The Four Stages of the Productive and Distributive Process. Securing the place of the location and the fixed capital for equipmentSecuring the materials and the power and fuel sourcesThe manufacturing process itselfThe shipping of the goods. Cost involved in each stage of the productive and distributive process.
1. Weber’s View on Theory
2. The Four Stages of the Productive and Distributive Process Securing the place of the location and the fixed capital for equipment
Securing the materials and the power and fuel sources
The manufacturing process itself
The shipping of the goods
3. Cost involved in each stage of the productive and distributive process Profit, the interest rates of the fixed and operating capital of the different stages, and the power, the cost of labor, transportation costs, the general expenses and the cost of land.
Which of these elements vary according to location and thus represent general regional factors of location?
Labor costs and transportation costs
Agglomerative or deglomerative factors
4. Weberian Model: Least Cost Approach Assumptions
Uniform or isotropic plain in a single country
One finished product at a time is considered
The raw materials are fixed at certain locations (known) and the point of consumption is also fixed and known.
Labor is fixed geographically but its availability is unlimited.
Transportation costs are a direct function of weight of the item and the distance shipped.
5. Factors Shaping Weberian Spatial Outcomes Transportation sets the general regional pattern of manufacturing
Weight and Distance; Material Index
Then, consider spatial variations in the cost of labor
Coefficient of Labor
The final determinant is agglomeration economies
6. Raw Material Classes Spatial Distribution of Availability
Ubiquitous raw materials -- Air
Localized raw materials -- Coal
Weight Loss during Processing
Pure raw materials – water
Gross raw materials – Iron ores
7. Transportations Costs The cost of collecting raw materials (RM)
The cost of distributing the finished products (FP)
The total transportation cost (TTC)
TTC = RM + FP
8. Case 1: Bottled and canned soft drink
10. Case 2: Copper Ore
12. Further Elaborations of Weberian Models Isotim: a line of equal transport cost for any material or product
Isodapane: a line of equal total transport cost
13. Con’t Critical Isodapane: isodapane which signifies the outer limit for alternative locations (alternative to the location with minimum aggregate transport costs) in a Weberian locational triangle or other polygon. Its specification is dependent on the savings (labor cost, scale- or agglomeration economies) associated with such an alternative; beyond the critical isodapane, savings are not sufficient to compensate for the additional transport costs.
14. Finding “Critical Isodapane” Total transportation cost is minimized at Point T, $4. As we move away from T, total transportation costs increase. At Point L, labor costs are $2 per unit less than at T. Then where do you want to locate your firm? Find a critical isodapane, too.
15. Transportation Technologies and “Critical Isodapane” t1
16. Transportation Technologies and “Critical Isodapane” t2
17. Weber was Misunderstood! Contemporary spatial economists have focused on Weber’s technical approach, “Locational Triangle.”
The partial reading of Weber’s works by the first spatial economists who discovered him
The development of Operational Research
Spatial economists do not even bother to re-read Weber
18. Post-Weberian Trends The Divisibility of the Industrial Process of Production and Distribution
Locational Factors and Diversification
Locational Factors and Division of Labor Between Industries
19. Divisibility of the Industrial Process 1 In the first five chapters, Weber assumes that the activity connected with the productive and distributive process of an industry is a uniform and indivisible thing which can only as a whole be drawn to and from the material deposits and the place of consumption by locational forces and which goes on entirely independent of the activities of other industries. (p.173)
20. Divisibility of the Industrial Process 2 This indivisibility of the productive process and its independence of the productive processes of other industries do not in fact exist (p. 173) ? As a result, such processes were very seldom all located in the same place.
Productive Process as a heap of little balls which have been rolled together at one place by the locational factors but which may be redistributed by those factors
21. Divisibility of the Industrial Process 3 Once Weber rejects the hypothesis of the possible indivisibility of productive and distributive processes and the divisibility of the manufacturing process, the agglomeration of these processes, or parts of these processes, affects their costs (economies of agglomeration).
22. The Diversification of a Plant Weber p.196
We have proceeded thus far on the assumption that the various processes of industrial production are independent of each other without any relationship to one another. This is not the case. They in fact interact upon one another in various ways.
Different processes may be gathered within a single plant, thus leading to a local linking of independent industrial processes initially located at some distance
23. Division of Labor Between Industries 1 Weber studies the emergence of auxiliary industries which are responsible for part of a divisible productive processes.
Reasons and conditions for auxiliary industries
Location of auxiliary industries
24. Division of Labor Between Industries 2 Reasons and Conditions for Auxiliary Industries
The complete technical equipment which is necessary to carry out a process of production may in highly developed industries become so specialized that minutes parts of the process of production utilize specialized machines and that even quite large-scale plants are not able to make full use of such equipment. Such specialized machines must then, together with their own parts of the process of production, be taken out of the single large plant and must work for several of them, i.e., become the basis of independent auxiliary industries (128-129)
25. Division of Labor Between Industries 3 The Location of Auxiliary Industries 1
Wrapping material manufacturing—a logic of exchange: the location of the main industry will be the same as that of the auxiliary industry, to the extent that such location will make it possible to minimize transportation costs
Industry of Investment Goods—a logic of production: location near the main industry becomes a precondition for the production and sale of equipment goods. These industries make up a technical whole composed of mutually dependent parts.
26. Division of Labor Between Industries 4 The Location of Auxiliary Industries 2
The production and sales of auxiliary industry seem to depend on whether it is located near the customer companies or not. In such conditions, agglomeration is not only a way of reducing production and distribution costs owing to economies of agglomeration in particular, but it becomes a pre-condition for production.
The geographical concentration of the main industry will make it possible to reach the technical minimal point of concentration which is required for the emergence of an auxiliary industry