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Industry Chapter 11.2.

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Presentation on theme: "Industry Chapter 11.2."— Presentation transcript:

1 Industry Chapter 11.2

2 Why are Situation Factors Important?
Why are industries located where they are?

3 The farther something is transported, the higher the cost
Proximity to Inputs The farther something is transported, the higher the cost Try to locate factory as close as possible to both buyers and sellers Inputs= Physical or man made Physical= minerals, wood, animals. Man made= parts or materials made by companies Bulk-reducing industry (BRI)= An industry in which the inputs weigh more than the final products To minimize transport costs, BRI needs to locate near its sources of inputs

4 1st three steps= bulk reducing activities
Copper: BRI 1st three steps= bulk reducing activities Mining the heavy, bulky ore extracted is mostly waste Concentration always near the mines because concentration transforms the copper ore into a product of much higher value per weight. Smelting Concentrated copper=the input. Smelting produces different forms of copper, so they want to be near the input…the concentration mills Refining Little weight loss occurs so the proximity to the first three is less critical.

5 Steel: BRI Mid-19th century= concentrated around Pittsburgh Late 19th century= Lake Erie, Cleveland, Youngstown and Toledo, shifted because of discovery of rich iron ore, coal was shipped by train Mid 20th century= Southern end of Lake Michigan, new steelmaking required more iron ore than coal Late 20th century: Most steel mills in USA closed, so for those remaining the proximity to markets is more important Located to minimize the cost of transporting two inputs (iron ore and coal) Needs large quantities of bulky, heavy iron ore and coal steel making has to be near the sources of the two inputs

6 Proximity to Markets: BGI
Fabricated Metals Brings together metals such as steel and previously manufactred parts as the main inputs and transforms them into a more complex product Separate parts are joined together through welding, bonding, and fastening Cost of shipping the final product is usually the most important Located near markets i.e.: air conditioners, refrigerators, televisions, cars Beverage Production An industry that adds bulk Empty cans to start, full cans at the finish Principal input= water Added ingredients= syrups, barley, hops, yeast= less bulky than water, easier to transport Because water is available almost everywhere in USA, bottlers can minimize cost by being near market

7 Single-Market Manufacturers
Specialized manufactureres with only one or two customers Optimal location is often in close proximity to the customer Example: producer of parts for motor vehicles “Just in time” delivery Parts are delivered to the assembly plant just in time to be used The seats… manufactured close to the customer so that shipping is quick


9 Must be located near their markets Milk, bread
Perishable Products Must be located near their markets Milk, bread Frozen, canned, and preserved products do not have to be close…cheese and butter (Wisconsin) Daily newspaper…why?

10 Transportation methods
Firms seek the lowest-cost mode of transport Trucks: Short-distance, fast loading and unloading time. Trains: Used for trips that will take longer than 1 day, take longer than trucks to load Ships: Good for long distance b/c cost per km is low, slow Air: Most expensive so used for small-bulk, high value packages Some companies have to use more than one mode of transportation Break-of-bulk point: Multiple transport modes located here, which is a location where transfer among transportation modes is possible…i.e. a steel mill near the port of Baltimore receives iron ore by ship from South America and coal by train from Appalachia.

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