Industrial Landscapes Least Cost Location Theory.

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Presentation transcript:

Industrial Landscapes Least Cost Location Theory

Classification of Manufacturing Industries 1. Processing Industries –Initial Processing Industries A single raw material. Eg. Dairy processing –Complex Processing Industries More than one raw material Eg. Steel making

Classification of Manufacturing Industries 2. Fabricating Industries –Assembly of a finished or semi-finished product –Eg. Automobile

Least Cost Location Theory By Weber

Assumption Isotropic plain (uniform in culture, climate, economic and political system……) Ubiquitous resources are found everywhere Some resources are localized Transport cost is a function of weight and distance Labour has a given pattern of distribution

Assumption Markets are fixed at certain specific point Perfect competition exists Industrialists are economic man

Building of theory Material Index Location Triangle Location Polygon Isotims Isodapanes / Critical Isodapane Varignon Frame Effects of cheap labour and agglomeration

Material Index eg. (To produce 10 tonnes cement) Limestone 11.2 tonnes Clay or shale 2.8 Coal 3.0 Gypsum0.25Total Material Index = (18.25/10.00) = 1.825

Material Index Material Index > 1.0 (weight-loss) Materials oriented industry Material Index < 1.0 (weight-gain) Market oriented industry Material Index = 1.0 Footloose Industry

Location Triangle

Location Polygon

Isotims – Cost surface

Isodapanes / Critical Isodapane

Varignon Frame

Effect of Cheap Labour Having cheap labour can save $16 additional transport cost. Firm will not be moved to L1 but it will be moved to L2

Effect of Agglomeration

Demerits Transport Costs –Decline the importance of transport costs –Stepping of Freight Rates –Variations in the Transport Modes

Demerits Stepping of Freight Rates

Demertis Transport Rate for 3 main carriers

Demerits Isotropic plain is not our real world Importance of other properties of raw materials Market is not a fixed point Perfect competition does not exist A Static Model Nature of Industries Mobile nature of labour Economic man

Merits Founder of modern industrial location theory Point out transport cost as a key factor to determine industrial location Distinct ubiquitous and localized raw materials Distinct various orientations of different industries Conceptual instrument for understanding the locational patterns of industries

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