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Chapter 7 Manufacturing

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1 Chapter 7 Manufacturing
Fundamental nature of manufacturing processes Major manufacturing regions in the world Deindustrialization in the developed world and the rise of manufacturing in the developing world Sector specific dynamics The rise of flexible production systems, business process outsourcing & downsizing (The product life cycle model is not in this chapter again)

2 The Nature of Manufacturing
Elements of the manufacturing process: (a) product design, (b) assembling inputs, (c) transforming the inputs, (d) marketing the product Location decision – Weber model again Value added in each stage of production

3 Porter’s Value Chain Firm Infrastructure Human Resource Management
Support Activities Technology Development Procurement Primary Activities Inbound Logistics Operations Outbound Logistics Marketing and Sales Service Upstream value activities Downstream value activities


5 Concentration of World Manufacturing
80% of Global Output in Three Regions How current are these data? Current role of China?

6 Global Distribution Manufacturing Value Added
U.S. – 22.4% Source: Calculated from

7 Shares of Manufacturing Value Added
Source: World Bank World Development Indicators, 2011

8 U.S. & Canadian Manufacturing Belt: Accounts For about Two-thirds of Total Employment in The U.S. and Canada Rise of Maquiladoras – Border & interior Mexico A good Overview Of specialized Versus market Oriented manufacturing

9 Specialization in the Regional Distribution of Manufacturing
Some cartograms – where area is proportional to employment (using the BEA Economic Area classifications) The first map shows the actual geometry of the BEA Economic Areas The following maps depict industries distributed broadly across the U.S., and industries that are highly concentrated These are old maps, but for many lines of manufacturing the data are probably relevant

10 BEA Economic Areas – As of 1985
























34 Other Manufacturing Regions
Europe – Figure 7.5, Japan - Figure 7.9 Globalization of manufacturing – movement of capacity from U.S. & Canada, Europe, and Japan to less developed countries “The new international division of labor” “Anatomies of Job Loss”

35 U.S. Manufacturing Employment Trend
x x 2012 2013

36 Change in U.S. Mfg. Employment 1960-2000
Post-2000 Trends?

37 Deindustrialization in industrialized countries
The Share of Mfg. may have fallen, but real mfg. output is probably up in all these countries – see next slide for WA state

38 Real Output by Industry WA State

39 Anatomies of Job-Loss: disinvestment
Broad Structural Trends Corporate Agency The “outfall” of restructuring Spatial outcomes Plant openings Plant closings In-situ changes Macroscale causal forces in the global economy Corporate responses to global trends Corporate competitive strategies Events on the ground Bluestone & Harrison - Deindustrialization of America: “The core of B&H’s argument followed a restructuring approach with the need to restore the drive to accumulate, producing, through spatially distributed effects, a major reworking of the role of U.S. cities and regions in the geographic distribution of production.”

40 Impacts on Manufacturing Jobs in U.S., Europe and Japan
Job losses in manufacturing in all of these regions Replacement has primarily been in services Occupations created in the services are frequently very different than occupations lost in manufacturing, leading to high unemployment rates and income deterioration

41 Assets of Centers of Control versus Peripheral Regions
Key role in circulation; realizing wealth Focal point for investment, profits, interest Focus on forms of capital: FIRE Occupational dominance by professionals “Virtuous” multiplier relationships driven by above points Support networks of a large cadre of service workers in lower occupational categories Peripheral Regions Key role in creating value through labor pools & resource endowment Compete with centers for capital Capital transfers to core; possible scarcity in periphery Multipliers chancy: impacts only if investment comes to them Employment fortunes conditioned by “waves of investment” and restructuring No direct transference

42 Current Spatial Outcomes in the U.S.
Old centers are having their power erode New centers are rising, based on redistribution Charlotte NC - banking or the rise of “new industrial spaces” - Orlando-Melbourne (retirement) - Las Vegas (entertainment) - Seattle & Atlanta - technology based manufacturing & information services The rural renaissance - retirement, footloose entrepreneurs, recreation, rich people, niche mfg., IT, commuter air and courier services

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