1. DEPARTMENT OF URBAN AND REGIONAL PLANNING
Location Analysis of Industrial Site (Subject: Location and Spatial Analysis)
Belinda Ulfa Aulia, ST, MSc
DEPARTMENT OF URBAN AND REGIONAL PLANNING
2018

2. Classification and cluster of industry
OUTLINE PRESENTASI
Introduction: industry
History of industry
Factors determining industrial site
Classification and cluster of industry
Methods and Study case

3. Introduction:
I n d u s t r y

4. Peraturan Pemerintah no. 24 2009 about Industrial Site
definition
Peraturan Pemerintah no about Industrial Site
Industry is an economic activity which process raw, basic, and half-processed material into a product with higher value.
Place for industrial activity to produce higher value product, which has adequate facility and utility to support production provided by government/private sector.

5. Urgencies behind Deciding Industrial Site
Private perspective: maximizing long term profit through optimization of production factors
Government perspective: efficiency and suitability of land use
When private and government aligned, appropriate industrial site can results:
Increasing economic development of a nation
Preventing land use conflict of interest
Lowering development disparity between regions
Driving infrastructure development of a region/city

6. HISTORY OF
INDUSTRY

7. Early 18TH century
Small size industry in small, rural communities, large industry reside in Britain consist of coal and iron ore
Mid 18th century
Textile industry wa growing with raw but still small because raw materials are hard to find. Some innovation in machinery increase the size of industry (still depend on the resource)
early19th century
Manufacture started to grow bigger with rise of transportation industry, raw materials and finished goods were hauled and distributed viia horse drawn wagons
19th century
Industrial revolution boost the industry development and the rise of communication and banking in the industrial revolution

8. Industrial Site Location Theories
To determine an industrial site, combination of theories and multi diciplinaries point of view is needed (Tarigan 2009; 159)
Minimum Cost Location Theory (Alfred Weber) – transportation, labour, agglomeration
Industrial Site Theory (Marsudi Djojodipuro) – endowment, market and price, raw material and energy, agglomeration, government policy, private policy
Moderate to large Industrial Site Theory (Kuncoro) – labour, market location, raw material location, transportation, power/energy, climate, constitution and tax system, water and industrial waste, water and industrial waste, raw material stock, labour supply

9. DETERMINING FACTORS OF INDUSTRIAL SITE
Alfred Weber (1909)
Sofjan Assauri (1980)
M. Djojodipuro (1992)
Smith (1981)
M. Kuncoro (2002)
Synthesis
Transportation cost
Labour
agglomeration
Market location
Raw material source
Transportation service
Labour supply
Energy/power
Land condition
Water supply
Facilities
Public opinion
Tax
Endowment (land rent, labour, and capital)
Market
Raw material and energy
Agglomeration
Government policy
Private policy
Market and price
Transportation
Land condition agglomeration
Financial and facility
Raw material
Energy and water supply
Public
facility

10. 1. Labour
Available labour according to certain needs in industry
Amount of labour available
Standard minimum wage in each region
2. Raw material
Companies needs easy, cheap, and continued source of raw material with high quality
Transportation cost/ length of mobility to transfer the raw material

11. 3. Transportation 4. Land Quality of road and classification of road
Transportation service and transportation infrastructure
Railway availability
Road availability
4. Land
Companies always look for the most stable land structure
Topography of a region
Geological condition
Land rent
Land availability for expanding

12. 7. Energy and water supply
5. Market
Population rate nearby industrial site
Wage rate of population nearby industrial site
6. Agglomeration
Needs from other industry nearby
Infrastructure provision built by other industries nearby
7. Energy and water supply

13. 8. Government Policy 9. Public 10. Urban facility
Incentive from government
Regulation for industrial permit
9. Public
Public acceptance
Political stability
10. Urban facility
Settlement nearby industrial site
Provision of health, education, and recreational service

14. INDUSTRY
CLASSIFICATION

15. TYPE OF INDUSTRIAL SITE
Resource
Orientation
Optional
Orientation
Market
Orientation

16. Industrial Site Concept
Industrial Site is landscape which has purpose for industrial activity only based on RTRW (Keppres No. 98/1993
Industrial site concept divided into 2:
Industrial zone
Industrial Growth Center Region (WPPI)

17. Industrial Growth Center Region (WPPI)
Industrial Zone
Downstream industry as main industry
Agglomerated and integrated industrial estate which spatially binding in specific area
Industrial Growth Center Region (WPPI)
- A specific region which has spatial function as place for industry growth and optimization of its natural resources, this function can be obtained through strengthening the industrial infrastructure and connectivity with surrounding region

19. CLUSTER OF INDUSTRY
MODERATE AND LARGE
Industrial location which is far away from city and settlement. Specialized for basic industry which is known as Industrial Complex
Example: fertilizer industries complex, food industrial complex (Kompleks Industri Makanan Mara Batu, Malaysia)

20. CLUSTER OF INDUSTRY
MODERATE AND LARGE
Industrial Estate - Land which is prepared specifically for large manufacture industry with integrated management, large enough area for development, integrated industrial activity system with adequate facilities and utilities
Example: SIER

21. CLUSTER OF INDUSTRY
MODERATE AND LARGE
Industrial Land Use – industrial location which usually lies on the outer side of the city but integrated with other activities within the city which has been planned and regulated through local planning document
Example:

22. CLUSTER OF INDUSTRY
MODERATE AND LARGE
Kawasan Berikat– industrial site which has good accesibility to airport or seaport (proximity to customs office) with export import orientation
Example: PT. Kawasan Berikat Indonesia which consist of Tanjung Priok, Cakung, Batam

23. CLUSTER OF INDUSTRY
SMALL
Small Neighborhood Industry– small industry within settlement area in semi urban region. Consist of high number of small industry which has been agglomerated in the are
Small Industry Central– small industry within or outside settlement area in urban or rural area. Consist of few small industry which has been agglomerated in the are
Sarana Usaha Industri Kecil – provided by specific organization to support big industry / industrial estate

24. Location Evaluation Methods
Factor Rating Method
Locational Break-Even Analysis
Center of Gravity Method
Transportation Model

25. Factor Rating Method
Six steps in the method
Develop a list of relevant factors called critical success factors
Assign a weight to each factor
Develop a scale for each factor
Score each location for each factor
Multiply score by weights for each factor for each location
Recommend the location with the highest point score
Popular because a wide variety of factors can be included in the analysis

26. Factor Rating Method Factors Affecting Location
Labor costs and availability, including wages, productivity, attitudes, age, distribution, unionization, and skills.
Site costs, including land cost, parking, drainage, expansion opportunities, etc.
Proximity to raw materials and suppliers.
Proximity to markets.
State and local government fiscal policies (including incentives, taxes, unemployment compensation).
Utilities, including availability and costs.
Transportation availability (road, rail, air, water, pipeline).
Quality-of-life issues (education, cost of living, health care, sports, cultural activities, housing, entertainment, religious facilities, etc.).
Foreign exchange, including rates and stability.
Government, including stability, honesty, attitudes toward new business, etc.

27. Factor Rating Method Critical Scores
Success (out of 100) Weighted Scores
Factor Weight France Denmark France Denmark
Labor availability and attitude (.25)(70) = 17.5 (.25)(60) = 15.0
People-to- car ratio (.05)(50) = 2.5 (.05)(60) = 3.0
Per capita income (.10)(85) = 8.5 (.10)(80) = 8.0
Tax structure (.39)(75) = 29.3 (.39)(70) = 27.3
Education and health (.21)(60) = 12.6 (.21)(70) = 14.7
Totals

28. Locational Break-Even Analysis
Three steps in the method
Method of cost-volume analysis used for industrial locations
Determine fixed and variable costs for each location
Plot the cost for each location
Select location with lowest total cost for expected production volume

29. Locational Break-Even Analysis Example
You’re an analyst for AC Delco. You’re considering a new manufacturing plant in Akron, Bowling Green, or Chicago. Fixed costs per year are $30k, $60k, & $110k respectively. Variable costs per case are $75, $45, & $25 respectively. The price per case is $120.
What is the best location for an expected volume of 2,000 cases per year?

30. Locational Break-Even Analysis Example
Three locations:
Selling price = $120
Expected volume = 2,000 units
Akron $30,000 $75 $180,000
Bowling Green $60,000 $45 $150,000
Chicago $110,000 $25 $160,000
Fixed Variable Total
City Cost Cost Cost
Total Revenue = TR = 120x
At x=2000 cases/year:
A: Profit = 240,000 - (30, ,000) = 60,000
B: Profit = 240,000 - (60, ,000) = 90,000
C: Profit = 240,000 - (110, ,000) = 80,000
B is Best
Total Cost = Fixed Cost + (Variable Cost x Volume)

31. Locational Crossover Chart
200,000
Akron
150,000
Chicago
Bowling Green
Akron lowest cost
Bowling Green lowest cost
Chicago lowest cost
100,000
50,000
500
1000
1500
2000
2500
3000
Volume