What is the driving force behind this company moving from plant to plant?

Transcription

1 Industry

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5 What is the driving force behind this company moving from plant to plant?

6 Location of Industry Location theory: Predicting where business will or should be located 1. Accessibility to material inputs such as raw material and energy 2. Relative importance of the following inputs: a. Labor needed b. Cost of land, plant and machinery c. Wages, salaries, bills, taxes d. Demand of good by the market e. Transfer costs

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8 Agglomeration: a process involving the clustering or concentrating of people or activities. Often refers to manufacturing plants and business that benefit from being in close proximity because they share skilledlabor pools and technological and financial services

9 Site Factors Labor (most important site factor) Labor-intensive industries vs. capital-intensive Examples: textiles vs. autos Trend has been a shift to lower wage areas Land Shift from urban to rural Available cheap land Environmental factors utilities Capital loans for investment, machinery, inventory

10 Site (Land)

11 Situational Factors Proximity to inputs Examples: Copper Steel Bulk-reducing industries End product is lighter/less bulky or easier/cheaper to transport than inputs. Locates closer to inputs

12 Situational Factors Major Beer Bottling Centers Proximity to markets Bulk-gaining industries End product is heavy/larger than inputs Examples: Fabricated metals (cars, appliances, etc.) Beverage production Single-market manufacturers Industry suppliers Just-in-time delivery Perishable products

13 Why Are Situation Factors Important? Ship, rail, truck, or air? Consider line costs, terminal costs and route flexibility Truck = most often for short-distance travel Train = used to ship longer distances (1 day +) Ship = slow, but very low costs per km/mile Air = most expensive, but very fast Locate at break-of-bulk point Place where transfer between modes takes place Minimize cost by locating processing nearby Oil refineries Less important now due to containerization

14 Location Models Weber s Model Manufacturing plants will locate where costs of transportation, labor are the least and agglomeration is beneficial 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 Businesses choose locations where they can maximize profit Closely related to Christaller s Central Place Theory. Theory: Zone of Profitability

15 Weber (Least Cost Theory)

16 If I only used roads I would build my brewery in Thirsty Town because I would only spend money on the raw materials and not the finished product. $ $.30 + $0 = $1.40

17 Hotelling's model: (locational interdependen ce/ spatial competition)

18 Lösch's model: (zone of profitability/ market zones)

19 Factors Changing Location Changing industrial distribution within MDCs Interregional shift within the United States Northeast/Midwest (Rustbelt) => South/West Right-to-work laws/non-union = low site costs Climate = more comfortable, less utilities = lower site costs Interstate highway system (1950s) = allows location away from urban railway hubs = shifting situation costs Interregional shifts in European Union Encouraged by government policy Convergence shifts toward poorer regions Competitive and employment regions receives assistance to offset job losses

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21 European Union Structural Funds

22 Changing U.S. Manufacturing

23 International shifts in industry Attraction of new industrial regions East Asia, South Asia, Latin America Cheap labor, pro-free trade laws, lax environmental regulations

24 World Steel Production

25 International shifts in industry Changing distributions New International Division of Labor /Deindustrialization A process by which companies move industrial jobs to other regions with cheaper labor MDCs = highly skilled vs. LDCs = unskilled, labor-intensive Period of high unemployment in deindustrialized region Effects unskilled workers in MDCs Interregional differences in LDCs Areas connected to core developing more rapidly Outsourcing responsibility for production of components to independent suppliers Footloose industries industry that has minimal transport costs

26 Effects of the New International Division of Labor on LDCs + Added job opportunities Positive addition to personal and national income that raises societal status, family income, etc. + Gender opportunity Entry of women into work force means added income for household support, which improves the standard of living and lowers population growth rate. - Child labor Use of child labor discourages further education.

27 Effects of the New International Division of Labor on LDCs Regional growth Location of new jobs fosters regional growth and concentration of wealth, pollution, etc. Uneven nature of growth creates a spatial gap between have and have not areas. Cultural change Westernization of production, management, etc., changes the social and cultural relationships (e.g., women in the workplace, language, cultural disruption

28 I m going to bring back American Jobs! - DT Capital-intensive, bulk-gaining industries Proximity to market Availability of investment Proximity to skilled labor Technology corridor: area designated by local or state govt to benefit from lower taxes and high-tech infrastructure with goal of providing high-tech jobs to the local population Technopole: An area planned for high tech with agglomeration built on a synergy among tech companies Post-Fordist, or lean production More flexible work rules Teams, problem solving, leveling

29 Electronic Computing Manufacturing

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