1. 11-2 Industry Situation

2. Introduction What is the purpose of industry? To maximize profit! How?
One way is to minimize production “costs”.
There are 2 geographical costs:
Situation Factors
and
Site Factors

3. I. Situation Introduction
A) Goal
B) Must consider 2 factors:
Cost of transporting_________
and then
C) Every manufacturer
Where do I build my Smiley Face Making Plant??????

4. II. Situation Factor 1: Location Near Inputs
A) Types of Inputs OR

5. B) Bulk-Reducing Industry
1) Definition - the final product weighs LESS than its inputs (raw materials)
2) So the Wise Choice is to….
3) Examples:

6. Example 1: Copper Industry in North America
High Quality Ore is only about 15% copper so
It makes sense to locate near the mines.

7. Notice first the mines, then the refineries/smelters. Most where?

8. Example 2: Steel Industry
A - Historically:
DONE BY HAND
(Hard work to keep fire
Going-mold the steel)
WHAT CHANGED THAT
IN THE INDUSTRIAL
REVOLUTION?

9. B) Since the Industrial Revolution
What do you need, in large amounts, to make steel?
Iron Ore
Coal

10. C) US Steel Industry has changed locations over time.
1850 – Started around Pittsburg (coal & iron)
Late 1800’s/Early 1900’s – Moved west (Lake Michigan) closer to new Iron Ore finds.
1950’s – East/West Coasts of US as Iron Ore has to be imported.
2000 – Most US Steel Mills have closed and is a product that is imported.

11. So Traditionally, Steel Plants were located near inputs
As Iron Ore started to run out…

12. D) Steel Today New! Mini-Mills- use scrap metal (recycled) as
main resource-
have located
near markets
around the US

13. Review
WOW! YOU’RE
SMARTER THAN
YOU LOOK!
So why would an industry locate closer to inputs that to markets???????

14. III. Situation Factor Number 2: Location Near Markets
***3 REASONS: Bulk-GAINING, Single Market or Perishable.
A) Bulk –GAINING Industry (Reason 1)
1) Definition –something that GAINS volume or weight during production.
2) Examples

15. Example 1: Beverage Production
What is a soda mostly made of?
Bottles – weight empty
Syrup – weight concentrated
Water – most weight, large % of Soda
So, where do you locate????

16. Beer Bottling
Coors used to be the exception – Why?

17. Trivia Question: What is the best selling beer in the world?
Snow Beer (China) – Sold double Bud Light last year. Why?

18. Example 2: Fabricated Metals Industry
A) Definition: previously manufactured parts (main inputs) are used to make a more complex product.
B) Industries like: TVs, Refrigerators, etc.
Most Important One?

19. C) Cars! (AKA “Motor Vehicles”)

20. About 40 car assembly plants in US (3/4th of all cars sold in US are assembled here – or Canada/Mexico.)
Mostly located
Interior of country (Michigan to Alabama)
Along interstate highways (Auto Alley)

21. Why are most cars manufactured in the middle of the United States?
THEY ARE BULK- _______________ SO
NEED TO BE NEAR _________________! (Wait! That’s not where most people live so???)

22. B) Single-Market Manufacturers (Reason 2)
1 - Definition: sold primarily in one location so being near that market is critical
2 – Good Example:
Car parts makers
“Just-in-time” delivery

23. C) Perishable Products (Reason 3)
Definition: must be used quickly.
Examples: bakers, milk bottlers
daily newspapers

24. Question?
Why are jobs in print publishing declining in the 21st century?
Answer: TECHNOLOGY!

25. IV. Choice of Transportation
Cheapest
Slowest
Fastest
Most Expensive
Which is best??????

26. A) Distance
1) general rule: further things must be transported the lower the costs per mile
(cost of loading/unloading remains same)
2) Containerization

27. $ $ B) Type of Goods 1) Bulky Items
2) “Perishable”/ “time-urgent” Items $ $

28. C) Break-of-Bulk Points: place where you change transportation modes
Decision for a company – Should we locate here? (Ex: Seaports/Airports)
Cargo removed from ships then loaded onto trucks

29. The End!
Beer Truck – What Country????
South Korea