350 The Cultural Landscape

KEY ISSUE 2

Why Are SituationFactors Important?

■ Proximity to Inputs■ Proximity to Markets■ Ship, Rail, Truck, or Air?

Having looked at the “where” question for industrial loca-tion, we can next consider the “why” question: Why areindustries located where they are? Geographers try toexplain why one location may prove more profitable for afactory than others.

A company ordinarily faces two geographical costs—situation and site. Situation factors are discussed in this sec-tion and site factors in the next section. Situation factorsinvolve transporting materials to and from a factory. A firmseeks a location that minimizes the cost of transportinginputs to the factory and finished goods to consumers. ■

Proximity to InputsManufacturers buy from companies and individuals who supplyinputs, such as materials, energy, machinery, and supporting serv-ices. They sell to companies and individuals who purchase theproduct. All manufacturers try to minimize the aggregate cost oftransporting inputs to their factories and transporting finishedproducts from their plants to consumers. The farther somethingis transported, the higher the cost, so a manufacturer tries tolocate its factory as close as possible to both buyers and sellers.

• The optimal plant location is as close as possible to inputs ifthe cost of transporting raw materials to the factory exceedsthe cost of transporting the product to consumers.

• The optimal plant location is as close as possible to the cus-tomer if the cost of transporting the product exceeds thecost of transporting inputs.

Every industry uses some inputs. These may be resourcesfrom the physical environment (minerals, wood, or animals), orthey may be parts or materials made by other companies.An industry in which the inputs weigh more than the final prod-ucts is a bulk-reducing industry. To minimize transport costs, abulk-reducing industry needs to locate near its sources of inputs.

Copper: A Bulk-Reducing IndustryCopper production involves several steps. The first three stepsprovide good examples of bulk-reducing activities that need tobe located near their sources of inputs (Figure 11-7). The fourthstep is not bulk-reducing, so does not need to be near inputs.

1. Mining. The first step in copper production is mining thecopper ore. Mining in general is bulk-reducing becausethe heavy, bulky ore extracted from mines is mostly waste,known as gangue. Copper ore mined in North America isespecially low-grade, less than 0.7 percent copper.

2. Concentration. Concentration mills crush and grind theore into fine particles, mix them with water and chemi-cals, and filter and dry them. Copper concentrate is about25 percent copper. Concentration mills are always nearthe mines because concentration transforms the heavy,bulky copper ore into a product of much higher value perweight.

3. Smelting. The concentrated copper becomes the inputfor smelters, which remove more impurities. Smelters pro-duce copper matte (about 60 percent copper), blister cop-per (about 97 percent copper), and anode copper (about99 percent copper). As another bulk-reducing industry,smelters are built near their main inputs—the concentra-tion mills—again to minimize transportation cost.

4. Refining. The purified copper produced by smelters istreated at refineries to produce copper cathodes, about99.99 percent pure copper. Little further weight lossoccurs, so proximity to the mines, mills, and smelters is aless critical factor in determining the location of refineries.

Another important locational consideration is the source ofenergy to power these energy-demanding operations. In gen-eral, metal processors such as the copper industry also try tolocate near economical electrical sources and to negotiatefavorable rates from power companies.

Figure 11-7 shows the distribution of the U.S. copper indus-try. Two-thirds of U.S. copper is mined in Arizona, so the statealso has most of the concentration mills and smelters. Mostfoundries, where copper is manufactured, are located near mar-kets on the east and west coasts.

Steel: Changing Importance of InputsSteel is an alloy of iron that is manufactured by removingimpurities in iron, such as silicon, phosphorus, sulfur, and oxy-gen, and adding desirable elements, such as manganese and

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FIGURE 11-7 Bulk-reducing industries. Copper mining, concentrating, andsmelting are examples of bulk-reducing industries. In the United States, most plantsthat concentrate, smelt, and refine copper are in or near Arizona, where mostcopper mines are located. In contrast, most foundries, where copper products aremanufactured, are located near markets in the east and west coasts.

Chapter 11: Industry 351

chromium. The two principal inputs in steel production areiron ore and coal. Steelmaking is an example of a bulk-reducingindustry that has located to minimize the cost of transportingthese two inputs.

Steel was a luxury item until Henry Bessemer (1813–1898)patented an efficient process for casting steel in 1855. TheBessemer process remained the most common method of manu-facturing steel until the mid-twentieth century. Because of theneed for large quantities of bulky, heavy iron ore and coal, steel-making has clustered near sources of the two key raw materials.

Steelmaking demonstrates that when the source of inputs orthe relative importance of inputs changes, the optimal locationfor the industry changes. In the United States, the distributionof steel production has changed several times because ofchanging inputs (Figure 11-8).

• Mid-nineteenth century: The U.S. steel industry concen-trated around Pittsburgh in southwestern Pennsylvania,where iron ore and coal were both mined. The area nolonger has steel mills, but it remains the center for researchand administration.

• Late nineteenth century: Steel mills were built aroundLake Erie, in the Ohio cities of Cleveland, Youngstown, andToledo, and near Detroit. The locational shift was largelyinfluenced by the discovery of rich iron ore in the MesabiRange, a series of low mountains in northern Minnesota.

This area soon became the source for virtually all iron oreused in the U.S. steel industry. The ore was transported byway of Lake Superior, Lake Huron, and Lake Erie. Coal wasshipped from Appalachia by train.

• Early twentieth century: Most new steel mills werelocated near the southern end of Lake Michigan—Gary inIndiana, Chicago, and other communities. The main rawmaterials continued to be iron ore and coal, but changes insteelmaking required more iron ore in proportion to coal.Thus, new steel mills were built closer to the Mesabi Rangeto minimize transportation cost. Coal was available fromnearby southern Illinois, as well as from Appalachia.

• Mid-twentieth century: Most new U.S. steel mills werelocated in communities near the East and West coasts,including Baltimore, Los Angeles, and Trenton, New Jersey.These coastal locations partly reflected further changes intransportation cost. Iron ore increasingly came from othercountries, especially Canada and Venezuela, and locationsnear the Atlantic and Pacific oceans were more accessibleto those foreign sources. Further, scrap iron and steel—widely available in the large metropolitan areas of the Eastand West coasts—became an important input in the steel-production process.

• Late twentieth century: Most steel mills in the UnitedStates closed. Most of the survivors were around southernLake Michigan and along the East Coast.

Thus, for surviving steel mills in the United States, proxim-ity to markets has become more important than the traditionalsituation factor of proximity to inputs. Coastal plants providesteel to large East Coast population centers, and southern LakeMichigan plants are centrally located to distribute their prod-ucts countrywide.

The increasing importance of proximity to markets is alsodemonstrated by the recent growth of steel minimills, whichhave captured one-fourth of the U.S. steel market (Figure 11-9).

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FIGURE 11-8 Impact of changing situation factors. Integrated steel mills arehighly clustered near the southern Great Lakes, especially Lake Erie and LakeMichigan. Historically, the most critical factor in siting a steel mill was tominimize transportation cost for raw materials, especially heavy, bulky iron oreand coal. In recent years, many integrated steel mills have closed. Most survivingmills are in the Midwest to maximize access to consumers.

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FIGURE 11-9 Minimills for steel production. Shown are the plants of Nucor,the largest minimill operator in the United States. Minimills, which produce steelfrom scrap metal, are more numerous than integrated steel mills, and they aredistributed around the country near local markets.

352 The Cultural Landscape

Rather than iron ore and coal, the main input into minimill pro-duction is scrap metal. In the past, most steel was produced atlarge integrated mill complexes. They processed iron ore, con-verted coal into coke, converted the iron into steel, and formedthe steel into sheets, beams, rods, or other shapes. Minimills,generally limited to one step in the process—steel production—are less expensive than integrated mills to build and operate,and they can locate near their markets because their maininput—scrap metal—is widely available.

Proximity to MarketsFor many firms, the optimal location is close to customers.Proximity to markets is a critical locational factor for three typesof industries—bulk-gaining, single market, and perishable.

Bulk-Gaining IndustriesA bulk-gaining industry makes something that gains volume orweight during production. To minimize transport costs, a bulk-gaining industry needs to locate near where the product is sold.

FABRICATED METALS. A prominent example of a bulk-gaining industry is the fabrication of parts and machinery fromsteel and other metals. A fabricated-metal factory bringstogether metals such as steel and previously manufacturedparts as the main inputs and transforms them into a morecomplex product. Fabricators shape individual pieces of metalusing such processes as bending, forging (hammering orrolling metal between two dies), stamping (pressing metalbetween two dies), and forming (pressing metal against onedie). Separate parts are joined together through welding,bonding, and fastening with bolts and rivets.

Because fabricated and machined products typically occupya larger volume than the sum of their individual parts andmetals, the cost of shipping the final product to consumers isusually the most critical factor. Whereas steelmakers havetraditionally located near raw materials, steel fabricators havetraditionally located near markets. Machinery is fabricated foruse in farms, factories, offices, and homes. Common fabricatedgoods include televisions, refrigerators, and air conditioners.Machine shops also transform metal into useful products suchas structural metal for buildings and bridges.

The largest market for fabricated metal and machinery man-ufacturers is motor vehicles. Motor vehicles are fabricated inthe United States at about 40 final assembly plants, from partsmade at several thousand other plants (Figure 11-10). As abulk-gaining industry, the critical location factor is minimizingtransportation to the market, in this case the 20,000 dealerswhere roughly 12 million North Americans buy new vehicleseach year (see Contemporary Geographic Tools box). Thus,motor-vehicle assembly involves making vehicles near wherethey are to be sold:

• At a global scale: Three-fourths of vehicles sold in theUnited States are assembled in the United States, and mostof the remainder are assembled in Canada and Mexico.

• At a national scale: Most assembly plants are located in theinterior of the United States, between Michigan andAlabama, centered in a corridor known as “auto alley,”formed by north–south interstate highways 65 and 75.

BEVERAGE PRODUCTION. Beverage bottling is anothergood example of an industry that adds bulk (Figure 11-12).Empty cans or bottles are brought to the bottler, filled with thesoft drink or beer, and shipped to consumers.

The principal input placed in a beverage container is water,which is relatively bulky, heavy, and expensive to transport.Major soft-drink companies add syrups, and beer companiesadd barley, hops, and yeast, according to proprietary recipes.These added ingredients are much less bulky than the waterand much easier to transport.

If water were only available in a few locations around thecountry, then bottlers might cluster near the source of such ascarce, bulky input. But because water is available where

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FIGURE 11-10 Auto alley. U.S.- and foreign-owned motor-vehicle partsplants. Plants are clustered in the interior of the country, near the majorcustomers, the final assembly plants. Foreign-owned plants are more likely to befarther south, where workers are less likely to join a union. Circles areproportional to the number of plants in a particular ZIP code.

CONTEMPORARY GEOGRAPHIC TOOLSHonda Selects a Factory Location

When Honda decided that it neededanother assembly plant in the UnitedStates, it applied situation and site factorsto select a location for the factory. Situa-tion factors were considered first in thedecision-making process, then site factors.

The most critical situation factor forHonda was minimizing the cost of ship-ping finished vehicles to its customersaround North America. That led Hondato look for locations within auto alley,where its other U.S. assembly plants, aswell as nearly all of its competitors, arelocated (Figure 11-11).

The other situation factor, minimiz-ing the cost of shipping its inputs, wasalso important. Honda’s most importantinputs were the engine and transmission,which were to come from existing facto-ries in western Ohio. Other parts wouldcome from factories already shipping toHonda’s two assembly plants in centralOhio. That guided Honda to the portionof auto alley encompassing Illinois, Indi-ana, and Ohio.

Site factors helped Honda find spe-cific locations within auto alley. Principalsite factors were land and labor, thoughthese pointed Honda to different loca-tions. The land site factor suggested arural location. Honda wanted a largetract of land in order to construct aspread-out one-story factory. It needed tobe near at least one interstate highwaybecause most parts would arrive and fin-ished vehicles would leave by truck. Italso needed to be next to a rail linebecause some parts would come fromJapan by boat and train, and finishedvehicles would be shipped to the westcoast by rail. An assembly plant hiresseveral thousand workers, so Hondaneeded a large labor supply within a 1-hour commuting range. But it didn’twant to compete for workers with exist-ing assembly plants. That could lead to ashortage of skilled workers and push up

wages. So Honda looked for areas outsidethe 1-hour commuting range aroundexisting assembly plants.

Honda’s short list of locations includedDecatur in eastern Illinois, Greensburg insouthwestern Indiana, and unnamed com-munities in west-central Ohio. The thirdsite factor, capital, helped Honda make its

final pick. The state governments of Illi-nois, Indiana, and Ohio were all willing toprovide Honda with financial support forroads, utilities, and worker training. ButHonda considered Indiana the safestchoice: The governors of the other twostates at the time were involved in finan-cial scandals. ■

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FIGURE 11-11 Labor markets around motor-vehicle assembly plants. Assembly plants draw theirworkforce from within a roughly 1-hour radius. New plants have been located outside the labor market areasof existing plants.

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people live, bottlers can minimize costs by producing bever-ages near their consumers instead of shipping water (theirheaviest and bulkiest input) long distances. A filled con-tainer has the same volume as an empty one, but it is muchheavier. Because they are heavier, the filled containers aremore expensive to ship than the empty ones, and bottlerslocate near their customers rather than the manufacturers ofthe containers.

Single-Market ManufacturersSingle-market manufacturers are specialized manufacturerswith only one or two customers. The optimal location for thesefactories is often in close proximity to the customer.

An example of a single-market manufacturer is a producer ofparts for motor vehicles (Figure 11-13). The typical passengercar weighs about 3,300 pounds and contains about 54 percentsteel, 11 percent iron, 8 percent plastic, 7 percent aluminum, 6percent fluids and lubricants, 4 percent rubber, 3 percent glass,and 6 percent other materials. The total value of the partsattached to new vehicles produced annually in the UnitedStates is more than $200 billion. Most parts makers have only ahandful of customers—the major motor-vehicle producerssuch as Ford and Toyota. Parts makers now ship most of theirproducts directly to the carmaker’s assembly plants clustered in“auto alley.”

Proximity to the assembly plant is increasingly important forparts producers because of the diffusion of “just-in-time” deliv-ery (see Key Issue 4). Under “just-in-time,” parts are deliveredto the assembly plant just in time to be used, often within min-utes, rather than weeks or months in advance. For some partsmakers, just-in-time delivery dictates that they build their

factories as close as possible to their customers, the finalassembly plants. Seats, for example, are invariably manufac-tured at a location within an hour of the final assembly plant.The seat is an especially large and bulky object, and carmakersdo not want to waste valuable space in their assembly plants bypiling up an inventory of them. Most engines, transmissions,and metal body parts are also produced at locations only a cou-ple of hours away from an assembly plant.

On the other hand, many parts do not need to be manufac-tured close to the customer. For them, changing site factors aremore important. Some locate in Mexico to take advantage oflower labor costs. Others come from China, where labor costsare even lower but shipping costs are higher.

Perishable ProductsTo deliver their products to consumers as rapidly as possible,perishable-product industries must be located near their mar-kets. Because few people want stale bread or sour milk, foodproducers such as bakers and milk bottlers must locate neartheir customers to assure rapid delivery (Figure 11-14). Proces-sors of fresh food into frozen, canned, and preserved productscan, however, locate far from their customers. Cheese and but-ter, for example, are manufactured in Wisconsin because rapiddelivery to the urban markets is not critical for products with along shelf life, and the area is well suited agriculturally for rais-ing dairy cows.

The daily newspaper is an example of a product otherthan food that is highly perishable, because it contains datedinformation. People demand their newspaper as soon afterits printing as possible. Therefore, newspaper publishersmust locate near markets to minimize transportation cost.

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FIGURE 11-12 A bulk-gaining industry: beer-making. The two best-sellingbrewing companies locate their plants near major population concentrations.Most breweries are clustered in the heavily populated Northeast.

FIGURE 11-13 A single-market manufacturer: seat-making. Faurecia, aFrench company, makes seats for the BMW 3 Series at a factory in Leipzig,Germany, adjacent to BMW’s assembly plant.

Chapter 11: Industry 355

Difficulty with timely delivery is one of the main factors inthe decline of newspapers. Electronic devices—computersand handheld devices—can deliver news more quickly thana newspaper. Little wonder that during the first decade ofthe twenty-first century, print publishing jobs declined from1 million to 800,000 in the United States, whereas Internetpublishing jobs increased from 70,000 to 80,000.

Ship, Rail, Truck, or Air?Inputs and products are transported in one of four ways—viaship, rail, truck, or air. Firms seek the lowest-cost mode oftransport, but which of the four alternatives is cheapestchanges with the distance that goods are being sent.

The farther something is transported, the lower is thecost per kilometer (or mile). Longer-distance transportationis cheaper per kilometer in part because firms must payworkers to load goods on and off vehicles, whether thematerial travels 10 kilometers or 10,000. The cost perkilometer decreases at different rates for each of the fourmodes because the loading and unloading expenses differ foreach mode.

• Trucks. Most often used for short-distance delivery,because they can be loaded and unloaded quickly andcheaply. Truck delivery is especially advantageous if thedriver can reach the destination within one day, before hav-ing to stop for an extended rest.

• Trains. Often used to ship to destinations that take longerthan one day to reach, such as between the east and westcoasts of the United States. Trains take longer than trucks toload, but once underway aren’t required to make daily reststops like truck drivers.

• Ships. Attractive for very long distances because thecost per kilometer is very low. Slower than land-basedtransportation, but used when shipping cannot be doneby train or truck, such as to North America from Europeor Asia.

• Air. Most expensive for all distances, so is usuallyreserved for speedy delivery of small-bulk, high-valuepackages.

Modes of delivery are often mixed. For example, air-freightcompanies pick up packages in the afternoon and transportthem by truck to the nearest airport. Late at night, planes filledwith packages are flown to a central hub airport in the interiorof the country, such as Memphis, Tennessee, and Louisville,Kentucky. The packages are transferred to other planes, flownto airports nearest their destination, transferred to trucks, anddelivered the next morning.

Containerization has facilitated transfer of packagesbetween modes. Containers may be packed into a rail car,transferred quickly to a container ship to cross the ocean, andunloaded into trucks at the other end. Large ships have beenspecially built to accommodate large numbers of rectangularbox-like containers.

Regardless of transportation mode, cost rises each time thatinputs or products are transferred from one mode to another.For example, workers must unload goods from a truck andthen reload them onto a plane. The company may need to buildor rent a warehouse to store goods temporarily after unloadingfrom one mode and before loading to another mode. Somecompanies may calculate that the cost of one mode is lower forsome inputs and products, whereas another mode may becheaper for other goods. Many companies that use multipletransport modes locate at a break-of-bulk point, which is alocation where transfer among transportation modes is possible(Figure 11-15). Important break-of-bulk points include sea-ports and airports. For example, a steel mill near the port ofBaltimore receives iron ore by ship from South America andcoal by train from Appalachia.

FIGURE 11-14 A perishable product: newspapers. Delivery of afternoonnewspapers was once commonly handled by youths after school. Most afternoonnewspapers have ceased production.