Site and situation factors of industry AP Human geography Industrialization and economic development unit

Factors affecting distribution of industry Site: physical characteristics of a location Deals with industry’s factors of production Land, labor, capital Situation: location relative to other things Deals with industry’s proximity to markets and inputs Bulk-gaining vs. Bulk-reducing

Site factor 1: Land Factories are usually rural, suburban, or foreign Large tracts of cheap land for one story buildings More energy efficient and cheaper Lower electricity rates Less environmental regulations Tax incentives offered by state, county, city governments Modes of transportation are critical factor – rail, road, river, etc.

Site factor 2: Labor Most important site factor Labor intensive industry: labor is a high percentage of the expense Agriculture, coal mining, construction, textiles Skilled vs. unskilled Skilled workers likely in MDCs in cities with high number of colleges or college graduates Unskilled workers likely in LDCs due to cheap labor costs

Hourly Wages for Countries The global division of labor: companies hire out foreign workers to aid in the manufacturing of a single product (selective transfer of jobs)

Site factor 3: Capital Manufacturers need to borrow money to establish new factories or expand existing ones Examples: Automotive industry concentrated in Michigan due to availability of banks to provide loans High tech industry of Silicon Valley (California) and Research Triangle (North Carolina) 2/3 of these companies fail ¼ of all capital in U.S. is spent on new industries here

Situation factor 1: Location near inputs Bulk-reducing industries The finished product weighs less than inputs Ideal location is near the inputs due to high transportation costs Easier to transport good to market than input to factory Examples: Steel industry, copper industry

Steel mills are located close to the source or iron ore and coal, which are both used to make steel.

Situation factor 2: Location near markets Bulk-gaining industries Final product has more volume than inputs Ideal location is near consumers due to high transportation cost of finished product Examples: Soft-drink bottling, automobile assembly, breweries,

Beer: inputs heavy to transport Beer: inputs heavy to transport. WATER IS EVERYWHERE - produce near customers.

Transportation Ship, rail, truck or air? Choose cheapest according to weight and distance shipped Trucks = short distance Trains = long distance Air = small bulk/high value; fast but costly Ship = slow, but very low cost Break of bulk point: location where transportation among many modes is possible Truck, train, ship, and/or air

Break of Bulk Points Houston Hong Kong Rotterdam Singapore