2. The Paris Basin is the Industrial base of France. Rouen
(above) is at the head of navigation point on the Seine River.
3. 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
4. Location Models
Weber’s Model-The Least Cost Theory
Alfred 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.
Categories of Costs:
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-when a group of industries cluster for mutual benefit-
shared services, facilities, etc.-costs can be lower
Deglomeration-when excessive agglomeration offsets advantage-
eastern crowded cities
5. Booming Town
Bunny Fur Bricks
Weber’s Least Cost Theory: Brick Bunny
Bulk Gaining Vs. Bulk Reducing.
6. Location Models
• Hotelling’s Model-Harold
Hotelling (1895-1973) this
economist modified
Weber’s theory by saying
the location of an industry
cannot be understood with
out reference to other
similar industries-called
Locational
Interdependence
• Losch’s Model-August
Losch said that
manufacturing plants choose
locations where they can
maximize profit. Theory:
Zone of Profitability
8. How has Industrial
Production Changed?
Fordist – dominant mode of mass production
during the twentieth century, production of
consumer goods at a single site.
Post-Fordist – current mode of production with a
more flexible set of production practices in which
goods are not mass produced. Production is
accelerated and dispersed around the globe by
multinational companies that shift production,
outsourcing it around the world.
9. Time-Space Compression
• Just-in-time delivery
rather than keeping a large
inventory of components or
products, companies keep just
what they need for short-term
production and new parts are
shipped quickly when needed.
Global division of labor
corporations can draw from
labor around the globe for
different components of
production.
10. Modern Production
Outsourcing –
moving individual steps in the
production process (of a good
or a service) to a supplier, who
focuses their production and
offers a cost savings.
Offshore –
Outsourced work that is located
outside of the country.
11. Nike (A Light Industry)-Headquartered in
Beaverton, Oregon, Nike has never produced a shoe
in Oregon. Beginning in the 1960s, Nike contracted
with an Asian firm to produce its shoes.
Skopje, Macedonia-The swoosh is ubiquitous, but where is the shoe
produced? Nike has a global network of international manufacturing and
sales.
13. New Influences on the
Geography of Manufacturing
• Transportation-intermodal connections where
air, rail, truck, ship and barge connect-eases
flow of goods-e.g. container shipping… Break
of Bulk
• Regional and global trade agreements-WTO,
Benelux, European Union, NAFTA,
MERCOSUR, SAFTA, CARICOM, ANDEAN
AFTA, COMESA, etc. goal to ease flow of
goods by eliminating trade tariffs or quotas
• Energy-coal was replaced by natural gas & oil
after WW II-transported by pipeline or tanker
14. • Europe-despite North Sea Oil-still must import
• Mexico & Canada oil and natural gas
• U.S. uses 27% if oil & 37% of natural gas produced in the world.
Dependent on imported oil
• OPEC: Saudi Arabia, Kuwait, Iraq, Russia large oil reserves
15. Deindustrialization –
a process by which companies move industrial jobs to
other regions with cheaper labor, leaving the newly
deindustrialized region to switch to a service
economy and work through a period of high
unemployment.
Abandoned street
in Liverpool,
England, where the
population has
decreased by one-
third since
deindustrialization
Alfred Weber 1868-1958 wrote Theory of the Location of Industries in 1909
Henry Ford introduced the assembly line production of automobiles which resulted in agglomeration of auto production in the Detroit and Great Lakes area-now known as the rust belt. Bretton Woods agreement industrial countries adopted the gold standard-value of currency pegged to the value of gold-basis for prosperity and mass production by large corporations
Containers await shipment in China Bottom Container ship from Europe enter Halifax, Canada’s harbor Major corporations: General Motors, Union Carbide, Exxon and others take advantage of the low transport costs, expanding information technology and favorable government regulations to outsource jobs to specific locations. Multinational Corporations move labor-intensive manufacturing to peripheral countries where laobr is cheap Core manufacturing is increasingly automated
WTO 148 states in 2005 works to negotiate trade agreements
