INDUSTRY AND SERVICES

1. INDUSTRY AND SERVICES Chapter 12

2. Where Did the Industrial Revolution Begin, and How Did It Diffuse? Industrial Revolution: A series of inventions that brought new uses to known energy sources, new machines to improve efficiencies and enable other new inventions

3. Beginning of Industrial Revolution • Began in Great Britain in the middle to late 1700s • Why Great Britain? • Flow of capital • Second Agricultural Revolution • Mercantilism and cottage industries • Resources: Coal, iron ore, and water power

4. Flow of Capital into Europe, 1775

5. Origins of the Industrial Revolution • Textiles: Liverpool, Manchester • Iron: Birmingham • Coal mining: Newcastle

6. Diffusion of the Industrial Revolution • Mainland Europe • Early 1800s • Location criteria: • Proximity to coal fields • Connection via water to a port • Flow of capital • Later • Late 1800s • Some regions without coal • Location criteria • Access to railroad • Flow of capital

7. Diffusion of the Industrial Revolution

8. How Do Location Theories Explain Industrial Location? Location theory: Predicting where business will or should be located, considering • Variable costs • Friction of distance

9. 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

10. Least Cost Theory (1909) • Alfred Weber’s model – owners of manufacturing plants seek to minimize three costs: 1) Transportation, 2) labor, and 3) agglomeration (too much can lead to high rents & wages, circulation problems) • Weight-losing case: final product weighs less than raw mat.s; location = source

11. Weight-gaining case: final product weighs more (or takes more space) than raw mat.s (e.g. addition of water); location = market • Some argue Weber’s model doesn’t adequately account for variations in costs over time (e.g. taxation, consumer demand) • Substitution principle – decreases in certain costs can offset increases in others

12. Christaller’s Central Place Theory – Revisited • Distance affects the marketing strategies of enterprises • Businesses identify one location, possess a monopoly • Hexagons display a nesting pattern; Christaller’s theory is not as accurate today (diminishing specialization)

13. 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)

14. Losch’s Model: Zone of Profitability

15. Major Industrial Regions of the World Before 1950 • Main determinants • Near raw materials • Transportation • But…additional needs • Goods and capital • Political circumstances • Economic leadership • Labor costs • Levels of education and training

17. Western and Central Europe

18. Major Deposits of Fossil Fuels in North America

19. Major Manufacturing Regions of North America

20. Major Manufacturing Regions of Russia

21. Major Manufacturing Regions of East Asia

22. How Has Industrial Production Changed? • Fordist : Dominant mode of mass production during the twentieth century, with production of consumer goods at a single site • Post-Fordist : Current mode of production with more flexible production practices • Goods not mass produced • Production accelerated and dispersed around the globe • Multinational companies that shift production, outsourcing it around the world

23. Time-Space Compression • Improvements in transportation and communications technologies • Many places in the world more connected than ever before

24. Effects of Time-Space Compression • Just-in-time delivery • Keeping just what is needed for short-term production • New parts shipped quickly when needed • Global division of labor: Corporations drawing from labor around the globe for different components of production

25. New Influences on the Geography of Manufacturing • Transportation • Regional and global trade agreements • Energy

27. Modern Production Outsourcing Moving individual steps in the production process (of a good or a service) to a supplier, who focuses their production and offers a cost savings Offshore Outsourced work that is located outside of the country

28. Where Are the Major Industrial Belts in the World Today, and Why? • Deindustrialization • A process by which companies move industrial jobs to other regions with cheaper labor • Period of high unemployment in deindustrialized region • Goal: Switch to a service economy • Newly industrialized regions • Pro–free trade laws • Lax environmental regulations

29. China: Newly Industrialized Country • Major industrial growth after 1950, in 1960s • State-planned • Focus on: • Northeast district • Shanghai and Chang district • Today • Companies that bring production (not the whole company) • Advantages • Chinese labor • Special economic zones (SEZs)

30. Geographical Dimensions of the Service Economy Influences on location • Information technologies • Less tied to energy sources than manufacturing • Market accessibility more relevant for some and less relevant for others because of telecommunications • Presence of multinational corporations • Quaternary and quinary economic activities

31. High-Technology Corridors • Technology corridor: An area designated by local or state government to benefit from lower taxes and high-technology infrastructure with the goal of providing high-technology jobs to the local population • Technopole: An area planned for high technology with agglomeration built on a synergy among technological companies