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Weber and Industrial Location Theory Industrial Activity and Geographic Location

Weber Notes 2014

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Weber and Industrial Location Theory

Industrial Activity and Geographic Location

Economic Geography

Economic geographers investigate the reasons behind the location of an economic activity

Location Theory

Attempts to explain the pattern of the location of an economic activity in terms of influential factors

The Location Decision (1)

Primary Industries

Because these deal with the extraction of resources, primary industries must be located where the resources are

The Location Decision (1)

Secondary Industries

less dependent on resource location

raw materials can be transported if profits outweigh the costs of transportation

The Location Decision (2)

Alfred Weber: 1868-1958

German

The Von Thunen of economic geography

Least Cost Theory

Accounted for the location of a manufacturing plant in terms of the owners desire to maximize three costs

The Location Decision (3)

Transportation (most important)

moving raw materials to factory and finished goods to market

Labor

High labor costs reduce margin of profit

current economic boom on Pacific rim

Agglomeration

number of similar enterprises clustered in the same area

Shared talents, services and facilities

when excessive, can lead to high rents, rising wages, circulation problems

Weber

Some argued that Webers model did not adequately account for variations in costs over time

Substitution principle: when one cost decreases can endure higher costs in another area (fixed vs variable costs)

Model suggests that one particular site (point vs area) would be optimal but the business could flourish in more than one area

Taxation policies are not accounted for by Weber

Factors of Industrial Location (1)

Transportation

Raw materials to factory and finished products to market

steel plants along Atlantic seaboard because iron shipped in from Venezuela

Europes coal and iron ore regions

Iron smelters built near coal fields

Japans colonial expansion into E Asia (China/Korea) due to raw materials

European colonization for resources, periphery to core

http://www.epa.gov/sectors/sectorinfo/sectorprofiles/ironsteel/map.html

Piedmont: foot of the mountains; from Italian pied (foot) monte (hill)

Factors of Industrial Location (1)

Transportation

highly developed industrial areas are places that are served most efficiently by transportation facilities

alternative systems

container systems, break of bulk

for most goods, truck is cheaper over shorter distances, railroads cheaper over medium distances, and ships cheapest over longest distances

must consider loading/unloading, actual transportation (cost of transportation increases with distance at a decreasing rate), and weight and volume

Worlds largest container ship

Intermodal Facility: Portland, Oregon

Factors of Industrial Location (2)

Labor

a large, low-wage trainable labor force will attract manufacturers

Japans postwar success based on skills and low wages of workforce, low quality high quantity initially

China emerged with large labor force in 80s

Taiwan and South Korea emerged to challenge Japan in mid 90s due to cheaper labor

Four Tigers today

See page 377 in book

Factors of Industrial Location (3)

Infrastructure

transportation, telephone, utilities, banks, postal, hotel

China-inadequate local and regional infrastructure

Vietnam-inadequate power, water, transportation

Factors of Industrial Location (4)

Energy

used to be much more important than it is today

early British textile mills had to locate near water power

rarely a problem today, except industries needing a huge amount of energy--- metal processing and chemical industries may locate near hydropower (TVA or Pacific Northwest)

Map showing location of chemical manufacturing facilities.

Other Factors

agglomeration

political stability

regional receptiveness to investment

taxation policies

environmental conditions (Hollywood)

Silicon Valley

High Tech Heaven, headquartered in San Jose California, 50 miles south of San Francisco

Stanford University

Silicon is main ingredient in computer chip making

2nd most abundant element in Earths crust (ubiquitous)

IBM, Netscape, Apple, Yahoo!, Intel, Sony, Microsoft