The World Economy: Resources, Location, Trade, and Development, 6th Edition. Prentice Hall, Saddle River, NJ.

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Citation
Dr. Jean-Paul Rodrigue, Dept. of Global Studies & Geography, Hofstra University.

3. A - World Manufacturing
World Manufacturing Concentrations
De-Industrialization

4. 1. Phases in Manufacturing
1- Commodities
2- Intermediate Goods
3- Final Goods
Raw
materials
Manufacturing
and assembly
Distribution
Market
Stage
Attributable to climatic (agricultural products) or geological (ores and fossil fuels) conditions.
Transformation that confers added value. Metals, textiles, construction materials and parts used to make other goods.
Goods shipped to large consumption markets. Flow and inventory management.
Locational Behavior
Resulting spatial structure

5. 1. Commodity Chains and Added Value
High
R&D
Fabrication
Sales / Service
Branding
Marketing
Added value
Design
Distribution
Source: Adapted from the Stan Shih “Smile Curve” concept.
Manufacturing
Concept
Logistics
Low
Commodity chain

6. 1. Disconnection of Global Production and Distribution
Core Base
R&D
Distribution
Marketing/Retail
Manufacturing Base

7. 2. Global Manufacturing, 2009
Source: United Nations Statistical Division.

8. 2. World Manufacturing Concentrations
North America
The North American Manufacturing belt.
New England: Early Manufacture & Water Power mills
Mid-Atlantic: New York City’s vast labor pool
Central New York: The Erie Canal, Niagara, and Aluminum
Pittsburg-Cleveland-Lake Erie: Steel Triangle
Western Great Lakes: Motown
Southeastern states: Textiles and Food Processing
Gulf Coast: Petro-chemicals
California: Silicon Valley
Pacific Northwest: Aviation and electronics

11. 2. World Manufacturing Concentrations
Europe
Northern Lowlands: Encl. Both England and France
Upper Rhine: Ample hydropower, central location
Po Valley: Italian manufacturing
Ukraine district
Moscow-Volga; The Russian Mississippi
Urals: Resource availability and power.
Kuznetsk Basin: The newest Russian district, logistically isolated.

12. World Manufacturing Concentrations
Asia
Japan: Highly concentrated.
China: Special economic zones along the coast.

13. Major Japanese Conglomerates
Industry
Mitsui
Mitsubishi
Sumitomo
Fuyo
Sanwa
DKB
Banking
Sakura Bank ( )
Sumitomo Mitsui Bank (2001-)
Bank of Tokyo-
Mitsubishi ( )
Bank of Tokyo-Mitsubishi UFJ (2006– )
Sumitomo Bank (-2001)
Sumitomo Mitsui Bank (2001– )
Fuji Bank (-2000)
Mizuho Bank (2000– )
Sanwa Bank (-2002)
UFJ Bank (2002–2006)
Dai-ichi Kangyo
Bank (-2000)
Finance
Mitsui Trust & Banking
Mitsui Mutual Life
Mitsui Real Estate
Mitsui Marine & Fire
Tokio Marine and Fire Insurance
Mitsubishi Trust & Banking
Meiji Yasuda Life (2004-)
Sumitomo Trust & Banking
Sumitomo Mutual Life
Sumitomo Marine & Fire
Sumitomo Real Estate
Yasuda Trust & Banking
Marubeni
Yasuda Marine & Fire
Toyo Trust & Banking
Orix 
Fukoku Mutual Life
Asahi Mutual Life
Nissan Marine & Fire
Taisei Marine & Fire
Industrial and Manufacturing
Fuji Photo Film
Mitsukoshi
Suntory
Toshiba
Toyota
Mitsui Bussan
Japan Steel Works
Mitsui Toatsu Chemical
Kirin Brewery
Mitsubishi Electric
Mitsubishi Fuso
Mitsubishi Motors
Nippon Yusen (NYK)
Nippon Oil
Nikon
Mitsubishi Shoji
Mitsubishi Steel
Mitsubishi Gas
Asahi Breweries
Hanshin Railway
Keihan Railway
Mazda
Nankai Railway
NEC
Sumitomo Metal Industries
Sumitomo Chemical
Canon
Hitachi
Matsuya
Nissan
Ricoh
Tobu Railway
Yamaha
Kureha Chemical Industries
Hankyu Railway
Keisei Railway
Kobe Steel
Konica
Minolta
Kyocera
Shin-Maywa, Takashimaya
Toho
Nissho Iwai
Nakayama Steel Works
Nisshin Steel
Sekisui Chemical
Fujitsu
Isuzu
Itochu
Tokyo Electric Power
Kawasaki Steel

15. 3. De-Indsutrialization
Context
Decline in manufacturing capacity and employment.
Particularly prevalent in developed countries (North America, Europe and now Japan).
Decline of the share of GDP in manufacturing.
Impact on the landscape:
Dissolution of industrial cities (e.g. Detroit).
Decline in income and property values.
The “death” of manufacturing has been greatly exaggerated.

16. GDP Share of Manufacturing, Selected Countries, 1970-2010
Source: United Nations Statistical Division.

17. Factors Impacting De-Industrialization
Productivity growth
More output per workers.
Price of manufactured goods getting lower.
Outsourcing
Remove some service activities outside the manufacturing corporation.
Input costs is essentially "transferred" to the service sector.
Offshoring
Transfer of a production function to another country.
Added Value
A growing share of the added value along a value chain is derived from non-manufacturing activities.

18. Hourly Compensation in Manufacturing, 1997-2010 ($US)
Source: US Dept. of Labor, Bureau of Labor Statistics.

19. B – Manufacturing Systems
Globalized Manufacturing

20. 1. Globalized Manufacturing
Textiles and Garments
Important component of the industrial revolution.
Labor intensive activity largely globalized.
Steel
Material and capital intensive (economies of scale).
Provides inputs for many sectors.
Moved to port facilities in developing countries (China).
Automobiles
Large assembly lines with numerous suppliers (agglomeration economies).
Large conglomerates.

21. Automobile Production, Selected Countries,1950-2010 (in millions)
Source: Worldwatch Institute; International Organization of Motor Vehicle Manufacturers,

22. The Automobile Supply Chain
Supplying
industries
Bodies
Manufacture and stamping of body panels
Body assembling and painting
Steel and other metals
Rubber
Components
Final Assembly
Consumer market
Manufacture of mechanical and electrical components (wheels, tires, seats, breaking systems, windshields, exhausts, etc.)
Electronics
Plastic
Source: adapted from P. Dicken (2003) Global Production Networks In Europe And East Asia: The Automobile Components Industries, GPN Working Paper 7, University of Manchester,
Glass
Engines and transmissions
Forging and casting of engine and transmission components
Machining and assembly of engines and transmissions
Textiles

23. 1. Globalized Manufacturing
Electronics
Standard products (e.g. cars) and new applications (e.g. TC & computers).
Control of the R&D in developed countries.
Subcontracting and assembly in developing countries.
Biotechnology
Use of living systems and organisms to develop or make useful products.
Mostly involved in pharmaceuticals, chemicals and agriculture.
Agglomeration economies for skilled workforce.

24. Moore’s Law: Transistors per Microprocessor, 1971-2011
Source: Intel.

25. Value Creation and Capture, iPhone 4 (in USD)
Korea
Inputs ($80.05)
Germany
Distribution
($90.00)
Inputs ($24.63)
Inputs ($16.08)
Retail
($600)
USA
China
France
($329.95)
Inputs ($3.25)
Misc.
($45.95)
Source: adapted from OECD. "Global Value Chains: Preliminary Evidence and Policy Issues," Organisation for Economic Co-operation and Development, DSTI/IND(2011)3, Paris, 2011.
Factory Gate Price
($194.04)
Japan
VA ($6.54)
Inputs ($0.70)
Other
Apple
($269.05)
Inputs ($62.79)
International trade figures are therefore skewed…

26. C – Flexible Manufacturing
Fordism
The Emergence of Flexible Manufacturing (Post Fordism)

27. Impacts of mass production system (Fordism)
Customization before mass production.
Mass production and assembly lines.
Mass production (e.g. shopping mall).
Economics of scale locked into a lack of flexibility (little customization).
Fordism reached technical/social limits in the late 20th Century.

28. 2. Post-Industrial Revolution
Economic foundation
Relative shift from manufacturing to services.
In absolute numbers, manufacturing increases.
Capital
Knowledge becomes a form of capital.
Growth
High reliance on innovation.
Labor
Declining importance of “blue collar” tasks.
Increasing importance of technical and creative tasks.
Trade
Highly diversified trade (from resources to high value goods).
Information technologies
Global telecommunication networks.
IT embedded in products and services.

29. 2. The Emergence of Flexible Manufacturing (Post Fordism)
Principle
Allows goods produced cheaply regardless of volume.
Customers, supply firms, and production plant have close, complex relationships.
Customization and flexibility.
Just-in-time manufacturing
Initially developed in Japan.
On-demand manufacturing.
Limited warehousing (saving space).
High reliance on information technologies (process control).

30. 2. Fordist and Post-Fordist Corporate Structure
Characteristics
Fordism
Post-Fordism
Organization
Pyramidal
Networked
Focus
Supply
Demand
Style
Structured
Flexible
Reach
Regional / National
Global
Resources
Physical Assets
Information / Knowledge
Production Mode
Mass Production
Mass Customization
Production Structure
Self-Sufficiency
Alliances
Inventories
Months
Hours
Production Cycle Time
Weeks / Months
Days
Information
Weekly
Real-Time
Product Life Cycle
Years
Quality
Affordable Best
Zero-Defect
Source: Adapted from SRI (2000) Global Impacts of FedEx in the New Economy, CSTED Reports,

31. Topper the Trick Terrier
Voice Recognition Requirements:
(San Francisco)
Voice Recognition Programming:
(Taiwan)
Plastic Eyes:
(Shenzhen, China)
Plastic Body: (Malaysia)
Speaker for voice:
(Dongguan, China)
Microfiber for Coat: (Korea)
Transistors:
(Shenzhen, China)
Motors for legs:
(Shaoguan, China)
Source: adapted from Eng Ching Kooi (2006) An In-depth Study of the Emergence of Mini-Maestro in Supply Chain Governance and their Influence to Logistics Industry, MA Thesis, State University of New York at Buffalo,
IC chips: (Taiwan)
Plastic legs: (Taiwan)
Wiring: (Dongguan, China)
Packaging: (Hong Kong)