1. Unit 6 Lesson 5

2. Student will be able to…
Discuss elements of deindustrialization and development

3. Let’s talk about Detroit…
Detroit is part of a region known as the rust belt, or northern industrial states of Ohio, Michigan, and Pennsylvania in which heavy industry (Secondary/Manufacturing Economy) was once dominant through the 1980’s.
Lost a lot of their industry to other regions in the U.S. that were more attractive (variable costs), or other countries that were more attractive (variable costs).
Term “rust” is associated with abandoned or downsized manufacturing plants.
Steel mill in Pittsburgh

4. Multiplier Effect Works in Reverse

5. Tax Bases Taxes are how services are paid for:
People can’t pay their taxes; including property taxes
This is one of the reasons why Detroit has no money
The people who work in the area are executives
They now live in suburbs, so their taxes go else where (We’ll talk about that in urbanization)
The taxes pay for emergency response services, law enforcement, schools, city electricity, and even bus systems
Originally set-up to support 1 million +
Those people retired, need pensions
Crime goes up, education goes down, which deters even more people from the area (Creates a cycle)

6. Sun Belt Remember those migration maps?
Lot’s of people have left the Rust Belt for the Sun Belt
Areas of manufacturing in the south
Lack of jobs in north (push factor), jobs in south (pull factor)
Detroit and other cities have deindustrialized:
Process of social and economic change caused by the removal or reduction of industrial capacity or activity in a country or region.
Secondary & Manufacturing jobs gone; they supported the economy in the area.
The Rust Belt is an example in the U.S., but a lot of countries have deindustrialized areas, such as Great Britain, Japan (a little bit), and Austria

7. Vroom! Vroom! Geography of Cars
Cars are a great way to talk about changes in economic geography.
Prior to most cars in the U.S. (and world) were produced in the Detroit area (agglomeration).
Post World War II 3 big manufactures: Ford, General Motors, and Chrysler.
Present day: 10 manufacturers control 85% of the world’s market
Then things started to change a bit…
Asia started producing a lot of cars, by 1980’s Asian manufacturers became the leaders world wide
Remember in the movie where he was muttering about Asia winning before?
Also; jobs lost due to mechanization and becoming more efficient at assembly.
Today the top ten who produce 85%:
Two are based in U.S. (Ford and GM)
Four based in Europe (Volkswagen, Fiat/Owns Chrysler, Renault/Owns Nissan, and Peugeot.
Four based in East Asia: Toyota, Honda, and Suzuki (all Japan), and Hyundai (South Korea)

8. Mom, where do cars come from?
Cars are a “bulk-gaining” industry, so; where should assembly occur for the product?
Car makers assembly plants account for only 30% of the value of a car, so it means that they are getting other items that put together the entire car from other places.
Parts that are not heavy by themselves do not need to locate next to the manufacturing plant and can ship the part and still be cheaper; Mexico, China, and Czech Republic are some of those places.
According to U.S. News Best Cars, Toyota Camry is the most “American Made Car”.

10. Ugh, Globalization Again?
It’s not a car, but it’s the image than anything I could find.
Boeing 787, “made in America”? Assembled in Washington State.
Perfect Example of Post-Fordism supplies from all over
Specialization can keep costs down
Boeing out-sources some production within the U.S. (states with cheaper cost of labor)
Boeing off-shores specific components to countries that have a comparative advantage in that portion (typically cost is the advantage)
Boeing is a “transnational corporation”; has branch operations in multiple countries not U.S.

11. So, where did the jobs go? Number of jobs minimized due to technology
Some jobs shifted to southern portions of the U.S.
Right to work states
Assembly is going to stay in U.S. because of number of cars U.S. buy’s and that it is a weight gaining industry
Jobs shifted to New Industrialized Countries (NICs)
More and more people in the U.S. shift into tertiary or service industries
Some people argue deindustrialization is actually a good thing
Forces movement to other services with higher income areas

12. Don’t worry, The U.S. still has money.
GNP is a measure of economic activity for goods produced with in the country (Gross National Product). See chart to the right.
Large corporations are still headquartered in the U.S. and innovate from this region, still brining in world wide funds.
So, even though the U.S. maybe off showing to other countries; it’s still bringing some of the money home (less and less, but still some).
…but…there might be higher levels of inequality (Next slide)

13. Gini Coefficient
Intended to represent the income distribution of nation’s residents.
Primary measure of inequality
Measures the income distribution among residents
Greater to 1, the higher level of inequality.
.21 is “better” than .41, the lower
Scandinavian countries tend to have lower income inequality
You can actually be a poor country with a lower GINI (everyone is poor so inequality isn’t as bad)
Manufacturing is arguably what kept a middle class (what the guy is talking about at the end of the video)