Fordism: Manufacturing economy and system derived from assembly-line mass production and mass consumption of standardized goods.

Transcription

1 1

2 Fordism: Manufacturing economy and system derived from assembly-line mass production and mass consumption of standardized goods. (Fellman Getis &Getis). 2

3 3

4 Levels of living is now defined by quality of services and amenities rather than quantity of goods available. 4

5 There has been spatial disaggregation of the production process which has lead to the global supply chain. Disaggregation of industry is the separation of production components. In the past all components of a product (for example a cellphone) were manufactured within the same plant/factory. Today each facet of production may be carried out in different places so that the computer company would benefit from the advantages of the specific location. 5

6 Areas and countries can best improve their economies and standards of living through specialization and trade. A country should focus on producing items in which they have more of an advantage then other countries/areas. A country would focus on producing a specific item and then trading with other countries. Because of this idea the idea of free trade between countries is justified. This idea may cause a country to outsource if it is more cost efficient for them because this would be more profitable and lead to increased prosperity. Example (As seen in the chart) because roadway only has to give up ½ boat to make a truck compared to 5 boats that Seaside would need Roadway has the comparative advantage for the production of truck. Because Seaside only has to give up 1/5 th a truck to make a boat but Roadway has to give up 2 Seaside has the comparative advantage in the production of boats. In light of these facts it would be in their best interest for Seaside to produce boats and Roadway trucks. 6

7 Transnational Corporations (TNC s) are becoming increasingly important in the globalizing world economy. TNC s are private firms that have established branch operations in foreign countries. The total annual revenue of the world s largest TNCs rival the GDP of entire countries. For example Wal-Mart s $408 billion in revenues in 2010 would have placed it 24 th in the World just behind Norway and ahead of Venezuela. (Bjelland, Gettis &Gettis) 91 of the top 100 TNC s in the world are headquartered in the EU, U.S., and Japan. TNCs will exploit the principle of comparative advantage by outsourcing and offshoring. They look to produce in the country/region where the costs are cheapest (materials, labor, production inputs). Their factories may produce for a global market rather than just a local/national market. 7

8 This is where the TNC headquarters and producer services offices are. These cities dominate commerce in their parts of the world. These cities are linked to other cities that serve as primary and secondary level world cities. The three largest world cities in 1959 were New York, London, and Tokyo. Although today not the most populated they still dominate as world cities. World cities are home to societies most elite and powerful members, centers of art, culture, and consumption of goods (Bjelland, Gettis, and Gettis). Some secondary world cities: Paris, Hong Kong, Singapore, Milan, Toronto, Chicago, Los Angeles. 8

9 Time-space compression is the idea that with improvements in transportation and communication we have seen an increase in speed as to which things happen. This makes the distance between areas less important. The idea that our world is shrinking. In the past when we did not have these technologies most goods were produced close to where the product was consumed as well as the resource (think Weber). Today however because of new technologies things that happen in one place can quickly affect another Your book gives the example of the stock market. Fluctuations in the Tokyo stock market can affect New York mere hours later. Kiwis picked in New Zealand yesterday can be in lunchboxes in Canada tomorrow. (DeBlij/Murphy/Fouberg). 9

10 Skilled labor is in the core, unskilled labor in the periphery. 10

11 The supply chain consists of the continuous buying and selling of goods and services. The supply chain covers all the steps it to get a good/service from the supplier to the consumer. For example how did a bag of potato chips or fruit snacks make it to your local grocery stores? Where did the idea come from? What about the raw materials needed to produce it? Where is the factory that packaged it? How did it get to the retailer and then eventually to you? All of this is part of the global supply chain as we get raw materials and cheaper labor from different parts of the world. 11

12 A commodity chain is a network of labor and production processes beginning with the extraction or production of raw materials and ending with the delivery of a finished commodity. The image shows the commodity chain for the lego. Your book gives the example of the commodity chain for the ipod Processor (see page 364 of your textbook). 12

13 Today because of the new international divisions of labor (global division of labor) location is no longer the only consideration companies take into account when choosing a production site. Companies will not only look at location but they will look at cost of labor, transportation costs, government regulations, information technology, ect. 13

14 14

15 This includes air, road, rail, barge, and ship 15

16 The cost of production falls as output increases thus the larger the cost advantage. Some countries such as those in Europe looked to generate a greater profit by producing larger quantities of goods that were in high demand. They were looking to capitalize on economies of scale (p348) 16

17 This is the effect of one area that has developed industry into another area that is connected/linked to it. Your book uses the example of the Ruhr area of Germany. It is one of the largest industrial centers in continental Europe. It is connected to the port of Rotterdam in the Netherlands. Rotterdam benefited economically from this connection and expanded their port. 17

18 Your book gives the example of the Ford industrial Complex in Dearborn Michigan. The goal of this complex was to be self-sufficient and own, operate, and coordinate all the resources that were necessary for producing the automobiles. It had a power plant, boat dock, railroad, fire station, police department, and 100,000 employees. 18