Economic Secondary Industries Wales And Multinationals
ECONOMIC SYSTEMS AND DEVELOPMENT <ul><li>Secondary Industries </li></ul><ul><li>What factors influence the location of industry ? </li></ul><ul><li>How has the location of industries changed over time ? </li></ul>
INDUSTRY AS A SYSTEM Industry as a whole, or a factory as an individual unit, can be regarded as a system. <ul><li>INPUTS </li></ul><ul><li>Raw materials </li></ul><ul><li>Human input </li></ul><ul><li>costs </li></ul><ul><li>PROCESSES </li></ul><ul><li>Manufacturing processes generally in a factory. </li></ul><ul><li>Value added </li></ul><ul><li>OUTPUTS </li></ul><ul><li>End products </li></ul><ul><li>income </li></ul>For a firm to be profitable and to remain in business, the value of its outputs must be greater than the cost of its inputs. Some of the profit should then be re-invested, e.g. in modernising the factory and introducing new technology.
What factors are important when locating a factory / industry ? Labour Capital Markets Transport Government Policies Technology Leisure facilities Raw materials Power Flat land HUMAN AND ECONOMIC FACTORS PHYSICAL FACTORS
What Factors are Important when locating a Factory? Physical Factors Raw Materials: The bulkier and heavier these are to transport, the nearer the factory should be located to the raw materials. This was even more important when transport was poor. Power – energy: This is needed to work the machines in the factory. Early industry needed to be sited near to fast-flowing rivers or coal reserves, but today electricity can be transported long distances. Site and Land: Industries should be built on FLAT land with room to expand. The land is often low-quality as it is cheaper to purchase. Human and Economic Factors Labour: This includes both quantity (large numbers in nineteenth-century factories) and quality (as some areas demand special skills as technology develops). Capital: Early industry depended on wealthy entrepreneurs. Now banks and governments may provide the money. Markets: The size and location of markets have become more important than the source of raw materials. Transport: Costs increase when items moved are bulky, fragile, heavy or perishable. Industries want to save money. Economies of scale : Small units may become unprofitable and so merge with, or are taken over by, other firms.
Improved Technology: The better the technology, the faster the speed of production. Leisure Facilities: Both within the town and the surrounding countryside, leisure activities are becoming more desirable. Government Policies: Governments control most wealth so can offer industries money to locate in certain areas . Human and Economic Factors <ul><li>Questions: </li></ul><ul><li>1. Describe and explain an example of an industry where being located near to the following factors is important: </li></ul><ul><ul><ul><li>raw materials </li></ul></ul></ul><ul><ul><ul><li>l abour </li></ul></ul></ul><ul><ul><ul><li>market </li></ul></ul></ul><ul><ul><ul><li>transport </li></ul></ul></ul><ul><ul><ul><li>Government help e.g. grants </li></ul></ul></ul><ul><li>2. What are footloose industries? </li></ul>
CHANGING INDUSTRIES CASE STUDY : SOUTH WALES <ul><li>Why did iron and steel decline in Wales? </li></ul><ul><li>Where are new iron and steel factories located ? Why ? </li></ul>
CHANGING INDUSTRIES CASE STUDY : SOUTH WALES Port Talbot integrated Steelworks
BOC at Port Talbot Integrated Steelworks at Port Talbot Why do heavy industries locate at Port Talbot? 1) cheap, flat and plentiful reclaimed land 2) accessible – near the M4 and on the coast (port)
There is only one remaining steelworks in South Wales. This is located at Port Talbot (Llanwern steelworks closed in 2001 causing 1340 jobs to be lost). The Port Talbot steelworks is called an ‘integrated’ steelworks because all stages of manufacture take place on one site. The high quality coal and iron ore have now been exhausted in South Wales. Nowadays coal and iron ore are imported from abroad where high quality raw materials can be extracted more cheaply. It is therefore more efficient for the steelworks to be located on the coast. Traditional Industries on the coast - Integrated Steelworks Give reasons why raw materials can be extracted more cheaply from abroad.
CASE STUDY : THE UK IRON AND STEEL INDUSTRY <ul><li>As the raw materials are mainly imported by bulk carrier ships, the most favoured locations for iron and steel plants are at BREAK OF BULK POINTS. </li></ul><ul><li>What are break of Bulk points ? </li></ul><ul><li>The best locations are, therefore, at deep water ports where the heavy imported raw materials are unloaded eg Port Talbot. </li></ul><ul><li>Large integrated iron and steel works are the most efficient locations. Large areas of flat land are needed and again, coastal areas have large expanses of land available for development. </li></ul>
How have governments tried to encourage industry in the UK ? CASE STUDY : SOUTH WALES <ul><li>Look at p 24 in booklet </li></ul><ul><li>What are … </li></ul><ul><li>DEVELOPMENT ZONES ? </li></ul><ul><li>ENTERPRISE ZONES ? </li></ul><ul><li>Who did this encourage to locate in Wales ? </li></ul>
Ebbw Vale – Festival Park Shopping The WDA (Welsh Development Agency), local authorities and the private sector spent £60 million on converting the area from a wasteland of spoil heaps into the Ebbw Vale Garden Festival. Festival Park Factory Shopping Village is now located on this site.
What has been done ? WDA (Welsh Development Agency) UK Government European Regional Development Fund The Valleys are a Development Area. This means that industries are encouraged to the area by offering them incentives such as grants, reduced business rates, planning permission and premises. Sources of Regional Assistance
Who gains from regional assistance ? Rhondda gains new jobs Fenner is closing its Hull and Peterborough factories to move its production to Maerdy. The company has been attracted to the Rhondda by £12 million in government grants. The factory is a godsend. Maerdy’s colliery closed in 1990 putting 400 out of work and male unemployment stands at 25%. The new factory will be built on this site. Eventually, the factory, which makes mouldings for the car industry, will employ 500 people. 1995 Why did Fenner move its production to Maerdy? Who loses and who benefits from Fenner’s decision?
Lucky Goldstar in Newport LG, a South Korean multinational company, decided to locate a semi conductor plant in Newport, South Wales in 1996.
Why do you think LG located in Newport? What type of support jobs may be generated? South Wales celebrates with Korean multinational investment Lucky Goldstar (LG) plans to build a new factory on a 250 acre site at Imperial Park in Newport. The factory, which eventually aims to employ 6,100, will produce semi conductors and television parts. It is likely that another 15,000 support jobs will be generated. LG were given a generous subsidy in order to attract their investment to South Wales. The WDA refuses to confirm rumours that the grant was as much as £200 million. This is equivalent to £20,000 per job. July 1996
Summary – selected industries in South Wales Lucky Goldstar Tourism in the Valleys – Big Pit at Blaenavon and Rhondda Heritage Park at Trehafod Ebbw Vale – Corus galvanizing steel and tin plating tertiary and quaternary Corus Integrated steel works Nickel and copper plating, DVLA HQ (Driving License) Business parks E.g. Sony and Hotpoint in Bridgend Industrial Park
HOW HAS INDUSTRY CHANGED IN SOUTH WALES ? <ul><li>Look at page 27 in booklets </li></ul><ul><li>FROM ‘SOOT’ TO ‘SONY’ !!! </li></ul><ul><li>South Wales was once famous for its coal and steelworks in valleys such as the Rhondda. </li></ul><ul><li>The industrial scene today, is very different. </li></ul><ul><li>The old ‘heavy’ industries have gone and new industries from OVERSEAS have located there due to INWARD INVESTMENT . </li></ul><ul><li>What is Inward Investment ? </li></ul><ul><li>This is where a government office eg Welsh Development Agency, has offered financial incentives to companies to set up in the area. </li></ul><ul><li>(This area also received financial support from the Central government under Assisted area scheme). </li></ul><ul><li>Much of the new industry is HI-TECH INDUSTRY. </li></ul><ul><li>This is a general term used to describe a range of recently developed information technology industries involving micro-electronics and related activities. </li></ul><ul><li>South Wales has therefore, moved from heavy industries to light manufacturing industries such as electronics etc. </li></ul>
Summary In the nineteenth century and first half of the twentieth century, the coal and iron and steel industries dominated the landscape of the _______ of South Wales. These industries prospered due to the accessibility of raw materials and due to the fact that Britain had an _______ which provided a ready market. These industries declined in the latter half of the twentieth century because Britain lost its Empire, the raw materials became exhausted and there was competition from abroad. In addition, coal is no longer the major source of _______ in Britain. Coal is an example of a _______ industry. Iron and steel is an example of a _______ industry. The raw materials that make iron are iron ore, _______ and _______. Steel production increased because it is stronger and less _______ than iron. primary tertiary secondary fuel malleable Empire coal limestone coast Valleys steel brittle