© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? 3.2Where should manufacturing activities be located?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? How does a manufacturing firm make location decisions? The most important aim of a firm is to make a _________. profit Land A Land price $800/m 2 Land B Land price $7000/m 2 The prime concern is to choose ( low-cost / high-cost ) locations for its activities, in order to maximize profits. Firms of different scales may have different preferences when making location decisions.

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? All manufacturing processes are completed in one factory ________-point production Single Often owned by small and medium enterprises How does a manufacturing firm make location decisions? 1Single-plant firms ( Small / Large ) scale of operation; ( Small / Large ) number of workers; Relatively ( small / large ) business sales. Serve ( local / regional / overseas ) markets;

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? How does a manufacturing firm make location decisions? 2Multi-plant firms Research and development Place A Production Place C Production Place B Marketing Place D ________-point production Multi Headquarters Products Production activities are carried out in different places.

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? How does a manufacturing firm make location decisions? 2Multi-plant firms Research and development Place A Production Place C Production Place B Marketing Place D Products Country W Country X Country Y Country Z _____________ production Multinational Production activities are carried out in plants in different countries.

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? How does a manufacturing firm make location decisions? What are the advantages of multi-point production? For example, specialization, lower operation costs, lower production costs... Can you give an example of a world famous brand that is conducting this mode of production?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? When a manufacturing firm considers where to place its factories and offices, it will have to consider industrial location factors. Government policies Technology and innovation Capital Agglomeration Power Raw materials Labour Markets Clients Management Communication systems Land attributes Socio-economic factors Operation factors Site factors What location factors matter?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Factors affecting the location of industries vary with the nature of the industrial activities. Which of the location factors shown is the most important one to each of these industries? Drag the listed industries into the appropriate box of location factors. What location factors matter? If the game cannot work properly, click here to download the latest Adobe Flash Player.click here

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Will manufacturing activities remain at the present location? The location of manufacturing activities may change due to changes in ________________. location factors Closure or relocation of factories Improvements in technology, production modes and trade relations Profits drop Importance of some location factors changes Land price ( / ) Market demand ( / )

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Will manufacturing activities remain at the present location? Do changes in location factors definitely result in relocation? Not necessarily! Remain in the existing site Industrial ________ inertia Reasons: Involving a very ( low / high ) cost in closing or relocating a factory Dependence on a pool of specifically skilled labour Well-established existing linkages with other business sectors Manufacturers’ personal preferences

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? How does a manufacturing firm make location decisions? Marketing Research and development USA South Korea Production Thailand Production China Production Nike sportswear

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Communication systems Site factors refer to the geographical characteristics of a site which have an effect on the development of the industry. Land attributes What location factors matter? 1Site factors

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? 1Site factors ALand attributes For manufacturing industries, desirable attributes of land include extensive land, ( low / high ) relief, mild climate and good infrastructure with quality amenities, such as efficient water, energy and _________ systems. Example 1 ( Light / Heavy ) industries demand extensive flat land for production. Oil refinery industry An oil refinery Is Hong Kong suitable for the development of heavy industries in terms of land supply? Why? sewage (Credit: Ron Chapple/Corbis)

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Example 2 Hong Kong Science Park High-tech manufacturing activities are often found in the industrial parks in ( city centres / suburbs ), because Good environment, amenities and basic utilities in suburbs Room available for ____________ expansion Research and development centres are often located near ____________________ for getting access to new ideas associated with researchers and scientists in universities and research institutes university campuses 1Site factors ALand attributes (Credit: Hong Kong Science and Technology Parks Corporation) Land and buildings are generally available at a lower price

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? 1Site factors BCommunication systems Good communication systems refer to two aspects Manufacturing activities are usually close to ___________, _______, ________ and _______________. Highways highways ports A port airports An airport cargo facilities (Credit: Tsui Chung Pong David) A rail terminal in India An efficient transport network for the flow of materials and people

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? 1Site factors BCommunication systems Good communication systems refer to two aspects Oriental Pearl Tower, a television and radio signal transmission facility, Shanghai, China (Credit: Tsui Chung Pong David) An efficient transport network for the flow of materials and people An effective infrastructure of telecommunications such as satellite, telephone, radio and computer networks

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What location factors matter? 2Operation factors Management Market LabourPower Raw materials Operation factors are related to a particular location in a region which makes it possible for manufacturing activities to benefit from easy access to... Clients

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Manufacturing industries which require heavy and bulky raw materials are often located near the source of the raw materials. This helps lower transport costs. Example 1 An iron and steel works Iron and steel industry Example 2 Sugar industry A sugar mill Industries that need to be located near the source of raw materials are ___________-oriented industries. raw material 2Operation factors AAccess to raw materials Sugar mill Sugar cane fields (Credit: Panorama Stock Photo Co. Ltd.)

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Heavy industries which consume a large amount of power tend to locate near sources of power. An aluminium smelting plant 2Operation factors BAccess to power The amount of electricity used to produce a tonne of aluminium equals the total amount of electricity consumed by 45 four- person households each month in Hong Kong (Credit: Russell Gordon/Peter Arnold Inc.) Example 1 Aluminium smelting industry Example 2 Iron and steel industry Industries that need to be located near the source of power are called ________- oriented industries. power Iron and steel works are often located close to coalfields

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? a ＿＿＿ of labour Cost Wages Medical plans Pension schemes Paid leave, etc Cost There are three aspects of labour that will affect industrial location: All industries need workers. How does the factor of labour affect the location of industries? 2Operation factors CAccess to labour

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? b ________ of labour Industries which demand a lot of workers are _______- intensive industries. This refers to the availability of a sufficient labour supply. Quantity labour Garment industry Can you give an example of labour-intensive industry? 2Operation factors CAccess to labour (Credit: SINOPIX)

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? c ________ of labour The skill levels of workers affect the quality of labour. Quality __________________ demand skilled labour. High-tech industries What other considerations about labour may affect the location of an industry? For example, the presence of unions, the numbers of strikes. As technology improves, more and more factories adopt automation. It has reduced the demand for labour. 2Operation factors CAccess to labour

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? The manufacturing industries which produce the following goods tend to locate close to the markets. __________ goods Bread making ________ goods Furniture making ________ goods Glassware making Perishable Bulky Fragile These industries are located near the markets in order to reduce the transport costs. They are ________- oriented industries. market 2Operation factors DAccess to markets

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Manufacturing firms require face-to-face contact with suppliers and customers to gather information. They then provide production plants with feedback for improvement 2Operation factors EAccess to clients (suppliers and consumers)

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? 2Operation factors FAccess to management Many firms place the access to an innovative and qualified management team the most important location factor of all. A good management team is able to combine inputs and distribute outputs choose a good location expand the market cut costs and promote growth

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Socio-economic factors refer to the socio-economic quality in a region or a country. It explains how the business environment is formed. Capital Government policies Technology and innovation What location factors matter? 3Socio-economic factors Agglomeration

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Capital refers to ______________, i.e. money; and _____________________, i.e. plants and machineries. financial capital fixed or physical capital It is essential to start, operate and expand a business with capital. Example Car-manufacturing industry A product display in a car- manufacturing plant in Guangzhou, China capital 3 Socio-economic factors ACapital Industries which require a large amount of capital to start are _______-intensive industries.

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? 3 Socio-economic factors ACapital High-tech manufacturing requires venture capital. Venture capital is a kind of private equity capital provided by professionals and outside investors to finance the creation of new, growth businesses. Venture capital investments are usually high risk, but offer the potential for above average returns. Examples Computer and pharmaceutical industries

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? In what ways a government can affect industrial location? Tightening pollution controls Building infrastructure Land-use planning Providing tax cuts 3 Socio-economic factors BGovernment policies Can you give an example of infrastructure built by the HKSAR government to attract manufacturers?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Power resources can be used more efficiently Electricity can be transmitted by ________ over a long distance cables Power supply How can advancements in technology affect the importance of the following location factors? Substitutes can be used, e.g. using _______ iron and steel instead of iron ore scrap ( Fewer / More ) raw materials are needed Raw materials Decrease in importance 3 Socio-economic factors CTechnology and innovation Decrease in importance

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? ___________ reduces the demand for workers Automation Labour How can advancements in technology affect the importance of the following location factors? Transport costs decrease Large cargo ships can be used to transport bulky and heavy goods Transport Decrease in importance 3 Socio-economic factors CTechnology and innovation Decrease in importance

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? 3 Socio-economic factors CTechnology and innovation Technology can raise efficiency and productivity of an industry. This is specially important for the information technology (IT) and aerospace industries. IT industry Aerospace industry

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Industries which put a large amount of resources in R&D are known as __________ _________________-intensive industries. High-tech industries are mostly found in districts near ___________ where innovations and new ideas emerge. universities research 3 Socio-economic factors CTechnology and innovation and development

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Some industries are located in the same location forming an ________________ or ______________________. Depending by-products of another industry as raw materials Sources of innovation Sources of supplies Common markets Supporting facilities Supporting services The benefits that agglomeration offers are called _______________________. agglomeration economies Industries can share: Cut _______________, increase ______________ in the market production costscompetitiveness Save ______________ transport costs 3 Socio-economic factors DAgglomeration industrial cluster industrial agglomeration What benefits does agglomeration offer?