1. CHANGING FACTORS IN INDUSTRIAL LOCATION

2. CHANGING LOCATIONS REMEMBER: SITE FACTORSSITUATION FACTORS Refers to specific qualities about an actual place a business will locate. Refers to the location of a place a business will locate in reference to other places on the map. Changing site factors are especially significant in stimulating the growth of new industrial regions and the movement of industry to them. Changing situation factors tend to cause industries to remain in their traditional locations.

3. CHANGING SITE FACTORS LABOR The presence of low-cost labor is a site factor. Many manufacturers relocate to places where labor is the lest expensive. In MDCs Interregional Shifts in the US In general, industry is shifting from its traditional locations. In the US, from the northeast to the west and south. In Europe, from the northwest to the European periphery (S, E). Between 1950 and 2009, the northeast lost 6 million jobs (clothing, textile, steel, fabricated metals) (esp. NY, PA). At the same time, the South and West gained 2 million jobs (especially CA and TX). The South had been overlooked due to a lack of infrastructure, after the civil war, but states have amended that since the 30s. Attractive to industry are lower wage rates in general, and RIGHT TO WORK LAWS which requires businesses to keep an “open shop” (union membership not required) as opposed to a “closed shop” (union membership required). The Gulf Coast has become particularly attractive to oil, natural gas, food processing and aerospace industries. Steel, textiles, tobacco and furniture industries have been particularly attracted to the South.

4. CHANGING SITE FACTORS LABOR RIGHT TO WORK LAWS “Right to Work Laws” require businesses to keep an “open shop” (union membership not required) as opposed to a “closed shop” (union membership required). As a result, industry has been pushed from traditional locations in the northeast and pulled to locations in the Southeast, midwest and southwest. Other pull factors include low-skilled workers due to a poor education system, improved infrastructure and cheaper land in rural locations.

5. CHANGING SITE FACTORS LABOR INTERREGIONAL SHIFTS IN EUROPE In Europe, industries have shifted to the the south and east. The EU provides assistance (and thus incentive) to two regions: Convergence regions (Easter and Southern areas where income lags behind EU average) Competitive and Employment regions (Western core industry areas which have sustained large recent job losses) In Western Europe, Spain has grown rapidly since entering the EU in 1986, in central Europe, Poland, the Czech Republic and Hungary have grown since the communist fall. Central Europe has cheap labor and market proximity. Labor is less skilled/expensive than Western Europe, but more skilled/expensive than Asian laborers.

6. INTERNATIONAL SHIFTS IN INDUSTRY CHANGING SITE FACTORS LABOR In 1970, ½ of world industry was in Europe; 1/3 was in the US. In 2010, ¼ in Europe, ¼ in US, and ½ in other regions. The most significant emerging regions are: EAST ASIA SOUTH ASIA LATIN AMERICA It is now a top 3 industrial region, and China will soon be #1. Key areas are China, Japan and increasingly South Korea (cars, container ships, steel, fabricated metal products) Region is led by India with major textile industries and growing car manufacturing. India is a leading location for business service industries. It is the closest low wage region to the US, and it’s cheaper to ship from there than from other LDCs. MAQUILADORAs are companies which import inputs duty free, assemble them and then re-export them for sale. Most are located in Northern Mexico near the US border. Brazil is the leading industrial country in the region.

7. INTERNATIONAL SHIFTS IN INDUSTRY CHANGING SITE FACTORS LABOR The Steel and Clothing industries demonstrate the industrial shift to LDCs. In 1980, 80% of steel was produced in MDCs, 20% in LDCs. In 2008, 40% of steel was produced in MDCs, 60% in LDCs. China accounts for 38% of world steel output (as much as all MDCs combined). Labor intensive industries have been especially attracted to LDCs. Apparel workers have decreased by 75% in the US since 1900.

8. OUTSOURCING CHANGING SITE FACTORS LABOR OUTSOURCING means to turn over the responsibility for production of various products/parts to independent suppliers. A number of transnational corporations have identified steps in their process or parts in their products that can be produced by low-wage, low-skill workers in LDCs. Processes or parts that require highly-skilled labor remain in MDCs. The NEW INTERNATIONAL DIVISION OF LABOR refers to the transfer of certain steps to LDCs while others remainin MDCs. VERTICAL INTEGRATION refers to the traditional form of mass production whereby a single company tightly controls all phases of a complex production process. Outsourcing and the NIDOL contrast with vertical integration. For example, most carmakers pay other companies to make their parts. Now, each step of a production process is scrutinized to determine the optimal location for that step/part. For example, car makers outsource seats. Most seat parts are made in other countries, but the seats are assembled in the US at a factory close to the auto plant.

9. NAFTA CHANGING SITE FACTORS LABOR BRICS In 1994, the US initiated the North American Free Trade Alliance (NAFTA) which eliminated trade barriers between the US, Mexico and Canada. Since that time, manufacturing has been exploding in Mexico as it attracts labor-intensive US industries who wish to take advantage of Mexico’s low- cost labor but who also want relative proximity to the US market. Maquiladoras are manufacturing and assembly plants near the US/Mexico border. Many companies ship their inputs to Mexico, have them assembled there, and then ship their products back to the US for sale. Recently, Mexico has been facing steep competition from China whose labor wages are even lower than Mexico and whose industrial infrastructure is finaly coming on line. Much of the world’s manufacturing growth is expected to come from outside traditional areas. In 2006, and investment banking term coined the term “BRIC” to refer to Brazil, Russia, India and China– the countries many expect to dominate global manufacturing in the 21 st century. In 2010, South Africa was added to the list, and the acronym became BRICS. Currently China is expected to become the world’s largest economy in 2020 (the US is currently 1 st. India is expected to overtake the US around 2035. By 2050, Russia and Brazil are expected to be #6 and #7. China and India have massive, low-cost labor forces. Russia and Brazil are loaded with inputs and raw materials

10. INTERNATIONAL DIVISION OF LABOR (The Global Assembly Line) CHANGING SITE FACTORS LABOR The NEW INTERNATIONAL DIVISION OF LABOR is the reorganization/relocation of economic activities from a national to a global scale FEATURES --Economic Interdependence --Space-time compression --Comparative advantage --Outsourcing and offshoring --Trade Agreements --Foreign Management --Cost Reduction Impact on US Economy --Rising unemployment --Deindustrialization --Degglomeration --Interregional migration of workers --De-unionization --Increased consumerism --Increased corporate profit Impact on Foreign (LDC) Economies --Job Opportunities --Gender Equity --Child Labor --Wage gap --Migration --Environment --Regional Growth --Culture Change

11. CHANGING SITE FACTORS LABOR DEGLOMERATION is the process when companies that were formerly clustered together move to new locations because the economic incentives for them doing so have disappeared. An ECONOMIC BACKAWATER is an area that has lost all of its primary industries to deglomeration, outsourcing or other forms of industrial relocation. NPR story on reviving an economic backwater

12. CHANGING SITE FACTORS LABOR The need for skilled labor is a site factor that has attracted industries BACK to traditional locations. COMPUTER MANUFACTURING Computer manufacturing has clustered in high wage areas of the US. CLOTHES MANUFACTURING High-end clothing also still concentrates in high- wage areas of the US due to need for skilled labor. FORDISM AND POST-FORDISM In Henry Ford’s era of (FORDIST) mass production, a single low-skill worker was assigned a single task to perform repeatedly on an assembly line. Most industries now follow LEAN or FLEXIBLE PRODUCTION (POST-FORDIST) production approaches: TEAMSPROBLEM SOLVINGLEVELING Workers are placed in autonomous teamsCo-worker problems solved through consensus/ consultation Workers are treated equally and managers and veterans do not get special treatment

13. CHANGING SITUATION FACTORS PROXIMITY TO MARKETS Proximity to markets has increased in importance with just-in-time delivery. Just-in-time delivery is especially important for delivery of inputs to manufacturers of fabricated products. Parts suppliers must locate near their buyers. JIT Delivery reduces the need for stock or storage space for manufacturers, but it also leads to two potential disruptions: LABOR UNRESTACTS OF GOD

14. CHANGING SITE AND SITUATION FACTORS In some cases, companies change location due to changes in both site and situation factors. Two auto industry changes are that more foreign manufacturers are locating in the US, and that more manufacturers, (both foreign and domestic) are locating in the South. Possible Site Considerations Possible Situation Considerations -- Low Cost Labor --Deindustrialization in the Northern US --Favorable/unfavorable Government Policies --Cheap Land --Cheap Energy --Available Infrastructure --Proximity to US Market