© 2011 Pearson Education, Inc. Chapter 11: Industry

© 2011 Pearson Education, Inc.

Chapter 11: Industry


KI #1 Where is Industry Distributed?

• Origin of industry– Industrial Revolution – innovative

engineers and mechanics, invention of hundreds of mechanical devices, expansion in productivity which resulted in higher standards of living

• Started in UK late 18th century (late 1700’s) and diffused from there

• Impact of the Industrial Revolution especially great on iron, coal, transportation, textiles, chemicals, and food processing


• Industry much more clustered in space than agriculture.

• Important factorsoWhat are the characteristics of the land, labor,

and capitalo Location - Where are markets located and

where are resources located• Industry starting to shift from MDC’s to LDC’s –

Global markets

Main Points:


Diffusion of the Industrial Revolution

Figure 11-2


• Less than 1 percent of Earth’s land is devoted to industry

• Approximately ¾ of world’s industrial production is concentrated in 4 regions.– Europe

• Northwestern Europe and Eastern Europe• Emerged in late nineteenth and early twentieth

centuries

– North America• Industry arrived later but spread faster than in

Europe• Northeast U.S. and Southeast Canada

– East Asia• China and Japan


Industrial Regions

Figure 11-3


Industrial Areas in Europe

Figure 11-4


Industrial Areas in North America

Figure 11-5


NAFTA• Agreement made between Canada, US, Mexico- NO

TARIFFS• Maquiladoras : an area set up along Mexico / US

border where factories and industry are set up. It has the benefits of lower wages, lower transportation costs because of closeness to US, lower environmental restrictions, and due to NAFTA no tariffs on goods

Learn about this more later, for now.. What do you think the benefits of this

are? (think economically)

Learn about this more later, for now.. What do you think the benefits of this

are? (think economically)


KI #2 Why Do Industries Have Different Distributions?


Principles of location

• Raw materials• Labor supply and cost• Processing costs• Markets• Transport costs• Government policies• Human behavior


Location Theory

• Location Theory – predicting where a business will or should be located.

• Location of an industry is dependent on economic, political, cultural features as well as whim.

• Location Theory Considers:– Variable costs-energy,

transportation costs & labor costs

– Friction of distance-increasing distance =increased time & cost


Weber’s Model-The Least Cost TheoryAlfred Weber, (1868-1958) a German economists, published Theory

of the Location of Industries in 1909. His theory was the industrial equivalent of the Von Thunen Model.

Manufacturing plants will locate where costs are the least.

Three Categories of Costs (JUST JOT DOWN CATEGORIES FOR NOW):

Transportation-the most important cost-usually the best site is where cost to transport raw material and finished product is the lowest

Labor-high labor costs reduce profit-location where there is a supply of cheap, non-union labor may offset transportation costs

Agglomeration- (clustering of an industry) when a group of industries cluster for mutual benefit-shared services, facilities, etc.-costs can be lower

• Availability of ancillary (service) industries• Infrastructure (fixed social capital)• “Forward linkages” to markets


Weber’s Theory simplified:(We will be spending the day on this tomorrow)

•If the raw material is bulkier, the factory will be closer to them, if the finished product is bulkier then the factory will be closer to the markets.•Examples: Coke (Coca Cola) , cars, refrigerators


Agglomeration diseconomies

• Traffic, pollution, full waste dumps

• High rent and taxes

• Labor shortages and turmoil


Why Are Situation Factors Important?

• Proximity to inputs– Bulk-reducing

industries– Examples:

• Copper• Steel

Figure 11-8


• Proximity to markets– Bulk-gaining

industries– Examples:

• Fabricated metals• Beverage production

– Single-market manufacturers

– Perishable products

Figure 11-10


Why Are Site Factors Important?

• Labor– The most important site factor– Labor-intensive industries

• Examples: textiles– Textile and apparel spinning – Textile and apparel weaving– Textile and apparel assembly


• Land– Rural sites– Environmental

factors

• Capital

Figure 11-20


KI #3 Where is Industry Expanding?

• Intraregional Shifts

• Factories in MDC’s have relocated from the center of cities to peripheral locations

• Interregional Shifts

• Factories have located from traditional clusters to regions not traditionally associated with manufacturing


Changing U.S. Manufacturing

Figure 11-21


What does America still make?• Automobiles (Ford, Gm, Chrysler- Detroit),

foreign automakers assemble cars here• Airplanes (Boeing, McDonnell Douglas, Seattle)

Commercial and military• Pharmaceuticals (drugs)• Entertainment (Music Movies- Hollywood)• Computer software (Silicon Valley) TECHNIPOLES• Military weapons


Major Manufacturing Regions of North Major Manufacturing Regions of North AmericaAmerica



Electronic Computer IndustryElectronic Computer Industry

• Computers and computer parts manufacturing requires a highly-skilled labor force.

• It is concentrated in the Northeast, South and West Coast in areas where universities and research facilities are located.


Tuesday Pick-me-up

• Who was Alfred Weber?

• What are the 3 factors that determine location of manufacturing?

• What are bulk-gaining and bulk-reducing industries?


REVIEW: 3 major factors that determine location of manufacturing

• 1. Transportation (most important)– Raw materials (inputs) to factory– Finished goods (outputs) to market– Distance and weight most important factors.

• 2. Labor– High labor costs reduce profit– May locate farther from inputs/ market if cheap

labor can make up for added transport costs.• 3. Agglomeration

– Similar businesses cluster in the same area. – Businesses support each other, reduce costs


Locational Tendencies

• Primary: oriented toward raw material sources

• Services: market oriented• Secondary: complicated spatial

expression, depending upon a set of factors– Raw material location– Markets– Agglomeration economies– Labor costs


Weber’s Theory of Location

• Assumptions (WILL HELP FOR PORTFOLIO):

– Isotropic plain– One finished product with one market– Fixed location of raw materials and market

site– Labor is fixed, but available in unlimited

quantities at production site– Transportation is uniform and costs are a

function of weight and distance



Transport Costs:

• Single market and single source:– Pure material allows processing at market,

source, or an intermediate location– Weight-losing material will be processed at

the source to avoid transporting waste material


Raw material location REVIEW• Weight losing operations are drawn to the raw

material source.– Ex. Copper smelter, iron and steel, fruit and

vegetable packing, meat packing, orange juice, wine

• A break of bulk point is where a good is moved from one mode of transportation to another-often an attractive location for production– At Great Lakes ports of Chicago, Gary, Detroit,

Cleveland, and Toledo coal was brought by rail from Appalachia and iron was shipped by boat from N. Michigan and Minnesota for steel production



Transport Costs:

• One market and two sources:– Equal distance and shipping costs

dictates a market location– Two weight losing materials results in

an intermediate location



Labor Costs:

• Location chosen always has least combined costs

• A location may have higher transport costs, but less expensive labor…China?


Let’s Practice

• Please do not write on the green sheets. Copy in your journal and determine where Weber would place the factory.



Agglomeration:• Weber recognized that clustering will

result in a per unit savings– Shared Benefits

• Facilities

• Labor force

• Infrastructure

• Services

• Raw materials



Limitations of the Theory (USE FOR PORTFOLIO):• There are geographic variations in market demand• There are terminal costs• Transport costs are becoming less of a factor• Labor is mobile and does not exist in unlimited

quantities• Plants often produce a variety of outputs for many

markets



Additional Contemporary Considerations (USE FOR PORTFOLIO):

• Access to capital• Access to technology• Friendly regulatory environment• Political stability• Land cost• Inertia


1st part of end of semester portfolio

• Choose an industry – why did you choose it?• Make Weber’s triangle (need 2 raw materials, 1

market)• Explain why you placed it there (bulk-reducing,

bulk-gaining?)• Then create another triangle: place it

somewhere else based on a modern day consideration.

• Explain why you decided to put your factory there instead of where Weber would have suggested


ANOTHER REVIEW IF NEEDED….


Bulk-Reducing Industry


Bulk Gaining Industry“Market Orientation”

• Finished product weighs more than the inputs.

• Weight is gained during the production process.

• Cost of shipping outputs to market > cost of shipping inputs to factory.

• Therefore, factory is located near the market.

• Examples: Automobiles, beverages


Bulk Reducing Industry“Material Orientation”

• Inputs weight more that final product. • Weight is lost during the production

process

• Cost of shipping inputs to factory > cost of shipping outputs to market.

• Therefore, factory is located near raw materials/ inputs.

• Examples: copper, steel, lumber


• Input Factory Market

• Input Factory Market

Heavier input, shorter distance to plant

Lighter output, longer distance to market, lo

Lighter input, longer distance to plant.

Heavier output, shorter distance to market

Bulk Reducing

Bulk Gaining


Wednesday/Thursday Pick-me-up: Minute Mysteries


Murder

• Two bodies are lying in a puddle of water and there is broken glass all about. How did they die?


Snack Attack?

• Fifty people are in a cabin having a snack. Now they are all dead. What happened?


Robbed

• Ben tells an officer that his house was robbed the previous night.

• “What seems to be missing from your house?” the officer asks.

• “As far as I know, nothing.” Ben replies.

• How does Ben know he was robbed?


Clues

• • Something was stolen.

• • No evidence was left behind.

• • Nothing was missing from house.

• • Everything Ben owned was stolen.

• • What kind of house did Ben live in?


TYPES OF INDUSTRY

• Directions:– You will be in groups of 3-4. Decide roles– You will have 45 minutes to work on your

note placard.– You will have 2 minutes to present your

group’s industry. – Remember: The rest of the class will be

taking notes based on your explanation.


Jot down chart in JournalBASIC INDUSTRY COTTAGE INDUSTRY FOOTLOOSE INDUSTRY Examples:

Examples:

Examples:

NONBASIC INDUSTRY PRIMARY INDUSTRY SECONDARY INDUSTRY Examples:

Examples:

Examples:

TYPES OF INDUSTRIES


Friday Pick-me-up

• Back 2 Board Game– Left Side of Room Vs. Right– Who wants to be the volunteer from each

side?– Goal: sides will give clues to try to get them

to guess what the image is behind them.


Round 1


Round 2


Round 3


Round 4


Round 5


Round 6: (starts HuG Words): Agriculture


Round 8

Industrial Revolution


Round 7

BASIC INDUSTRY


Round 9

TERTIARY SECTOR


Round 10:

AGGLOMERATION


Friday: 5 min Quiz then Portfolio/Catch up Day

• Need to be completing draft of Food desert + sketch out Weber’s models to have approved.

Documents

© 2011 Pearson Education, Inc. Chapter 11: Industry