The title of this section refers to the manufacturing of goods in a factory. The word industry is appropriate because it also means persistence or diligence in creating value. A factory utilizes a large number of people as well as considerable machinery and money to turn out valuable products.
Key Issue 1: Where Is Industry Distributed?
Industry, Energy, & Geography The hearth of modern industry—meaning the manufacturing of goods in a factory—was in northern and southern England during the second half of the eighteenth century. From these two locations, industry diffused to Europe and to North America in the nineteenth century and to other regions in the twentieth century.
The Industrial Revolution The Industrial Revolution was a series of improvements in industrial technology that transformed the process of manufacturing goods. Prior to the Industrial Revolution, people made household tools and agricultural equipment in their own homes or obtained them in the local village. Home-based manufacturing was known as the cottage industry system. Several inventions transformed the way in which goods were manufactured, beginning with the steam engine. The revolution in industrial technology created an unprecedented expansion in productivity, resulting in substantially higher standards of living. The Industrial Revolution resulted in new social, economic, and political inventions, not just traditional ones. The changes involved a gradual diffusion of new ideas and techniques over decades rather than an instantaneous revolution. Among the first industries impacted by the Industrial Revolution were iron, textiles, chemicals, and food processing.
Transportation Improvements in transportation were a critical factor in the diffusion of the Industrial Revolution. Canals and railroads supported the shipment of raw materials to the factories and finished goods to consumers.
Industrial Clusters Industry is concentrated in three of the nine world regions—Europe, North America, and East Asia.
Europe: Industrial Birthplace Europe was the first region to industrialize. Depending on their geographic assets subareas specialized in different types of industry. Europe’s major industrial areas include: United Kingdom, Rhine-Ruhr Valley, St. Petersburg, Urals, Kuznetsk, Volga, Moscow, Donetsk, Silesia, Po Basin, Northeastern Spain, and Mid-Rhine. Each area developed based on the available energy and iron ore resources and supply of labor.
North America: Industrial Leader Traditional industrial areas in North America were highly concentrated in the northeastern United States and southeastern Canada along the Great Lakes. Recently manufacturing has relocated to the South because of lower wages and restrictions on labor unions. North America’s major industrial areas include: Northern California, Southeastern Ontario, Mohawk Valley, New England, Middle Atlantic, Pittsburgh-Lake Erie, Western Great Lakes, and Southern California.
East Asia: The New Industrial Leader In the second half of the twentieth century East Asia became an important industrial region. China is the world’s leading manufacturing country. East Asia’s manufacturing regions include: China, South Korea, and Japan.
Site Factors in Industry Industrial location factors related to the cost of factors of production inside a plant are known as site factors. These site factors include labor, capital, and land.
Labor Minimizing labor costs is important for some industries and the variation of labor costs around the world is large. A labor-intensive industry is an industry in which wages and other compensation paid to employees constitutes a high percentage of expenses. The reverse case, an industry with a much lower-than average percentage of expenditures on labor, is considered capital intensive. A labor-intensive industry is not the same as a high-wage industry. Labor-intensive is measured as a percentage, whereas high-wage is measured in dollars. Motor vehicle workers are paid much higher hourly wages than textile workers, yet the textile industry is labor intensive and the auto industry is not.
Traditionally factories assigned each work a specific task to perform repeatedly. Geographers call this approach Fordist production, because of the use of the assembly line by the Ford Motor Company. Workers organized in teams perform a variety of production tasks in a more flexible production approach termed postFordist production that relies on teams, problem solving, leveling, and productivity.
Capital The availability of capital is key to the location of an industry. The U.S. motor-vehicle industry concentrated in Michigan early in the twentieth century largely because that region’s financial institutions were more willing than eastern banks to lend money to the industry’s pioneers. High-tech industries have been risky propositions—roughly two-thirds of them fail—but Silicon Valley financial institutions have continued to lend money to engineers who have good ideas so that they can buy the software, communications, and networks they need to get started. The ability to borrow money has become a critical factor in the distribution of industry in developing countries.
Land The actual location of a factory as well as energy and other natural resources are components of the land site factor. Early factories were located inside cities. Contemporary factories operate most efficiently when laid out in one-story buildings. Raw materials are typically delivered at one end and moved through the factory in conveyors or forklift trucks. The land needed to build one-story factories is now more likely to be available in suburban and rural locations. With trucks now responsible for transporting most inputs and products, proximity to major highways is important for factories. Especially attractive is the proximity to the junction of a long-distance route and the beltway, or ring road that encircles most cities.
Situation Factors Location factors associated with the transportation of materials into and from a factory are known as situation factors in which a firm seeks a location that minimizes the cost of transporting inputs to the factory and finished goods to consumers. The farther something is transported, the higher the cost. Depending on the goods produced, manufacturers either locate near the inputs or near the market.
Situation Factors: Inputs An industry in which the inputs weigh more than the final products is a bulkreducing industry. To minimize transportation costs, a bulk-reducing industry locates near the sources of inputs.
Bulk-reducing Industry: Copper Copper production involves several steps. Mining copper ore is a bulkreducing industry because the heavy, bulky ore that is extracted from the mines is mostly waste. The second step in copper production is the concentration mills that grind the ore into fine particles that are then mixed with water and filtered and dried. Copper smelters then remove more impurities. The purified copper produced by smelters is then treated at refineries to produce copper cathodes, about 99.99 percent pure copper. Most refineries are located near smelters. Copper that is ready for use in other products is produced in foundries. As a bulk reducing industry, copper concentration mills and smelters are built near the mines to minimize transportation costs. Because so much waste has already been disposed of, proximity to the mines is a less critical factor in determining the location of the foundries.
Mineral Resources Minerals are particularly important inputs for many industries. Minerals are either nonmetallic or metallic. In weight, more than 90 percent of minerals that humans use are nonmetallic. Building stones, gemstones, and fertilizers are examples of nonmetallic minerals that humans commonly use. Metallic minerals have properties that are especially valuable for fashioning machinery, vehicles, and other essential elements of contemporary society. Many metals are capable of combining with other metals to form alloys with distinctive properties important for industry. A ferrous alloy contains iron and a nonferrous one does not. Iron is extracted from iron ore, by far the world’s most widely used ore. Important metals used to make ferrous alloys include chromium, manganese, molybdenum, nickel, tin, titanium, and tungsten. Important metals used to manufacture products that do not contain iron and steel include aluminum, copper, lead, lithium, magnesium, zinc, precious metals, and rare earth metals. Mineral resources are not distributed evenly. Few important minerals are found in Europe, Central Asia, and Southwest Asia & North Africa.
Situation Factors: Proximity to Markets For many firms, the optimal location is close to customers. Proximity to markets is a critical locational factor for three types of industries: bulk-gaining industries, single market manufacturers, and perishable-products companies.
Bulk-Gaining Industries A bulk-gaining industry makes something that gains volume or weight during production. To minimize transport costs, a bulk-gaining industry needs to locate near where the product is sold. A prominent example of a bulk-gaining industry is the fabrication of parts and machinery from steel and other metals. For example, steelmakers have traditionally located near raw materials; steel fabricators have traditionally located near the markets. Beverage bottlers also locate near large markets to cut down on the cost of shipping.
Single-Market Manufacturers A single-market manufacturer is a specialized manufacturer with only one or two customers. The optimal location for these factories is often in close proximity to the customers. An example of a single-market manufacturer is a producer of buttons, zippers, clips, pins, or other specialized components attached to clothing. The makers of parts for motor vehicles are another example of specialized manufacturers with only one or two customers.
Perishable-Products Companies To deliver their products to consumers as rapidly as possible, perishableproduct industries must be located near their markets. Because few people want stale bread or sour milk, food producers such as bakers and milk bottlers must locate near their customers to assure rapid delivery. The daily newspaper is an example of a product other than food that is highly perishable because it contains dated information. Newspaper publishers must locate near the markets to minimize transportation costs. People demand their newspaper as soon as it is printed.
Motor Vehicle Production & Sales The motor vehicle is a noted example of a fabricated metal product that is likely to be built near its market. Around 90 million new vehicles are sold every year worldwide. China accounts for 30 percent of those sales, other Asian countries 25 percent, Europe 23 percent, and North America (including Mexico), 21 percent. Most of the vehicles that are produced in these regions are sold in their respective markets.
Truck, Train, Ship, or Plane? Inputs and products are transported in one of four ways: truck, train, boat or airplane. In all four modes the farther a product is transported, the lower the cost per unit distance. Longer distance transportation is cheaper per unit distance in part because firms must pay workers to load goods on and off vehicles, whether the material travels 10 kilometers or 10,000. The cost per kilometer decreases at variable rates for each of the four modes because the loading and unloading expenses differ for each mode.
Trucks: Short Distances Trucks are primarily used for short-distance delivery because they can be loaded and unloaded quickly and at low costs.
Trains: Cross-Country Shipment Trains are often used to ship to destinations that take longer than one day to reach, such as between the East and West coasts of the United States. Loading trains takes longer than loading trucks, but once under way, trains are not required to make daily rest stops like trucks.
Airplanes: Small & Valuable Packages Airplanes are most expensive for all distances and are usually reserved for expedited delivery of small-bulk, high-value packages.
Boats: Crossing Oceans Ships are attractive for transport over very long distances because the cost per kilometer is very low. Ships are slower than land-based transportation, but unlike trains or trucks, they can cross oceans.
Break-of-Bulk Points Mixed modes of transportation are often used. Industries that use a number of different shipping modes tend to locate at break-of-bulk points, which is a location where transfer among transportation modes is possible. Important break-of-bulk points include seaports and airports. Containerization has facilitated transfer of packages between modes. Containers may be set on rail cars, transferred quickly to a container ship to cross the ocean, and unloaded on to trucks at the other end. Large ships have been specially built to accommodate large numbers of rectangular box-like containers. Regardless of transportation mode, costs increase each time inputs or products are transferred from one mode to another. For example, when workers must unload goods from a truck and then reload them onto a plane.
Just-in-Time Delivery Proximity to market has become more relevant in recent years due to the emergence of just-in-time delivery. Just-in-time delivery is the shipment of parts and materials to a factory moments before they are needed in the production process. Just-in-time delivery is especially important for delivery of inputs, such as parts and raw materials, to manufacturers of fabricated products, such as cars and computers. Under a just-in-time system, parts and materials arrive at a factory frequently, in many cases daily or even hourly. Just-in-time delivery minimizes the costs a manufacturer incurs in wasteful inventory, and in storage space. However, natural disasters, traffic, and labor unrest can disrupt just-in-time delivery systems.
11.1
Basic industries Companies that sell their goods or services largely to people outside of that area means that they bring money into the area from outside
Break-of-bulk point A place where cargo is unloaded from one form of transportation and pieces of it are sent out in different directions to other forms
Bulk-gaining industry Industry that makes something that gains volume or weight during production
Bulk-reducing industry Industry that makes something that loses volume or weight during production
Cottage industry Manufacturing based in homes rather than in factories, most common prior to the Industrial Revolution.
Deindustrialization Decline in industrial activity in a region or economy often due to lower labor costs elsewhere
Fordist production Form of mass production in which each worker is assigned one specific task to perform repeatedly.
Just-in-time delivery A strategy for maintaining just the right amount of inventory so as to not have to pay for storage
Labor union An organization of workers that aims to protect their rights and further their interests
Labor-intensive industry An industry for which labor costs comprise a high percentage of total expenses.
Market A place where goods are sold (non-physical markets have expanded greatly since the Internet became mainstream)
Nonbasic industries Companies that sell their goods or services largely to people who live inside of that area this means that they mostly circulate money inside the area
Post-Fordist production Adoption by companies of flexible work rules, such as the allocation of workers to teams that perform a variety of tasks.
Site factors Location factors related to the costs of factors of production inside a plant, such as land, labor, and capital.
Situation factors Location factors related to the transportation of materials into and from a factory.