Ch.11 Key Process #1

1. Ch.11 Key Process #1

7. Where it all began? England • Why did it begin in England? a. Resources such as coal, iron ore, large labor force b. Technology: skilled mechanics and new inventions c. Economic conditions: overseas trade, colonies, increased capital and demand for goods d. Political/Social conditions: stable gov’t, strong navy, colonies for raw materials e. Physical geography: long coastlines &natural harbors provided for easy transportation

9. Diffusion of the Industrial Revolution Figure 11-2

12. Industrial Regions Figure 11-3

13. Industrial Areas in Europe Figure 11-4

14. Europe’s Industrial Areas United Kingdom: dominated steel & textiles during 19th century; today the UK has attracted international investment through new high-tech industries that serve the European market Rhine-Ruhr Valley: iron & steel manufacturing b/c near coal fields; Rotterdam (world’s largest port) Mid-Rhine: centrally located in Europe Frankfurt- financial & commercial center Stuttgart- specializes in high-value goods that require skilled labor Mannheim- inland port on Rhine where lg. chemical industry manufacturing synthetic fibers, dyes, and pharmaceuticals

15. Industrial Areas in North America Figure 11-5

16. North America’s Industrial Areas New England: cotton textiles in 19th century w/ cotton imported from south & then shipped to Europe Middle Atlantic: largest U.S. market, attracts industries that need lg. # of consumers & depends on foreign trade Mohawk Valley: upper NY state, advantage of inexpensive electricity from Niagara Falls Pittsburgh-Lake Erie: leader in steel during 19th century b/c of proximity to coal & iron ore Western Great Lakes: centered in Chicago, hub of transportation network & center of steel production Southern CA: largest area of clothing & textile production, 2nd for furniture, & major food processing center Southeastern Ontario: most important center for Canada

17. Asia’s Industrial Areas Japan: became industrial power in 1950s-60s, manufacturing concentrated in central region btw. Tokyo and Nagasaki China: world’s largest supply of low-cost labor & world’s largest market for many consumer goods 3 areas of manufacturing: Guangdong and Hong Kong, Yangtze River valley btw. Shanghai and Wuhan, along Gulf of Bo Hai from Tianjin and Beijing to Shenyang South Korea: focuses on export-oriented manufacturing, leading producer of ocean-going ships, manufacturing centered along rim of country btw. Seoul (capital) and Busan (largest port)

19. Ch.11 key process #2Why are Situation and Site Factors Important? -Geographers try to explain why one location may prove more profitable for a factory than other -A company looks at 2 geographic costs: • Situation factors: involve transporting materials to & from a factory -a firm seeks to find a location that minimizes the cost of transporting inputs to the factory & finished goods to the consumer b. Site factors: results from the unique characteristics of a location (labor, land, & capital)

20. Situation Factors • Manufacturers buy from companies & individuals who supply input (minerals, materials, energy, machinery, & supporting services) • The farther something is transported the higher the cost so manufacturers try to locate its factories as close as possible to its inputs & markets • Proximity to inputs: optimal location of factory is close as possible to input if cost of transporting raw materials to factory is GREATER THAN the cost of transporting the product to consumers • Proximity to markets: optimal location of factory is as close as possible to customers if the cost of transporting raw materials to the factory is LESS THAN the cost of transporting the product to consumers

21. Situation Factors: Proximity to Inputs • Inputs may be from the physical environment like minerals or they may be parts or materials made by other companies • Industry where inputs weigh more than the final product is called a bulk-reducing industry • to minimize costs they locate near source of inputs • Starts out heavy & gets lighter or easier to transport • Minerals are especially important inputs for many industries (iron ore, tin, nickel, chromium, copper, lead, magnesium, zinc, etc. • China leading producer of tin, tungsten, lead, magnesium, zinc • U.S. leading producer of Molybdenum • Australia leading producer of nickel, titanium, lead, lithium • Ex. of bulk-reducing industry: • Paper mills are close to timber or wine makers close to vineyards

23. Situation Factors: Proximity to Markets • Proximity to markets is critical for 3 types of markets: bulk-gaining, single-market manufacturers, & perishable products • Bulk-gaining industry: makes something that gains volume or weight during production (starts out light but gets heavier or harder to transport) • Want to locate near where products are sold to reduce transportation costs • Ex. fabrication of parts & machinery from steel or other metals such as microwaves, TVs, refrigerators, & air conditioners • Ex. bottled beverages, potato chips, bread, water

25. Situation Factors: Proximity to Markets • Single-Market Manufacturers: specialized manufacturers w/ only one or two customers so optimal location is near customer • Ex. producer of buttons, zippers, pins, or makers of parts for motor vehicles • Perishable Products: locate near markets • Ex. food producer like bakers, milk bottlers, daily newspapers

26. Transportation The farther something is transported, sometimes results in lower costs per km or mile b/c of things like labor costs, storage costs, etc. • Trucks most used for short distances (1 day or less), can load/unload quickly • Trains for longer distances b/c no stops needed but longer to load • Ships for long distances b/c cost per km is very low • Air is most expensive; usually used for speedy delivery of small bulk, high quality packages

27. Break of Bulk Point – location where transfer among transportation modes is possible • Many times modes are mixed • -Containerization has helped facilitate w/ transfer of packages btw. modes • Seaports and Airports • Companies that use multiple transport modes locate at a break of bulk point • Ship, rail, truck, or air? • The farther something is transported, the lower the cost per km/mile • Cost decreases at different rates for each of the four modes • Truck = most often for short-distance travel • Train = used to ship longer distances (1 day +) • Ship = slow, but very low cost per km/mile • Air = most expensive, but very fast

28. Ex. Copper • Four major steps: • Mining, concentration, smelting, then refining • 1st 3 steps are bulk-reducing b/c of weight of mineral so the industries want to be near the input (largest area is in AZ) • 4th step of refining and manufacturing are located near markets on the E. & W. Coast

29. Ex. Steel • Example of bulk-reducing industry • Situation factors have changed distribution of steel mills with U.S. & worldwide • Mid 19th century-SW PA • Late 19th century- Lake Erie b/c of discovery of iron ore • Early 20th century- Southern Lake Michigan b/c of shift to minimize transportation costs • Mid 20th century- E. & W. Coast b/c iron ore started coming from foreign markets • Late 20th century- Proximity to markets due to shift from steel mills to minimills using scrap metal b/c this input is widely available • Shift from steel mills in MDC to LDC over the last 30 yrs., mainly China, India, & S. Korea

30. Ex. Motor Vehicles • Bulk-gaining industry • 3 major industrial regions house 80% of world’s final assembly production (40% E. Asia, 25% Europe, & 15% N. America) • 10 carmakers control 85% of world’s sales • 2 in N. America: Ford & GM • 4 in Europe: Germany’s Volkswagen, Italy’s Fiat (which controls Chrysler), France’s Renault (controls Nissan), & Peugeot • 4 in E. Asia: Japan’s Toyota, Honda & Suzuki and S. Korea’s Hyundai • Carmakers’ assembly plants account for only around 30% of the value of the vehicle, while independent parts makers supply other 70% • Many parts makers considered single-market manufacturers & cluster near final assembly plant • Regional Distribution: • N.America: Auto Alley btw. Michigan & Alabama, especially Detroit, MI • Europe: east-west corridor btw. UK & Russia, E. Europe is growing • E. Asia: China’s plant near east coast

31. Why Are Site Factors Important? • Labor • The most important site factor • Labor-intensive industries: industry where wages & other compensation paid to employees constitute high % of expenses • China has ¼ of world’s manufacturing workers, India 1/5 • Examples: motor-vehicle workers are paid much higher hourly wages than textiles workers, yet textile industry is labor intensive, & auto industry is not • Textile and apparel spinning (labor intensive so primarily done in low-wage countries) Ex. China produces 2/3 world’s cotton thread • Textile and apparel weaving (labor intensive) • Textile and apparel assembly (located primarily in MDCs) • Land • Rural sites (more land available for one-story buildings) • Environmental factors • Access to transportation routes in suburbs or rural areas • Capital: location near banks or financial institutions that will invest or lend $

32. Location Models Weber’s Model Manufacturing plants will locate where costs of transportation, labor, and agglomeration are the least Theory: Least Cost Theory Hotelling’s Model Location of an industry cannot be understood without reference to other industries of the same kind Theory: Locational Interdependence Losch’s Model Manufacturing plants choose locations where they can maximize profit Theory: Zone of Profitability

33. Weber’s Least Cost Theory • Alfred Weber, (1868-1958) a German economists, published Theory of the Location of Industries in 1909. His theory was the industrial equivalent of the Von Thunen Model. • Manufacturing plants will locate where costs are the least. • Takes into account : • Transportation: need to weigh cost of moving raw materials & finished products to market • Labor: cheap labor may help to balance high transportation costs • Agglomeration: clustering of similar businesses that share resources • Ex. RTP & Silicon Valley for high-tech, Cities of Milan or Paris for fashion, LA for motion picture production

34. deglomeration • Traffic, pollution, full waste dumps • High rent and taxes • Labor shortages and turmoil

36. Try to be centered to the cost of all 3

37. Exceptions/Criticism of Weber’s Least Cost Theory • Taxes or tax breaks • Substitution principle: • suggests that business owners can juggle expenses, as long as labor, land rents, transportation, & other costs don’t go up all at once • you can substitute the high costs of one or two things (ex. land rents, transportation, etc.) for a really low cost of another ( ex. labor)

38. Harold Hotelling Model (Two dimensional) • Locational interdependence – the location of industries can’t be understood w/o ref. to the location of other industries of like kind • Two vendors located on pts. A & C, eventually gravitate toward pt. B (moving from this pt. will only hurt profitability) • A third vendor complicates this (spatially)

39. Losch’s Model: Zone of Profitability

40. Ch.11 Key Process # 4Why are situation and site factors changing? • Changes within Developed Regions: • Industry is shifting away from traditional manufacturing regions in NW Europe and NE USA • Shift in industry from NE to South and West in USA • NY and PA lost jobs in textile, steel, clothing, & fabricated metal manufacturing • CA & TX had largest increases in manufacturing jobs • What brought about the shift? • TVA brought electricity to rural south • Construction of roads • Air-conditioning • Right to Work Laws

41. Ch.11 Key Process # 4 • Shifts in Manufacturing: USA • Textile production (located primarily in SE like the Appalachian, Piedmont, & Ozark mountains; SC, NC, AL, GA) • NC large producer of hosiery & socks

42. Major Manufacturing Regions of North America

43. What does America still make? • Automobiles (Ford, Gm, Chrysler- Detroit), foreign automakers assemble cars here as well • Airplanes (Boeing, McDonnell Douglas, Seattle) Commercial and military • Pharmaceuticals (drugs) • Entertainment (Music Movies- Hollywood) • Computer software (Silicon Valley & RTP) • ex. TECHNIPOLES (An area planned for high technology with agglomeration built on a synergy among technological companies) • Military weapons

45. Ch.11 Key Process # 4Why are situation and site factors changing? • Shifts in Manufacturing: Europe • Change from NW to S & E • European gov’t policies have encouraged this relocation • EU Structural Funds provide assistance to areas called convergence regions & competitive and employment regions • Convergence regions primarily in E & S where income in lower • Competitive & Employment regions primary in W. Europe’s traditional core industrial areas where manufacturing has decreased • Spain had most rapid growth especially in motor vehicle industry • Major industry region is in Catalonia (motor vehicle & textile industry) • Since the fall of communism in E. Europe many countries have had much industrial development (ex. Hungary, Czech Republic, & Poland) • Central Europe has a combination of both site and situation factors that draw in manufacturing • Labor • Market proximity

46. Ch.11 Key Process # 4 • Emerging Industrial Regions: • Labor is biggest site factor influencing development in LDCs • Manufacturers are moving to where there are lower wage rates • Labor-intensive industries are moving to LDCs • Ex. Shift from apparel being made in USA declined dramatically from 1990 to 2010 • Outsourcing: turning over much of responsibility of production to independent suppliers • Transnational corp. outsource jobs to remain competitive in the global economy • Identify areas where they can outsource jobs and at the same time keep factories/jobs that require highly skilled workers in MDCs (called new international division of labor) • Outsourcing is different from traditional mass production of vertical integration (a company controls all phases of production) • Ex. Car parts, iPhone

47. Fashion Stores (Gucci, Polo): 1,2 Department Stores (Aeropostle, Gap): 2,3,4 Mass Merchandisers (Sears, JC Penney): 2,3,4 Discount Stores (Wal-Mart, Target): 3,4,5 Small Importers 4,5 Outer rings: later and poorer

48. NAFTA • North Atlantic Free Trade Agreement • Eliminates most barriers, such as tariffs, to moving goods among Mexico, USA, & Canada • Mexico attracts labor-intensive industries & manufacturing has increased since 1994 • Plants in Mexico near U.S. border are known as maquiladoras • under U.S. & Mexican laws, companies receive tax breaks if they ship materials from the U.S., assemble components at a maquiladoras plant in Mexico, & export the finished product back to the U.S. • Fears of U.S. & Canadians: • Shift of industries such as textile & food processing to Mexico b/c of lower wages & less stringent laws regarding air & water quality • Fears of Mexico: • Jobs are being lost to LDCs that have lower wage rates • Situation factors do give Mexico a competitive edge

49. Maquiladoras

50. BRIC & BRICS • BRIC: Brazil, Russia, India, & China • Countries expected to dominate global manufacturing in 21st century • Currently control 1/6 of world GDP • China is 2nd, Brazil 7th, Russia 9th, India 11th • China & India have largest labor force, while Russia & Brazil have large amounts of inputs critical for industry • S. Africa joined meeting w/ other 4 emerging countries in 2010 (now BRICS) • Indonesia & Nigeria are expected to rise as well