Why Are Location Factors Changing? Chapter 11: Industry Key Issue 4

New Regions of Industry  Site factors are leading to industry in new locations  Minimizing labor costs is the biggest goal of many factories today  Within MDC’s  Movement to peripheral areas  In US, movement to South & West  Interregional Movement in US  South lag behind in industry after Civil War  Right-to-Work laws encouraged many industries to locate south  Laborers don’t HAVE to join a union  Easier to control wages & benefits  Textiles  Moved from NE to SE  Interstate helped move to markets

New Regions of Industry  Movement in Europe  Convergence regions – have lower wages  Found in East and South Europe  Competitive & Employment Regions – Western Europe  Losing many industrial jobs  Same as in US, but encouraged by Government to help low-wage states (countries)

New Regions of Industry  International Shifts  Trends  1970’s:  In Europe – ½ of industry, In US – 1/3 of industry, Others – 1/6  Today:  In Europe – ¼, US – ¼, Others – ½  Regions:  E. Asia – China, Japan, S. Korea  Likely to pass US  S. Asia – driven by India  Huge textile production  Business services (Chp. 12)  Latin America – closest low wage region to US  Maquiladora plants close to US border to lower shipping costs  MDC’s are losing massive numbers of textile and steel industry jobs

New Regions of Industry  Outsourcing  Transnational companies using low-cost labor in LDC’s  New International Division of Labor: use of low-skill, cheap labor in LDC’s and skilled labor in MDC’s  Outsourcing vs. vertical integration  Vertical integration – company controls everything  Ex. auto company makes all the parts for its cars  Outsourcing – company hires/pays other companies to make parts for the company  Ex. Parts for seats made in other countries, but seats assembled in US

Traditional Industrial Regions  Tradition regions use to location factors:  Proximity to SKILLED Labor  Industries requiring skilled laborers stay where the skilled laborers are  Fordists vs. post-Fordists  Fordists – each person does a specific job  Post-Fordist (lean production):  Teams – workers figure out how to perform what is required  Problem solving – consensus to solve problems  Leveling – managers are treated same as employees  Just-In-Time Delivery  Helps to reduce inventory and tying up capital  Two disruptions:  Labor unrest – stop in production or transportation  “Acts of God” – natural disasters or major world events