2Why are Situation Factors Important? Why are industries located where they are?
3The farther something is transported, the higher the cost Proximity to InputsThe farther something is transported, the higher the costTry to locate factory as close as possible to both buyers and sellersInputs= Physical or man madePhysical= minerals, wood, animals.Man made= parts or materials made by companiesBulk-reducing industry (BRI)= An industry in which the inputs weigh more than the final productsTo minimize transport costs, BRI needs to locate near its sources of inputs
41st three steps= bulk reducing activities Copper: BRI1st three steps= bulk reducing activitiesMining the heavy, bulky ore extracted is mostly wasteConcentration 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 millsRefining Little weight loss occurs so the proximity to the first three is less critical.
5Steel: BRIMid-19th century= concentrated around PittsburghLate 19th century= Lake Erie, Cleveland, Youngstown and Toledo, shifted because of discovery of rich iron ore, coal was shipped by trainMid 20th century= Southern end of Lake Michigan, new steelmaking required more iron ore than coalLate 20th century: Most steel mills in USA closed, so for those remaining the proximity to markets is more importantLocated 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
6Proximity to Markets: BGI Fabricated MetalsBrings together metals such as steel and previously manufactred parts as the main inputs and transforms them into a more complex productSeparate parts are joined together through welding, bonding, and fasteningCost of shipping the final product is usually the most importantLocated near marketsi.e.: air conditioners, refrigerators, televisions, carsBeverage ProductionAn industry that adds bulkEmpty cans to start, full cans at the finishPrincipal input= waterAdded ingredients= syrups, barley, hops, yeast= less bulky than water, easier to transportBecause water is available almost everywhere in USA, bottlers can minimize cost by being near market
7Single-Market Manufacturers Specialized manufactureres with only one or two customersOptimal location is often in close proximity to the customerExample: producer of parts for motor vehicles“Just in time” deliveryParts are delivered to the assembly plant just in time to be usedThe seats… manufactured close to the customer so that shipping is quick
9Must be located near their markets Milk, bread Perishable ProductsMust be located near their marketsMilk, breadFrozen, canned, and preserved products do not have to be close…cheese and butter (Wisconsin)Daily newspaper…why?
10Transportation methods Firms seek the lowest-cost mode of transportTrucks: Short-distance, fast loading and unloading time.Trains: Used for trips that will take longer than 1 day, take longer than trucks to loadShips: Good for long distance b/c cost per km is low, slowAir: Most expensive so used for small-bulk, high value packagesSome companies have to use more than one mode of transportationBreak-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.