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Chapter 7 Manufacturing. Fundamental nature of manufacturing processes Major manufacturing regions in the world Deindustrialization in the developed world and the rise of manufacturing in the developing world Sector specific dynamics

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chapter 7 manufacturing
Chapter 7 Manufacturing
  • Fundamental nature of manufacturing processes
  • Major manufacturing regions in the world
  • Deindustrialization in the developed world and the rise of manufacturing in the developing world
  • Sector specific dynamics
  • The rise of flexible production systems, business process outsourcing & downsizing
  • (The product life cycle model is not in this chapter again)
the nature of manufacturing
The Nature of Manufacturing
  • Elements of the manufacturing process:

(a) product design, (b) assembling inputs, (c) transforming the inputs, (d) marketing the product

  • Location decision – Weber model again
  • Value added in each stage of production
porter s value chain
Porter’s Value Chain

Firm Infrastructure

Human Resource Management



Technology Development










and Sales


Upstream value activities Downstream value activities

concentration of world manufacturing
Concentration of World Manufacturing

80% of Global Output in Three Regions

How current are these data?

Current role of China?

global distribution manufacturing value added
Global Distribution Manufacturing Value Added

U.S. – 22.4%

Source: Calculated from

shares of manufacturing value added
Shares of Manufacturing Value Added

Source: World Bank World Development Indicators, 2011

U.S. & Canadian


Belt: Accounts

For about

Two-thirds of



Employment in

The U.S. and


Rise of

Maquiladoras –

Border & interior


A good


Of specialized

Versus market



specialization in the regional distribution of manufacturing
Specialization in the Regional Distribution of Manufacturing
  • Some cartograms – where area is proportional to employment (using the BEA Economic Area classifications)
  • The first map shows the actual geometry of the BEA Economic Areas
  • The following maps depict industries distributed broadly across the U.S., and industries that are highly concentrated
  • These are old maps, but for many lines of manufacturing the data are probably relevant
other manufacturing regions
Other Manufacturing Regions
  • Europe – Figure 7.5, Japan - Figure 7.9
  • Globalization of manufacturing – movement of capacity from U.S. & Canada, Europe, and Japan to less developed countries
  • “The new international division of labor”
  • “Anatomies of Job Loss”
deindustrialization in industrialized countries
Deindustrialization in industrialized countries

The Share of Mfg. may have fallen, but real mfg.

output is probably up in all these countries – see next slide for WA state

anatomies of job loss disinvestment
Anatomies of Job-Loss: disinvestment






The “outfall”

of restructuring



Plant openings

Plant closings

In-situ changes


causal forces

in the global


Corporate responses

to global trends

Corporate competitive



on the


Bluestone & Harrison - Deindustrialization of America:

“The core of B&H’s argument followed a restructuring approach

with the need to restore the drive to accumulate, producing,

through spatially distributed effects, a major reworking of the

role of U.S. cities and regions in the geographic distribution

of production.”

impacts on manufacturing jobs in u s europe and japan
Impacts on Manufacturing Jobs in U.S., Europe and Japan
  • Job losses in manufacturing in all of these regions
  • Replacement has primarily been in services
  • Occupations created in the services are frequently very different than occupations lost in manufacturing, leading to high unemployment rates and income deterioration
assets of centers of control versus peripheral regions
Centers of Control

Key role in circulation; realizing wealth

Focal point for investment, profits, interest

Focus on forms of capital: FIRE

Occupational dominance by professionals

“Virtuous” multiplier relationships driven by above points

Support networks of a large cadre of service workers in lower occupational categories

Peripheral Regions

Key role in creating value through labor pools & resource endowment

Compete with centers for capital

Capital transfers to core; possible scarcity in periphery

Multipliers chancy: impacts only if investment comes to them

Employment fortunes conditioned by “waves of investment” and restructuring

Assets of Centers of Control versus Peripheral Regions

No direct transference

current spatial outcomes in the u s

Current Spatial Outcomes in the U.S.

Old centers are having their power erode

New centers are rising, based on redistribution

Charlotte NC - banking

or the rise of “new industrial spaces”

- Orlando-Melbourne (retirement)

- Las Vegas (entertainment)

- Seattle & Atlanta - technology based

manufacturing & information services

The rural renaissance - retirement, footloose entrepreneurs, recreation, rich people, niche mfg., IT, commuter air and courier services