1. CHAPTER 11: INDUSTRY

2. Key Issues: 1. Where is industry distributed?
2. Why do industries have different
distributions?
3. Where is industry expanding?
4. Why are location factors changing?

3. Where is industry distributed?
1. Northwestern Europe
2. Eastern Europe
3. Northeastern North America
4. East Asia

4. Northwestern Europe Four Major Regions: 1. United Kingdom
2. Rhine-Ruhr Valley
3. Mid-Rhine
4. Northern Italy

5. United Kingdom
Dominated manufacturing from the late 1700's through the
1900's.
Industrial Revolution originated here. The “revolution” was
really the “collective invention of hundreds of mechanical
devices.”
The UK lost dominance in the early 20th century as its
factories became outmoded.
Expanded industrial production in the late 20th century
by bringing in new high-tech industries that serve the
European market.

6. United Kingdom Industrial Region
The British government has
actively worked to attract high-tech
industry by lowering taxes on
businesses, reducing government
regulation, reducing government
ownership of economic activity and
using new technology such as
computers.

7. Transportation The need to transport inputs and
outputs caused the development
of faster transportation systems.
The two earliest were:
1. Canals
2. Railroad

8. Rhine-Ruhr Valley Innovations in Belgium, Germany
and France helped to expand
industry from the UK to main-
land Europe.
Iron and steel production is
dispersed throughout this region
due to proximity to coal and iron
ore. This has encouraged
heavy metal industries like loco-
motives, machinery and arms.
Rotterdam's location at the
mouth of the Rhine has made
the Dutch city the largest port
in the world.

9. Mid-Rhine This location is mostly determined by proximity
to markets rather than
resources.
Frankfurt: consumer goods.
Stuttgart: high value goods.
Mannheim: chemicals
Alsace Lorraine: near iron-
ore field, leading steel
producer.

10. Northern Italy Po River Basin: textile industry began in 19th Century.
Half of the country's population
located here and -
Two thirds of Italy's
industry.
Two attractions: lower wage
workers and hydro-electric
power.

11. Eastern Europe

12. Eastern Europe Central Industrial District: Centered around Moscow.
Located close to markets. Few natural resources. High
skilled workers make textiles, chemicals.
St. Petersburg: shipbuilding, early industrial area
Volga: grew during WWII, oil and natural gas, automobiles
Ural: contains more than 1000 types of minerals, most diverse
mining region in world. Industry located near resources. Lacks
energy sources.
Kuznetsk: largest reserves of coal and iron ore. Produces steel
Eastern Ukraine: Donetsk coal field one of largest in world.
Largest producer of pig iron and steel in this region
Silesia In southern Poland and northern Czech Republic. Steel
producer near coal fields.

13. North America

14. U.S. Industrial Areas
New England: Oldest cotton textiles. Provided cheap
immigrant labor in past. Now has expensive labor.
Middle Atlantic: Largest US market. Port cities depend on
foreign markets or imported raw materials. Finance, communi-
cations and entertainment in New York attracts other industry.
Mohawk Valley: Connects NY City to Great Lakes via the Erie
Canal. Early important industrial center for food products and
steel. Niagara Falls is a source of cheap hydro-electric power.
Pittsburgh-Lake Erie: Early steel production region due to prox-
imity to iron ore and coal in Appalachian Mountains.
Western Great Lakes: Chicago serves as a transfer point for a
variety of transportation systems. This has attracted car
manufacturers and related industries.

15. Canada (North American Region)‏
St. Lawrence Valley-
Ontario Peninsula: close
to Canadian markets.
Access to energy (Niagara
Falls)‏
Products: steel, automobiles, aluminum, paper, flour, textiles
and sugar.

16. East Asia

17. East Asia Japan
East Asia's largest obstacle to industrial growth was isolation from markets
Japan recovered from WWII (1945) by selling products at low prices
Low labor costs (wages) allowed Japan to undercut prices in Europe/US
As other east Asians entered the market, Japan changed strategies
It began producing high quality products:
automobiles, ships, cameras, stereos and TVs
required a highly skilled labor force.
China
World's second largest manufacturer.
Manufacturing is clustered along the east coast.

18. Review: Key Issue One Where is Industry Distributed?
In your notebook, on the page with information about
the four major industrial regions, briefly describe the
reason each industrial region located where it did.
1. Northwest Europe
2. Eastern Europe
3. North America
4. East Asia

19. Answer to Review of Key Issue 1
1. Northwestern Europe: Industry began here. (Before
Industrial Revolution manufacturing, such as cottage
industries were dispersed.) New technology caused
manufacturing to concentrate.
2. Eastern Europe: Proximity to resources (coal, iron
ore)caused industry to locate in some places, but proximity
to markets is a major factor for the central region around
Moscow.

20. Answers to Review of Key Issue 1
3. North America: Despite initial distance from markets,
industry emerged around transportation routes such as
the Great Lakes, the Atlantic Coast, the Erie Canal and
later railroads. The resources of the northeast as well
as its large population (market) attracted industry.
4. East Asia: Also far from markets, Japan and China led
the way with low cost labor that kept product prices low.
Japan has evolved its strategy by shifting to high value
goods requiring a skilled labor force.

21. Key Issue 2 Why Do Industries Have Different Distributions?

22. Situation Factors
What are the costs of transporting materials to and from
the factory?
Owners will seek to locate factories close to resources and
to markets.
Saab factory in Germany.

23. Proximity to Inputs
Factories locate near inputs when they are large and bulky.
1. Copper Industry: Bulk reducing. Concentration mills and
smelters located nearby. Refineries can be located elsewhere.
2. Steel Manufacturing: Need energy (coal) and iron ore to
produce steel. As steel making technology has changed, new
smaller mills (minimills) can now locate nearer to markets
rather than inputs.
US steel manufacturing has declined as competitors have
gained more of the market.

24. Steel mill in eastern Germany

25. Proximity to Markets
Bulk Gaining Industries: manufacturing that creates a
product that is heavier or bulkier than its components,
will locate as close to markets as possible in order to
reduce transportation costs.

26. Proximity to Markets II
Fabricated Metals and Machinery: a fabricated metal factory
takes individual parts and adds them together to create a
more complex product.
Examples: Refrigerators, TVs, air conditioners, automobiles,
architectural components (steel)‏

27. Proximity to Markets III
Single-Market Manufacturers: These factories will locate
close to their customers. Auto parts dealers are clustered
near automobile factories.
Perishable Products: This can be food, newspapers or any
product that has a short life-span. Modern technology is
changing the requirements for these companies.

28. Transportation Low costs are important in keeping costs down. The
farther the product is transported the CHEAPER cost
per mile/kilometer. Why?
because the labor of loading and unload products is the
same regardless of the distance traveled.
boat is the cheapest form of transport for long distances
air may be preferred if quick delivery is desired.

29. Break-of-Bulk Points
Sometimes the cost of one mode of transport is lower for
some products and inputs than for others. This means some
businesses will use a BREAK-OF-BULK POINT where transfer
of products from one type of transportation to another can
be done.

30. SITE FACTORS Labor, Land and Capital: Labor is the most important
site factor and determines the location of key industries.
Labor Intensive Industries: produce products that's cost
is made up of a high percentage of labor costs. Textiles
are an example.
Textile and Apparel Spinning: done in low wage countries
such as China and south Asia.
Textile and Apparel Weaving: Even more labor intensive than
spinning. Also located in low wage countries. Low labor costs
offset transportation costs.

31. SITE FACTOR: LABOR (continued)‏
Textile and Apparel Assembly: Textiles are made into:
clothing, carpets, home furnishings and in cars.
Again: Asia, because of low cost labor, is the location
of most apparel assembly industries.

32. Textile factory in China. Are you seeing spinning, weaving
or apparel assembly?

33. SITE FACTOR II: LAND What do manufacturer's look for in land? Climate
Amenities
Education Facilities
Low-cost energy sources

35. SITE FACTOR III: CAPITAL
Financing, raising money for manufacturing projects, is
essential to developing industry.
Location of Capital has influenced the development of
the automobile industry and Silicon Valley in California.

37. Review of Key Issue 2: Why do Industries Have Different Distributions?

38. Directions: On the back of a piece of notebook paper, answer the following questions:
1. What two factors influence where an industry locates?
2. Bulk-reducing industries locate near to resources or
markets?
3. What site factor influences the location of labor
intensive industries?
4. A fabricating plant is an example of a bulk gaining or
bulk reducing industry?

39. Answers to Key Issue 2 Review:
1. Proximity to inputs and proximity to markets influence where
industries locate.
2. Bulk reducing industries locate near to resources.
3. Labor intensive industries are most concerned with labor costs.
4. A fabricating plant is a bulk gaining industry.

40. That's the end of Key Issues I and 2!

41. Key Issue 3: Where is industry expanding?

42. Changing Distribution Within MDC's
Intraregional Shifts in Manufacturing
Cities were original locations of much manufacturing.
Close to labor and capital but land eventually became too expensive.
Factories began to locate outside of cities where land was cheaper.
Modern factories in rural/suburban areas can be one story.
This is a more efficient layout than the urban, multistory factories.
These newer factories are also closer to major highways for inputs/outputs.

43. Interregional Shifts in Manufacturing
Southern and Western United States
The northeastern US lost 1 million manufacturing jobs in the last 30 years.
Steel, textiles and fabricated metal in NY and Pennsylvania especially
Since 1970's manufacturing has grown by 1/6 in the South and West.
For years, South remained agricultural due to lack of infrastructure.
Government policy (TVA, road building) has helped the South catch up.
Southern Right-to-Work Laws were a powerful attraction for employers.
Right-to-Work Laws
Right-to-Work states require “open shops.”
“Open shops” allow workers to belong to the union or not.
This makes it difficult for unions to organize workers.
A “Closed Shop” requires union membership as a requirement of working at that factory or business.
The effect of an open shop is to keep job costs (wages and benefits) low.

44. Southern and Western Manufacturing
In the south: steel, textiles, tobacco products and furniture industries
are widely dispersed around the region.
Gulf Coast: chemicals, petrochemical manufacturing and food processing
In the west: Panama Canal (1914) had effect of bringing the west coast
closer to east coast markets. Manufacturing activity include:
aircraft manufacturing, clothing and textiles, furniture and food processing
low-wage workers from Mexico and Asia help make the west coast
attractive to employers.

45. Interregional Shifts in Western Europe
Shifts in Europe, unlike the US has seen manufacturing shift because
European governments have encouraged it.
They use incentives to attract industry to poor regions within Europe
and discourage manufacturing in rich areas.
The European Union (EU) provides money (Structural Funds) to develop
manufacturing facilities. An is example is Spain which has developed
car and textile industries.

46. New Industrial Regions Asia
China is by far the leading new manufacturing center.
Steel production reflects shift from MDC's to LDC's
1980 – 80% of all steel was produced in MDC's
Since then, steel production has shifted to LDC's
China now produces 30% of world's steel.
US steel has dropped to only 10%, steepest of MDC's
China has become the one of the world's largest manufacturer for
two reasons:
1. a large supply of low wage workers
2. a large supply of potential customers
Transformation began in 1990's when China's communist government
began opening the country to outside business investment.

47. New Industrial Regions Latin America
Mexico and Brazil are leading industrial areas in Latin America.
Most manufacturing is centered in largest cities: Mexico City and Sao Paulo.
Until 1990's, Latin American countries discouraged trade with Europe and US in an
effort to encourage support of local manufacturing. Instead, this policy caused
inefficient factories and led to inflation and debt.
Since the 1990's, Latin American countries have engaged in more free trade and seen
their economies improve as a result.
“Maquiladoras” are factories located along the US border. This allows American
manufacturers to pay lower wages in factories relatively close to the US.
They are not close enough for “Just-In-Time” Delivery.
Even low Mexican wages cannot compete with those of Asia.

48. Review of Key Issue 3: Where is Industry Expanding?
1. Within the US, which regions of the US have seen an increase in
manufacturing?
2. How have interregional shifts differed in Europe compared to the US?
3. What two factors encouraged the expansion of manufacturing
after the Chinese government changed its policies?
4. What are two disadvantages of “Maquiladoras”?

49. Answers to Key Issue 3: Where is Industry Expanding?
1. Southern and western states
2. The Europeans actively encouraged shifts in manufacturing from more
developed regions to less developed regions.
3. The Chinese were able to provide a large, low wage labor force and a
very large potential market.
4. “Maquiladoras” are too far away for “just-in-time” delivery and even though
wages are low compared to the US, they are much higher than wages in Asia.

50. Key Issue 4: Why Are Location Factors Changing?
Attraction of New Industrial Regions
Proximity to Low Cost Labor: The shift of factories from MDC's to LDC's
has been especially intense for the textile industry.

51. Per hour wages in the clothing industry by country.

52. Percentage of clothing made in the US 1994-2004
Percentage of clothing made in the US Clothing made in LDC's around the
world.

53. Key Issue 4: Why are locations changing?
Outsourcing
New International Division of Labor: Multinational corporations select those
manufacturing operations that can be done by unskilled labor in LDC's and
move those jobs to LDC's, leaving skilled jobs in MDC's.
Outsourcing: This practice allows multinational corporations to maximize their
profits by having other companies produce some needed parts for less than
the multinational corporation could produce the items itself.

54. Renewed Attraction of Traditional Industrial Regions
Proximity to Skilled Labor: Some industries need skilled labor to produce their products. Unlike Fordism, where workers performed repetitive jobs that needed
little training, skilled workers today are expected to complete complex tasks, solve
problems and work in teams with other workers. This approach is known as post-
Fordism.
The computer industry requires a skilled work force and uses post Fordism
approaches to manufacturing.

55. Renewed Attraction of Traditional Industrial Regions
Just-in-Time Delivery: Manufacturers order inputs at the very
day or moment it is needed. This reduces the cost of maintaining
a large warehouse full of needed parts.
This arrangement means suppliers must be very close to the
manufacturers in order for this system to work.
Two Potential Risks:
1. Labor unrest could interrupt production throughout system.
2. Bad weather could also interrupt production.

56. Review of Key Issue 4: Why Are Location Factors Changing?
1. What has been the primary reason that textile manufacturing
has moved to LDC's?
2. What is the new international division of labor?
3. What is outsourcing?
4. How is “just-in-time” delivery causing factories to locate in
traditional industrial regions?

57. Answers to Key Issue 4 1. Low Wages
2. The practice of using low skilled, low wage workers in LDC's to
complete simpler tasks and skilled labor in MDC's to carry out more
complex tasks.
3. Outsourcing is buying parts from suppliers rather than making
these components by the main manufacturer.
4. In order for “Just-In-Time” manufacturing to work, suppliers
must be located close to the manufacturing customer using the
parts.