This document discusses factors that influence the location of industrial activity, including primary industries locating near resource deposits and secondary industries considering transportation costs of raw materials and finished goods. It summarizes Alfred Weber's least cost theory of industrial location and describes how transportation, labor, infrastructure, energy, agglomeration, and other political and environmental factors affect site selection. Silicon Valley is provided as an example of an industrial agglomeration influenced by proximity to a university, skilled labor, and natural resource abundance.

1. Industrial Activity and Geographic
Location

2. Economic Geography
 Economic geographers investigate the
reasons behind the location of an
economic activity

3. Location Theory
 Attempts to explain the pattern of the
location of an economic activity in terms
of influential factors

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. The Location Decision (1)
 Secondary Industries
 less dependent on resource location
 raw materials can be transported if profits
outweigh the costs of transportation

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. 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 problems

9. 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

11. 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

14. http://www.epa.gov/sectors/sectorinfo/sectorprofiles/ironste
el/map.html

20. Piedmont: foot of the mountains;
from Italian pied (foot) monte (hill)

22. 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

27. World’s largest container
ship

30. Intermodal Facility: Portland, Oregon

31. 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
 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

34. See page 377 in book

40. Factors of Industrial Location
(3)
Infrastructure
 transportation, telephone, utilities, banks,
postal, hotel
 China-inadequate local and regional
infrastructure
 Vietnam-inadequate
power, water, transportation

41. 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)

42. Map showing location of chemical manufacturing facilities.

43. Other Factors
 agglomeration
 political stability
 regional receptiveness to investment
 taxation policies
 environmental conditions (Hollywood)

44. 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, Sony,
Microsoft