Industrialization #2 The future of Industry

21st Century Labor most important factor changing location of industry in the 21st century Shifts within MDC US Europe Japan International Shifts Countries Distribution outsourcing

Changing Industrial Distribution within MDCs Industry is shifting away from traditional areas of northwestern Europe and northeastern United States In U.S. it has shifted west and south In Europe, government has encouraged relocation toward economically distressed areas

The United States NE U.S. lost 6 million jobs in manufacturing between 1950-2009 Especially large declines in NY and PA Once served as hub of clothing, textiles, steel, and fabricated metal manufacturing 2 million jobs added to the South and West between 1950-2009 Why the south? Right-to-work laws Enacted in South Requires a factory to maintain “open-shop” and prohibits “closed-shop” Closed shop A company and union agree that everyone must join a union Open shop A union and company must not negotiate a contract that requires workers to join a union Textile Production Also moved to south and west Lower wages Little interest in joining unions

Europe Manufacturing has shifted from NW Europe to southern and eastern Europe European government policies have encouraged EU provides assistance to convergence regions and competitive and employment regions Convergence= Eastern and Southern Europe Competitive and Employment= Western Europe’s traditional core Spain has had most manufacturing growth since late 20th century Growth had been retarded by physical and political isolation Regions east of Germany and west of Russia have become industrial centers since fall of Communism Called “Central Europe” Poland, Czech Republic, and Hungary Two attractive site and situation factors labor, market proximity Good value for money

International Shifts in Industry In 1970 nearly ½ of world industry was in Europe and nearly 1/3rd was in North America Today both regions only account for ¼ Increasingly important industrial areas East Asia Rapid industrial growth in China Also includes Japan and South Korea South Asia Led by India Textiles, motor-vehicle production Important center for business services Latin America Brazil leading industry country Closest low-wage region to the United States Cost of shipping lower Maquiladoras

International Shift in Industry Changing distributions Shift to new industrial regions can be seen clearly in steel and clothing MDCs losing production to these key industries to LDCs Steel production declined in MDCs 40% and increased in LDCs by 60% between 1980 and 2008 Labor-intensive industries have been especially attractive U.S. apparel workers declined from 900,000 in 1990 to 150,000 in 2009

Industrial Shift in Industry Outsourcing Transnational corporations have been especially aggressive in using low-cost labor in LDCs Operations that can utilize low-skill, low-wage workers will relocate to LDCs despite increase in transportation costs Selective transfer of jobs to LDCs is known as the new international division of labor TNCs corporations allocate production to low-wage countries through outsourcing Definition: turning over much of the responsibility for production to independent suppliers Outsourcing contrasts vertical integration Outsourcing has had a major impact on the distribution of manufacturing Each step scrutinized closely in order to determine the optimal location

Outsourcing

Maquiladoras Definition: Spatial distribution: Why Mexico? Foreign owned factories located in Mexico Spatial distribution: Located close to U.S. border/ major cities/ entry points Why Mexico? Inexpensive labor costs NAFTA Mexico’s proximity to U.S. market Improved transportation

New International Division of Labor Reorganization/relocation of economic activities (jobs) from a national to a global scale LDCs now ideal for manufacturing jobs Features: MDCs rely on lower-cost production from LDCs Comparative advantage Offshoring/ outsourcing Trade agreements Consequences: Unemployment in MDCs Deindustrialization Internal migration International migration In LDCs Added job opportunities More gender equality Increase in wage gap Migration Environment issues westernization

Renewed Attraction of Traditional Industrial Regions Two factors encouraging some industries to located in traditional regions Availability of skilled labor Rapid delivery to market Proximity to skilled labor Skilled labor often found in traditional industrial regions Example: Computer Industry Traditional approach= Fordist (mass production) Today = post- Fordist Teams Problem solving Leveling Just-in-time delivery Increased in importance

The Future? BRIC?? Brazil Russia India China