Imagine you are the CEO of a manufacturing company that makes high tensile strength steel in the UK. You are about to expand to a new branch somewhere in the UK.
But where do you put the new building? What about the transportation costs of raw materials? What about getting the new steel to its buyer? And what about being close to a settlement with a workforce to employ?
All these factors need to be considered before placing a new industry location.
TRANSPORT: Being close to raw materials lowers transportation costs but the type of industry also affects the cost. Light industry requires less deliveries which can be quick and easy to transport.Heavy industries need more resources to keep up the rate of production.
ENERGY: Usage of energy is important in manufacturing but more specifically heavy industry. Heavy industry requires vast amounts of electricity and heat to keep machines, furnaces and conveyor belts running.
MARKETS: Markets are needed to sell things. Sounds simple doesn't it? However these days many manufactured resources are sold overseas so easy access to a dock or airport is paramount.
RAW MATERIALS: These resources are needed to make the goods the factories produce. The more there are close by, the faster goods can be produced. Generally heavy industry uses more raw materials than light industry and use more types.
GOVERNMENT: This can be an especially useful tool for getting funds and have a greater range of possible areas to locate the manufacturing plant. Large sums of money i.e. capital investment are more attractive to heavy industry firms as they need the funds.
SITE NEEDS: The location needs to have certain features for large industrial manufacturing. These are a low sloping or flat land, cheap developable land and land which no one will object to development on.
Even more factors affecting industrial location... >.> LABOUR: Access to a large workforce is possibly the most important factor in placing a possible site. Having a large labour force that are cheap to pay and are highly educated is the key to having an efficient, high output manufacturing industry. OTHER COMMUNICATION: Having good comunications within your company allows easier access to overseas contacts so that your manufactured products can be sold with ease. CAPITAL: By investing capital in the company you can fund large scale manufacturing with heavy machinery. Because of this more capital is used in heavy industry than in light industry.
A consideration of locational factors: transport, government policy, raw materials, finance, labour, energy, physical site.Case studies of secondary industries to illustrate the changing relative importance of locational factors: a traditional area of heavy industry, a footloose industry and those associated with TNCs and NICS. The case studies are to consider the industry as a system, the physical and human factors affecting its location, the nature of the industry and recent problems and changes. Case studies of industries should be chosen with at least one from each of UK , EU and LEDCs.
Iron and steel making began to develop along south bank of the Tees in the 19th century.
This occured because all the raw materials and fuel supplies were locally available.
Iron ore from the Cleveland hills, coking coal from the Durham coalfield and limestone from the East Durham plateau.
Raw materials were usually much heavier than products and transport was not developed as well as today so a location near to raw materials made more economical sense than a location close to the marked.
In Tees case it was close to both with shipyards lining the river, which were part of the demand for the steel.
Teeside still had location factors than allowed it to continue to grow as a centre for industry
Modern Plants (Redcar works) have been built as recently as the 1980's and investment in the area continued
The Tees estuary is wide, sheltered and deep, allowing large carries to ship in iron ore cheaply made from anywhere in the world and making transport into the area easy. There is also a railway line running into the area
- These are companies which have business interests in many different countries.
- These business interests can include mining, farming and manufacture.
- The headquarters of these corporations are commonly in MEDCs but the corporations themselves are global companies.
- Many of these corporations are well known companies such as:
Ford - a vehicle manufacturer,
Shell - oil and mining
Nestle - food and drinks
Advantages and Disadvantages of Multi-nationals
+ Countries can benefit from economic growth
+ It can help poorer countries in places like Africa and Asia
- Multi-nationals are motivated more for profit rather than the economic growth of a country.
- They are competitive corporations which would leave a country as soon as no profit can be gained
Multi-nationals in countries has had different views, with manufacturing industries profiting the most in south-east Asia but there is little to bring to the economy and the workers in Central America.
Advantages of the presence of multi-nationals in LEDCs
They bring Capital, Technology, Knowledge, Expertise and Skills to the country.
They set up Industries such as vehicle manufacturing, engineering and chemicals, for which the LEDC does not have the technology and the capital.
They bring/encourage improvement of the transport infrastructure.
They create jobs
They increase exports
There may be other benefits from the multiplier effect and spin-offs
Disadvantages of the presence of multi-nationals in LEDCs
There are few jobs when industries are capital intensive and technology is used to do the work
Low wages gives the impression that the company has moved there to exploit the workers
Companies avoid taxes and export the profits
Industries are export-dependent
Only a limited range of industries are chosen, not for the best needs of the country but for their earning potentail to the company.
Poor safety records and inadequate pollution controls
Working standards below those that would be allowed in the country where the HQ is located.
Sample studies to illustrate the main changes taking place such as deindustrialisation and the decline in traditional manufacturing industries in MEDCs, increasing tertiary and quaternary sectors compared with the industrialisation in LEDCs and the growth in importance of TNCs.
Newly Industrialising Countries (NIC's) pages 180-181
These chaebol are active in many areas of industry
Driving desire to become leading global companies
Examples of these are Hyundai and LG which are Korean companies marketing to MEDC's.
Location of Industries according to the Syllabus.
A consideration of locational factors:
transport, government policy, raw materials,
finance, labour, energy, physical site.
Case studies of secondary industries to
illustrate the changing relative importance of
locational factors: a traditional area of heavy
industry, a footloose industry and those
associated with TNCs and NICS. The case
studies are to consider the industry as a
system, the physical and human factors
affecting its location, the nature of the
industry and recent problems and changes.
The problems of the environmental impact
of industries, particularly heavy industries
and their contribution to land, sea and air
The case studies are to consider the industry as a system, the physical and human factors affecting its location, the nature of the industry and recent problems and changes . Case studies of industries should be chosen with at least one from each of UK , EU and LEDCs.
Changes in industrial location in the UK (pages 182 - 183)
This example is set in the UK, but occurs in many MEDCs. There are two general trends in these changes; Growth of out-of-town locations, and areas in need of goverment assistance.
Growth of out-of-town locations
Traditionally, the manufacturing industry is located near the town centre, sometimes near canals. Sometimes, space is cleared for industry, called brownfield sites, but these sites aren't seen as attractive to new companies, who usually build on greenfield sites, rural open areas where there has no building previously, usually in the rural urban fringe. Greenfield sites are better than brownfield sites because: the land is cheaper, there is more space, it is closer to motorways for transport, there is less traffic congestion and it is easier to landscape.
In these sites, when many of the tenants are manufacturing companies, it is called an industrial estate . When there is a mixture of light manufacturing, retail, lesuire, warehouse, offices and research it its called a business park . Usually, brownfield sites are industrial estates and greenfield sites are business parks. Science parks are business parks with a direct link to Universities. The intention of this is to provide a link between development and research, and business possibilities.
There are approximately 40 science parks in the UK, wiht the largest being Cambridge Science Park. The pie chart above show the types of companies found in Cambridge Science Park.
The map to the left shows the traditional areas of industry within Britain. The majority of these (excluding only London) were close to coalfields. This is because coal was the main fuel from the start of the industrial revolution until the 1950s. They built factories close to the coalfields to save on transport. Modern industries, however, prefer to be close to motorways rather than the fuel supplies.
Recently, there has been a great decline in heavy industry. Those industries that fail to modernise, such as the shipbuilding industry, are now unable to compete with over-sea companies.
The heavy industry that did survive, however, such as steel, have changed, in order to mordernise, and they bear only a very small resemblance to their original state. Lots of plants are closed, and is concentrated in four places with the greatest advantages (see map). Teesside is one of these. The steel output at teeside increases with use of modern industry, even with less staff (see graph). Even the ,ost profitable industry have lost workers.
It was mainly the northen and western areas of Britain that were affected by the decline of
coalmining and heavy industry. Footloose companies preferred the south and the east. Areas of job losses can get assistance from the UK government and the EU. This is an example of how politics influence industrial location, and it is only with this assistance that Central Scotland, north-east England and South Wales still have industry on them.