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New Industrial Division of Labor


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New Industrial Division of Labor

  1. 1. The NEW International Division of Labor and the new industry location in the U.S. How have things changed in the last 30 years
  2. 2. Terms to know
  3. 3. Just-in-Time Delivery • No overstock • Use computers/technology/communication • Produce just enough when needed • Supply Chains
  4. 4. Fordist vs Post-Fordist Fordist -Mass Production in one location -Assembly line -Know one part of the process Post-Fordist Flexible production, adaptation, and innovation -Post-Fordism uses workers in teams-all together working to solve problems, Post-Fordism outsources certain jobs Production shifts worldwide
  5. 5. Intermodal Connections • Break of Bulk locations • Containerization is a system of intermodal freight transport using standard intermodal containers. • These can be loaded and sealed intact onto container ships, railroad cars, cargo planes, and semi-trailer trucks.
  6. 6. Outsourcing (Offshoring): • moving part of your business operation overseas to take advantage of low costs (land, labor, taxes, etc)
  7. 7. Transnational Corporation • Nike
  8. 8. Maquiladoras
  9. 9. Technopoles • SiliconValley • Clusters of High-tech industries
  10. 10. Technopoles
  11. 11. Venture Capital • What Does Venture Capital Mean? • Money provided by investors to startup firms and small businesses with perceived long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above-average returns.
  13. 13. Silicon Valley
  14. 14. What is a footloose industry?
  15. 15. a general term for an industry that can be placed and located at any location without effect from factors such as resources or transport.
  16. 16. Ex: internet companies...however
  17. 17. High-tech industries, needing a highly qualified workforce, may appear footloose, but in practice they tend to locate close to universities, research establishments, and motorways.
  18. 18. Why the Change today? LET’S LOOK AT U.S. REGION AND THEN WORLD CHANGES
  19. 19. INTERREGIONAL CHANGE- the U.S. • Cities to Suburbs • Why? • Northeast (Steel Belt) to Southwest/South • Why?
  20. 20. To Suburbs • Factories are better one story…need cheaper land to build out; not up (land cheaper in burbs) • Trucks and Interstate highways are the major modes of shipping goods today; not railroads • Cluster near major highways in industrial parks • Changing demands (more variety)-Cars! • Regional plant produced cars for region (past) • National plant produces 1 car for country
  21. 21. Chevrolet Assembly Plants, 1955 In 1955, GM assembled identical Chevrolets at ten final assembly plants located near major population centers. Why are cars located near market? NEAR MARKET
  22. 22. Chevrolet Assembly Plants, 2007 In 2007, GM was producing a wider variety of vehicles… where did factories move and why? Market is still key
  23. 23. Chevrolet Assembly Plants In 2007, GM was producing a wider variety of vehicles, and production of various models was spread through the interior of the country. Market is still key
  24. 24. Site Selection for Saturn GM considered a variety of economic and geographic factors when it searched for a site for producing the new Saturn in 1985. The plant was eventually located in Spring Hill, TN. -land costs -labor costs -transport cost -taxes -infrastructure: energy, highways
  25. 25. To South • Lower land costs, labor costs, taxes • Right to Work States: • hard to create unions, less pay for workers • Saturn to the South • Better infrastructure than past • After Civil War, no railroads, no energy/electricity, poor roads • Government provides:TennesseeValley Authority, roads • Air Conditioning
  26. 26. BMW plant in South Carolina • Near major highways; non-union workers!
  27. 27. Sock & Hosiery Manufacturing Men’s and women’s socks and hosiery manufacturers usually locate near a low-cost labor force, such as found in the southeastern U.S.
  28. 28. To Gulf Coast • Oil and Natural Gas over coal • Natural Resources there • Oil Refining, petrochemical manufacturing, food processing, NASA
  29. 29. To S. California • Panama Canal opens • Aircraft industry • Light winds; no winters, clear skies • Textile production (largest in U.S.); Furniture (2nd largest in U.S.) • Immigrant labor (no unions) • High-skill, college-educated workforce
  30. 30. But…U.S. Production Workers 1950 & 2005 States in the Northeast and Southern Great Lakes traditionally associated with manufacturing accounted for two-thirds of manufacturing in 1950 but only two-fifths of manufacturing in 2005.
  31. 31. New Industrial Division of Labor MDCs to LDCs The International Change
  32. 32. Steel Production, 1980 The U.S., Soviet Union, and Japan were the largest steel producers in 1980.
  33. 33. World Steel Production, 2005 By 2005, steel production had increased in developing countries but declined in the more developed countries.
  34. 34. Distribution of Steel Production 1980 & 2005 Developed countries accounted for 80% of world production in 1980 but only 45% in 2005. LDCs increased from 20% to 55%. China is now the world’s largest producer.
  35. 35. Shanghai Steel Factory The Baoshan Iron Steel Company in Shanghai, China
  36. 36. Why the change Partner up!
  37. 37. Changing Location Factors • Economic Interdependence/Globalization • Transnational Corporations seeking high profits (Profit drive) • Transportation/Communication changes • Time-Space Compression • Cheaper Transportation costs • Internet superhighway • (Don’t need to be near market as much anymore!)
  38. 38. Changing Location Factors • Proximity to low-cost labor (skilled/unskilled) • Outsourcing by Transnational corps and other companies • Other Advantages • Lower Taxes *Lax environment laws • Access to new markets • Supernational Trade Agreements • NAFTA: Move to Mexico and Maquiladoras • European Union shift to cheaper labor
  39. 39. Changing Location Factors • Special Economic Zones (SEZ) • a geographical region that has economic laws that are more liberal than a country's typical economic laws. Usually the goal of a structure is to increase foreign direct investment by foreign investors, typically an international business or a multinational corporation (MNC). • Includes Free Trade Zones (FTZ), Export Processing Zones (EPZ) – like Maquiladoras • In China, Special Economic Zones -the early 1980s.The most successful, Shenzhen, has developed from a small village into a city with a population over 10 million within 20 years.
  40. 40. What is the impact?
  41. 41. Labor Cost per Hour MDCs and LDCs Fig. 11-22: Hourly wages can be under $1 in many LDCs compared to well over $10 in many MDCs.
  42. 42. U.S. Clothing Production 1994 - 2005 Fig. 11-23: The percent of U.S. made clothing has declined sharply since the 1990s while imports have increased.
  43. 43. New Industrial Regions • China • low cost labor; new market • New laws allowing TNC in certain regions (Special Economic Zones) • 3 areas: ¼ of pop; ½ of wealth; ¾ of foreign investment; 5/6 of foreign trade • BACKWASH EFFECT: population leaving areas rushing to inudustrial areas
  44. 44. New Industrial Regions • 4 Asian Tigers • South Korea • Hong Kong • Singapore • Taiwan
  45. 45. 4 Asian Tigers • Rapid industrialization between the early 1960s -1990s • Still industrial but move to tetriary • Low cost labor + education = skilled labor force; export driven • For example, Hong Kong and Singapore became world leading international financial centers, while South Korea and Taiwan became world leaders in information technology • The Four Asian Tigers focused on improving the education system at all levels;
  46. 46. Don’t forget India Computer industries, accounting, call centers, etc
  47. 47. Latin America • Mexico • NAFTA and Maquiladoras: 1980s HUGE growth in the north in MEXICO • Cheaper labor than in US; Close to US • Less environmental restrictions; child labor • Interregional migration and development problems • Some have closed due to cheaper labor in Asia (325 of 1122 textile maquiladoras closed and gone to Asia) • EXPORT-PROCESSING ZONE
  48. 48. Television factories
  49. 49. New Industrial Regions • EU has encouraged growth by giving capital to companies who locate in less developed areas • Spain • physically isolated and not developed into • 2nd largest auto industry in EU • Poland/Czech Republic • Low cost labor and great situation (Central Europe)
  50. 50. Overall impact on U.S. • Unemployment (Flint, Gary, etc) due to outsourcing • Deindustrialization (move from 2nd to 3rd service activities) • Increase in Retail jobs (less $; less benefits) • Internal Migration (Rust to Sun Belt) • Decreased Union membership • Lower-cost goods
  51. 51. U.S. Imports From China 0 50 100 150 200 250 300 350 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 China Admitted to WTO Source: U.S. Census Bureau $USinbillions$USinbillions