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Key Issue #2: “Why Do Industries Have Different Distributions?”

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Presentation on theme: "Key Issue #2: “Why Do Industries Have Different Distributions?”"— Presentation transcript:

1 Key Issue #2: “Why Do Industries Have Different Distributions?”
Industrialization Key Issue #2: “Why Do Industries Have Different Distributions?”

2 It’s All About PROFIT Industry seeks to maximize profits by minimizing production cost Geographers try to explain why one location may provide more profit than another Two geographical costs: Situation – transporting materials Site – land, labor, and capital

3 Situation Factors Definition – transporting materials to and from the factory Objective – minimize the costs For some companies, this is the most important factor in choosing a location

4 If you were building a car manufacturing plant in the U. S
If you were building a car manufacturing plant in the U.S., where would you locate it?

5 Proximity to Inputs Every industry needs either resources from the physical environment or parts/materials made by another company Weight of the material is a factor for choosing location

6 Example: Copper Industry
First Step: Mining the copper ore Gangue Bulk-reducing Industry Concentration mills must be near mines Purified copper is then treated at refineries Source of energy

7 Example 2: Steel Industry
Also a bulk-reducing industry Choose location to minimize the cost of transporting inputs Steel is an alloy of iron that is produced by removing impurities in iron

8 Origin of Steel Industry
Productions was small until the Industrial Revolution The constant heating and cooling of steel required strength, skill and a lot of time The Watt Steam Engine

9 More advances in the steel industry
Henry Cort Puddling – reheating iron until pasty, then stirring it with iron rods until impurities are burned off Rolling – passing iron between rollers to remove remaining scum Abraham Darby – produced high quality iron smelted with purified carbon made from coal, known as coke Result – the iron industry needed to be near coalfields

10 U.S. Steel Industry In the mid 19th Century – the U.S. steel industry was concentrated around Pittsburgh In the first half of the 20th Century – steel mills were built near the coast Baltimore, L.A., Trenton

11 Changing U.S. Steel Industry
Recently, many steel plants have closed Survivors – southern Lake Michigan, East Coast Successful steel mills are located close to markets Mini-mills

12 Proximity to Markets Transporting goods to consumers is an important locational factor for three industries: Bulk-gaining Single market Perishable

13 Bulk Gaining Industries
Gain weight during production Example: soft drink bottling Coca-Cola has bottling plants all over

14 Fabricated Metals and Machinery
This is a prominent example of a bulk gaining industry A fabricated-metals factory brings together parts to make a more complex product Examples: TVs, refrigerators, air conditioners, and cars

15 Location of Car Manufacturing
Historically – near large markets Recently – assembly plants focus on producing a single model rather than locating near all large markets

16 The Ford Plant in ATL (#6) has closed

17 Single Market Manufacturers
Products are sold primarily in one location, so they cluster near the market Example: the manufacturers of automobile parts only sell to a couple of customers (GM, Toyota) Parts makers ship their products directly to assembly plants “auto alley”

18 Perishable Products Products must be delivered to consumers ASAP!

19 Ship, Rail, Truck, or Air Trucks – used for short distance
Trains – longer distances Water – if available, is attractive for long distances Air – the most expensive, but more firms are using the air for speedy delivery

20 Break-of-Bulk Points Cost rises each time inputs are transferred from one mode to another Sometimes – the cost for one mode is lower for inputs and expensive for products, so companies locate at a “break-of-bulk” point where transfer among transportation modes is possible Seaport, airport

21 Site Factors Definition = the unique characteristics of a location
Land, labor, and capital are the three traditional production factors that vary among locations The most important site factor on a global scale = labor Minimizing labor cost is VERY important for some industries

22 Labor Labor-intensive industry – one in which labor is a high percentage of expense Some need highly skilled, expensive labor Labor intensive is not the same as “high-wage” Textile and clothing industries – require less skilled, low cost workers 3 steps: spinning, weaving, and cutting/sewing All are labor intensive, but not equally so resulting in global distributions that are not identical

23 Textile and Apparel Spinning
Because it is labor intensive, it is located in low-wage countries (PINGs) PINGs account for ¾ of the world’s spinning production Located where cotton is grown The U.S. is the only PED that is a major thread producer Synthetic fibers – ½ is grown in PINGs

24 Textile and Apparel Weaving
Labor is even more intensive Especially highly concentrated in low-wage countries: 86% of the world’s woven cotton factory is produced in PINGs China accounts for ½ of production India accounts for ¼ of production

25 Textile and Apparel Assembly
Textiles are assembled into four main types of products Garments Carpets Home products Industrial uses Most of the 80 billion articles or clothing sold worldwide is made in Asia 3/4 of shirts ½ of dresses and suits Most of the underwear and lingerie Europeans and North Americans produce woolens

26 Land Most efficient – one story building = more land
Land is cheaper in suburban or rural areas than in the city Industries are attracted to energy sources, low electrical rates, and amenities at the site

27 Capital Manufacturers typically borrow funds to establish new factories or expand existing ones Silicon Valley – capital Financial incentives The ability to borrow money in PINGs

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