Industrial theory
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Industrial theory






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  • 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

Industrial theory Industrial theory Presentation Transcript

  • Why is industry/manufacturing located where it is?• Begin theory…. Now!
  • The Paris Basin is the Industrial base of France. Rouen(above) is at the head of navigation point on the Seine River.
  • 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
  • Location ModelsWeber’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.Categories of Costs:Transportation-the most important cost-usually the best site is where cost to transport raw material and finished product is the lowestLabor-high labor costs reduce profit-location where there is a supply of cheap, non-union labor may offset transportation costsAgglomeration-when a group of industries cluster for mutual benefit- shared services, facilities, etc.-costs can be lowerDeglomeration-when excessive agglomeration offsets advantage- eastern crowded cities
  • Booming Town Bunny Fur Bricks Weber’s Least Cost Theory: Brick BunnyBulk Gaining Vs. Bulk Reducing.
  • 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
  • How has Industrial Production Changed?
  • 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.
  • 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.
  • Modern ProductionOutsourcing –moving individual steps in theproduction process (of a goodor a service) to a supplier, whofocuses their production andoffers a cost savings. Offshore – Outsourced work that is located outside of the country.
  • 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 shoeproduced? Nike has a global network of international manufacturing andsales.
  • Maquiladora in Nuevo Laredo, Mexico repairs telephones for AT&T
  • 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
  • • 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
  • 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 streetin Liverpool,England, where thepopulation hasdecreased by one-third sincedeindustrialization
  • The Rust Belt vsThe Sun Belt