Industry

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Definition Industry – The

manufacturing of goods in a factory

Globalization has changed focus, location

Maquiladora – Factories built by U.S. companies in Mexico Near the border Lower labor costs Consumers: price is more

important than originhttp://media.web.britannica.com/eb-media/42/100842-004-

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Origins of Industry Industrial Revolution

– Improvements in industrial technology that transformed the process of manufacturing goods N. England/Scotland in

the late 1700s Replaced cottage

industries (home-based manufacturing)

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Origins cont’d Key: steam engine

(1769, James Watt) Could concentrate

whole process in one building

Industries impacted: iron, coal, transportation, textiles, chemicals, food processing

Result: high productivity, better living standards

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Europe ¼ of world’s

industrial output Emerged during the

1800s/early 1900s Key areas:

United Kingdom Rhine-Ruhr Valley

(most important area, iron/steel)

Mid-Rhine (Germany) Po Basin (Italy)

http://homepage.smc.edu/buckley_alan/ps7/europe_industry_1850a.gif

Europe cont’d N.E. Spain (fastest-

growing, focus: textiles) Moscow (fabrics) St. Petersburg

(shipbuilding) Volga (petroleum,

natural gas) Urals (minerals) Kuznetsk (coal/iron) Donetsk (Ukraine, coal,

iron, natural gas) Silesia (Poland, steel)

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North America Arrived later, but grew

faster than in Europe Focus: N.E. U.S., S.E.

Canada Regions:

New England (oldest, textiles)

Middle Atlantic (largest) Mohawk Valley (food

processing) Pittsburgh/Lake Erie (steel) Western Great Lakes (cars) S. California (clothing) S.E. Ontario (steel, cars)

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East Asia Key resource: people Japan

Growth – 1950s/1960s Focus: motor vehicles,

electronics China

Largest supply of low-cost labor

Focus: textiles, steel, household goods

1990s - allowed transnational companies in, led to rapid economic growth

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Situation Factors

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Definition The transport of

materials to and from a factory Key factor in

determining why industries locate in particular places

Goal: minimize cost of transporting inputs (parts/resources) to factory, and finished goods to consumers

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Bulk-Reducing Industry Industry in which

inputs weigh more than the final product

Example: Copper Several steps in

production (mining, smelting, refining)

Need economical energy source for most steps

2/3 of U.S. copper comes from Arizona (proximity to mines is most important)

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Bulk-Reducing cont’d

Example: Steel Manufactured by

removing impurities and adding elements (manganese, chromium)

Steel mills have been replaced by minimills, which use scrap metal

Proximity to markets is now more important than inputs

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Bulk-Gaining Industry Making something

that gains volume or weight during production

Example: fabricated metals Brings metals together

and transforms them into a complex product

Most plants locate near markets due to shipping costs

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Bulk-Gaining cont’d Markets for fabricated

metal: TVs, refrigerators, air conditioners, motor vehicles

Beverage production Empty cans/bottles are

filled with liquid, shipped to consumers

Weight adds to shipping costs, so plants are located near markets

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Other Industries Single-Market

Manufacturers Specializers with only

1-2 customers Ex. Motor vehicle parts

Perishable Product Manufacturers Ex. Bread, milk,

newspapers Both industries must

locate close to customers

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How to Transport? Truck – short-distance,

best for one-day delivery Train – Longer distance,

no need for stops Ship – Low cost, cross-

continental Air – High cost, for small,

high-value packages Break-of-Bulk Point

Location where transfer of travel modes is possible

Cost rises with additional break-of-bulk points

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Site Factors

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Definition

The unique characteristics of a location

Three traditional production factors: Labor Land Capital

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Labor

The most important site factor

Labor-intensive industry Industry in which

wages and other compensation paid to employees constitutes a high percentage of company expenses

Found mainly in LDCs

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Labor cont’d Example: textiles

(woven fabrics) Step one: spinning

Done mainly in LDCs (China = 2/3 of cotton thread)

Synthetic fibers used in recent years (rayon, nylon, polyester)

Child labor is commonly used

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Labor cont’d Weaving

93% of weaving is done in LDCs

Low labor costs offset shipping costs

Assembly 4 types of products

(garments, carpets, home products, industrial products)

Assembled close to consumers (in MDCs)

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Land New factories need

lots of space (one-story facility)

Likely location: suburban or rural sites

Proximity to major highways is most important Past: railways Present: Semi-trucks

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Land cont’d Environment

Mild climates, year-round activities can also influence site selection

Also: access to affordable electricity▪ Ex. Alcoa▪ World’s largest aluminum

producer▪ Relies heavily on

hydroelectric power▪ Constructed its own dams

to produce power

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Capital Key source: borrowed

money Industries located

near available capital ‘Auto Alley’ – Michigan,

Indiana, Illinois Silicon Valley –

California (1/4 of all U.S. capital is spent here)

LDCs have great difficulty obtaining capital

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