1. Industrialization #2
The future of Industry

2. 21st Century
Labor most important factor changing location of industry in the 21st century
Shifts within MDC US
Europe
Japan
International Shifts
Countries
Distribution
outsourcing

3. Changing Industrial Distribution within MDCs
Industry is shifting away from traditional areas of northwestern Europe and northeastern United States
In U.S. it has shifted west and south
In Europe, government has encouraged relocation toward economically distressed areas

4. The United States
NE U.S. lost 6 million jobs in manufacturing between
Especially large declines in NY and PA
Once served as hub of clothing, textiles, steel, and fabricated metal manufacturing
2 million jobs added to the South and West between
Why the south?
Right-to-work laws
Enacted in South
Requires a factory to maintain “open-shop” and prohibits “closed-shop”
Closed shop
A company and union agree that everyone must join a union
Open shop
A union and company must not negotiate a contract that requires workers to join a union
Textile Production
Also moved to south and west
Lower wages
Little interest in joining unions

5. Europe
Manufacturing has shifted from NW Europe to southern and eastern Europe
European government policies have encouraged
EU provides assistance to convergence regions and competitive and employment regions
Convergence= Eastern and Southern Europe
Competitive and Employment= Western Europe’s traditional core
Spain has had most manufacturing growth since late 20th century
Growth had been retarded by physical and political isolation
Regions east of Germany and west of Russia have become industrial centers since fall of Communism
Called “Central Europe”
Poland, Czech Republic, and Hungary
Two attractive site and situation factors
labor, market proximity
Good value for money

6. International Shifts in Industry
In 1970 nearly ½ of world industry was in Europe and nearly 1/3rd was in North America
Today both regions only account for ¼
Increasingly important industrial areas
East Asia
Rapid industrial growth in China
Also includes Japan and South Korea
South Asia
Led by India
Textiles, motor-vehicle production
Important center for business services
Latin America
Brazil leading industry country
Closest low-wage region to the United States
Cost of shipping lower
Maquiladoras

7. International Shift in Industry
Changing distributions
Shift to new industrial regions can be seen clearly in steel and clothing
MDCs losing production to these key industries to LDCs
Steel production declined in MDCs 40% and increased in LDCs by 60% between 1980 and 2008
Labor-intensive industries have been especially attractive
U.S. apparel workers declined from 900,000 in 1990 to 150,000 in 2009

8. Industrial Shift in Industry
Outsourcing
Transnational corporations have been especially aggressive in using low-cost labor in LDCs
Operations that can utilize low-skill, low-wage workers will relocate to LDCs despite increase in transportation costs
Selective transfer of jobs to LDCs is known as the new international division of labor
TNCs corporations allocate production to low-wage countries through outsourcing
Definition: turning over much of the responsibility for production to independent suppliers
Outsourcing contrasts vertical integration
Outsourcing has had a major impact on the distribution of manufacturing
Each step scrutinized closely in order to determine the optimal location

9. Outsourcing

10. Maquiladoras Definition: Spatial distribution: Why Mexico?
Foreign owned factories located in Mexico
Spatial distribution:
Located close to U.S. border/ major cities/ entry points
Why Mexico?
Inexpensive labor costs
NAFTA
Mexico’s proximity to U.S. market
Improved transportation

11. New International Division of Labor
Reorganization/relocation of economic activities (jobs) from a national to a global scale
LDCs now ideal for manufacturing jobs
Features:
MDCs rely on lower-cost production from LDCs
Comparative advantage
Offshoring/ outsourcing
Trade agreements
Consequences:
Unemployment in MDCs
Deindustrialization
Internal migration
International migration
In LDCs
Added job opportunities
More gender equality
Increase in wage gap
Migration
Environment issues
westernization

12. Renewed Attraction of Traditional Industrial Regions
Two factors encouraging some industries to located in traditional regions
Availability of skilled labor
Rapid delivery to market
Proximity to skilled labor
Skilled labor often found in traditional industrial regions
Example: Computer Industry
Traditional approach= Fordist (mass production)
Today = post- Fordist
Teams
Problem solving
Leveling
Just-in-time delivery
Increased in importance

13. The Future?
BRIC??
Brazil
Russia
India
China