Location & Manufacturing Geographic Issues

Business Plan A business plan is required by anybody wanting to start a new company A business plan is required by anybody wanting to start a new company A business plan will provide a detailed outline explaining why the company will be successful A business plan will provide a detailed outline explaining why the company will be successful The Bank will require your BP before they loan you $$$ to get started The Bank will require your BP before they loan you $$$ to get started

Location Factors Definition Factors … that help explain the location of cities & industries Factors … that help explain the location of cities & industries (Page 491….Geographic Issues)

Location Factors The location of any particular factory is influenced by a unique set of circumstances, such as the presence of specific raw materials or the location of customers. The location of any particular factory is influenced by a unique set of circumstances, such as the presence of specific raw materials or the location of customers.

Location Factors Availability of Raw Materials Availability of Raw Materials Location of markets Location of markets Availability of fresh water & power Availability of fresh water & power Labour Supply Labour Supply Transportation Transportation Political Factors Political Factors Circumstances Circumstances

1. Availability of Raw Materials Raw Material: something used by an industry to be processed into a finished state Raw Material: something used by an industry to be processed into a finished state Iron ore (raw material) is made into steel (product) & steel (raw material) is made into an automobile (product) Iron ore (raw material) is made into steel (product) & steel (raw material) is made into an automobile (product)

Availability of Raw Materials 2 main reasons why it is important to be located close to raw materials 2 main reasons why it is important to be located close to raw materials 1. Fruits / vegetables should be processed quickly after being picked Many companies tend to be located in area where crops are grown.

Availability of Raw Materials 2. Some factories use great amounts of bulky raw materials (such as timber) to produce smaller finished products These companies tend to be located near bulky raw materials, which are more difficult to transport

McCain Foods Canada 18,000 employees 18,000 employees Based around agriculture (potatoes) Based around agriculture (potatoes) Located in New Brunswick, PEI, & Manitoba Located in New Brunswick, PEI, & Manitoba Factories are located around major potato growing areas Factories are located around major potato growing areas

2. Location of Markets Market: any place where goods & services can bought & sold Market: any place where goods & services can bought & sold Locating near customers reduces delivery costs & time. Locating near customers reduces delivery costs & time. Provides advantages over competitors located far away Provides advantages over competitors located far away

Location of Markets Why companies locate away from customers? 1. Customers are spread out over great distances (Canada or world) 2. Other location factors may be more important than having nearby markets

Cardium Tool Services Produces oil/gas production equipment Produces oil/gas production equipment Located in Edmonton, within range of the oilfields of Leduc Located in Edmonton, within range of the oilfields of Leduc Located close to the customer is important for delivering parts/supplies quickly when needed Located close to the customer is important for delivering parts/supplies quickly when needed Located in oil producing locations world- wide Located in oil producing locations world- wide

3. Availability of Fresh Water & Power Used by steel & oil refiners for cleaning & cooling Used by steel & oil refiners for cleaning & cooling These companies must locate near major rivers & lakes These companies must locate near major rivers & lakes Cheap hydro-electricity also determines the location of a company Cheap hydro-electricity also determines the location of a company

Availability of Fresh Water & Power Cheap power sources are very important to Canada’s aluminum industry Cheap power sources are very important to Canada’s aluminum industry Smelters are built only in places where electricity is readily & cheaply available Smelters are built only in places where electricity is readily & cheaply available

Alcan Aluminum Canada’s largest aluminum producer Canada’s largest aluminum producer Four smelters in Quebec located close to the Saguenay & Peribonka Rivers. Four smelters in Quebec located close to the Saguenay & Peribonka Rivers. Kitimat, BC. Kitimat, BC. Sells products to North America, Europe, Asia, & the Mid-East Sells products to North America, Europe, Asia, & the Mid-East

4. Labour Supply In the past, many companies needed a large, low-cost labour force. In the past, many companies needed a large, low-cost labour force. Now, companies in Canada are more likely to need highly skilled employees. Now, companies in Canada are more likely to need highly skilled employees. Manufacturers tend to locate in areas that have universities colleges, and apprenticeship programs Manufacturers tend to locate in areas that have universities colleges, and apprenticeship programs

5. Transportation Every company needs fast and efficient transportation. Every company needs fast and efficient transportation. Hamilton has two large steel mills that take advantage of raw materials (coal,iron ore) that are brought by ship via the Great Lakes-St. Lawrence seaway. Hamilton has two large steel mills that take advantage of raw materials (coal,iron ore) that are brought by ship via the Great Lakes-St. Lawrence seaway.

6. Political Factors Government decisions can either attract or drive businesses away. Government decisions can either attract or drive businesses away. Two types of support: direct and indrect. Two types of support: direct and indrect. Direct support may be to offer a company a tax break for a number of years. (eg. Maple Leaf Foods in Brandon) Direct support may be to offer a company a tax break for a number of years. (eg. Maple Leaf Foods in Brandon) Indirect support may be the building of a new highway improving transport of goods. Indirect support may be the building of a new highway improving transport of goods.

7. Circumstance Includes the role of the entrepreneur; someone who sees potential and develops it. (eg. McCain brothers and J. Armand Bombardier started businesses in their hometowns) Includes the role of the entrepreneur; someone who sees potential and develops it. (eg. McCain brothers and J. Armand Bombardier started businesses in their hometowns) Another circumstance occurred when high-tech companies (like Corel) were started in the Ottawa area by former Nortel Networks employees. Another circumstance occurred when high-tech companies (like Corel) were started in the Ottawa area by former Nortel Networks employees.

Chapter 25: Company Comparison Conduct a comparison of theses Canadian companies using information found in Chapter 25. Company Location Date Formed Product/Service Location Factor Company Location Date Formed Product/Service Location Factor McCain Foods McCain Foods Cardium Tools Cardium Tools Alcan Aluminum Alcan Aluminum Nortel Networks Nortel Networks Dow Chemicals Dow Chemicals Toyota Motors Toyota Motors