Key Issue 4 Why are location factors changing?

Attraction of new industrial regions Proximity to low-cost labor Outsourcing Renewed attraction of traditional industrial regions Proximity to skilled labor Just-in-time delivery

To minimize labor costs, some manufacturers are moving to locations with lower wage rates

Textile & apparel industry Moved to lower wage locations within and between countries United States Northeast: textile industry European immigrants, long hours, low wages Buyers came from around the world Jobs moved to Southeast Lower wages, lack of unions Interstate highways for transporting to pop. centers

Fig : Men’s and women’s socks and hosiery manufacturers usually locate near a low-cost labor force, such as found in the southeastern U.S.

Southeastern mills in US can’t compete with LDCs $10-15/hour vs $1/hour US & Europe loss apparel workers Apparel imports increased (China, Lat Amer, Asia) ¾ of shirts, trousers, underwear are imported

Fig : Hourly wages can be under $1 in many LDCs compared to well over $10 in many MDCs.

Fig : The percent of U.S. made clothing has declined sharply since the 1990s while imports have increased.

Transnational Corporations look for low-cost, low-skill labor in LDCs Highly skilled workers remain in MDCs New International Division of Labor Selective transfer of some jobs to LDCs Outsourcing: turning over much of responsibility for production to independent suppliers

Fig : High skill workers are needed for manufacture of computing equipment. California, the Northeast, and Texas are the major sites.

Fig 11-25: Products that require more skilled workers are still produced in or near New York City. Other items are produced in sites with lower cost labor.

Why would any industry locate in northeastern United States or northwestern Europe??? Proximity to Skilled Labor Just-In-Time Delivery

Skilled labor found in “traditional” industrial regions Fordist: workers assigned to just one specific task to perform repeatedly (Henry Ford, autos) Post-Fordist: flexible production workers 1. Teams 2. Problem solving 3. Leveling

Computer Manufacturing: high-wage, high skilled labor California, Mass, New York, Texas Skilled workers, proximity to major universities “High-end” clothing Northeastern US More skill in cutting, assembling

Proximity to market: extremely important for some manufacturers Shipment of parts/materials to arrive moments before needed Materials arrive hourly/daily Dell & Gateway: eliminated inventory, computers only built when ordered Less inventory to “cushion” any disruptions Strikes weather

Packages picked up by Fedex are transferred to planes, flown to sorting centers, transferred to other planes and flown to other cities, then loaded onto trucks for delivery the next day.