Weber notes 2013


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Weber notes 2013

  1. 1. Weber and Industrial Location Theory Industrial Activity and Geographic Location
  2. 2. Economic Geography• Economic geographers investigate the reasons behind the location of an economic activity
  3. 3. Location Theory• Attempts to explain the pattern of the location of an economic activity in terms of influential factors
  4. 4. The Location Decision (1)• Primary Industries – Because these deal with the extraction of resources, primary industries must be located where the resources are
  5. 5. The Location Decision (1)• Secondary Industries – less dependent on resource location – raw materials can be transported if profits outweigh the costs of transportation
  6. 6. The Location Decision (2)• Alfred Weber: 1868- 1958• German• The Von Thunen of economic geography• Least Cost Theory – Accounted for the location of a manufacturing plant in terms of the owner’s desire to maximize three costs
  7. 7. The Location Decision (3) Transportation (most important) moving raw materials to factory and finished goods to market Labor High labor costs reduce margin of profit current economic boom on Pacific rim Agglomeration number of similar enterprises clustered in the same area Shared talents, services and facilities when excessive, can lead to high rents, rising wages, circulation
  8. 8. Weber• Some argued that Weber’s model did not adequately account for variations in costs over time – Substitution principle: when one cost decreases can endure higher costs in another area (fixed vs variable costs) – Model suggests that one particular site (point vs area) would be optimal but the business could flourish in more than one area – Taxation policies are not accounted for by Weber
  9. 9. Factors of Industrial Location (1) – Transportation• Raw materials to factory and finished products to market• steel plants along Atlantic seaboard because iron shipped in from Venezuela• Europe’s coal and iron ore regions – Iron smelters built near coal fields• Japan’s colonial expansion into E Asia (China/Korea) due to raw materials• European colonization for resources, periphery to core
  10. 10.
  11. 11. Piedmont: foot of the mountains;from Italian pied (foot) monte (hill)
  12. 12. Factors of Industrial Location (1) – Transportation• highly developed industrial areas are places that are served most efficiently by transportation facilities• alternative systems• container systems, break of bulk• for most goods, truck is cheaper over shorter distances, railroads cheaper over medium distances, and ships cheapest over longest distances• must consider loading/unloading, actual transportation (cost of transportation increases with distance at a decreasing rate), and weight and volume
  13. 13. World’s largest containership
  14. 14. Intermodal Facility: Portland, Oregon
  15. 15. Greenville?
  16. 16. Factors of Industrial Location (2) – Labor• a large, low-wage trainable labor force will attract manufacturers• Japan’s postwar success based on skills and low wages of workforce, low quality high quantity initially
  17. 17. Factors of Industrial Location (2) – Labor• China emerged with large labor force in 80’s• Taiwan and South Korea emerged to challenge Japan in mid ‘90’s due to cheaper labor• Four Tigers today
  18. 18. Greenville?
  19. 19. Factors of Industrial Location (3) – Infrastructure• transportation, telephone, utiliti es, banks, postal, hotel• China-inadequate local and regional infrastructure• Vietnam-inadequate power, water, transportation
  20. 20. Factors of Industrial Location (4) – Energy• used to be much more important than it is today• early British textile mills had to locate near water power• rarely a problem today, except industries needing a huge amount of energy--- metal processing and chemical industries may locate near hydropower (TVA or Pacific Northwest)
  21. 21. Map showing location of chemical manufacturing facilities.
  22. 22. Other Factors• agglomeration• political stability• regional receptiveness to investment• taxation policies• environmental conditions (Hollywood)
  23. 23. Silicon Valley• High Tech Heaven, headquartered in San Jose California, 50 miles south of San Francisco• Stanford University• Silicon is main ingredient in computer chip making – 2nd most abundant element in Earth’s crust (ubiquitous)• IBM, Netscape, Apple, Yahoo!, Intel, Son y, Microsoft