Industry: Vocabulary

Agglomeration

• The clustering of productive activities and people for mutual advantage.

• Examples: Hollywood (agglomeration of film making firms)Sillicon Valley (hi-tech firms)NY/Wall Street (Finance firms)

basic industry

• The basic industry is an industry that brings money into the economy by providing a service to people outside the community.

• Examples: Commercial fruit orchards in Orange country, steel mills (formerly in Pittsburgh), hotels in Pismo.

bid-rent theory

• the price and demand for real estate changes as the distance towards the Central Business District increases.

• Example: rents in lower Manhattan are very high. Less in Brooklyn.

break-of-bulk

• A location where goods are transferred from one form of transport to another. This frequently involves the goods being repackaged into smaller quantities (their “bulk” is “broken up.”

• Example: Long Beach port where goods transferred from ship to truck and train

brownfield

• a property which has the presence or potential to be a hazardous waste, pollutant or contaminant

• Example: mines, steel mills, dry cleaning establishments, gas stations which produced high levels of subsurface contaminants during prior operations.

bulk-gaining industry

• An industry in which the final product weighs more or comprises a greater volume than the inputs.

• Examples: Soft-drink bottling industry, Fabricated metals industry (automobiles, refrigerators, etc.)

bulk-reducing industry

• An industry in which the final product weighs less or comprises a lower volume than the inputs.

• Copper, steel, paper industries

comparative advantage

• the ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than other producers.

• Examples: producing oranges at lower cost in Florida than Georgia due to site factors (labor, climate)

cottage industry

• Manufacturing based in homes rather than in a factory, commonly found before the Industrial Revolution.

• Example: n/a

deindustrialization

• The decline of primary and secondary industry, accompanied by a rise of the service sectors of the industrial economy.

• Example: loss of secondary industry (manufacturing job) in the U.S. Rust Belt to outsourcing.

economies of scale

• Increase In Effiency Of Production As The Number Of Goods Being Produced Increases

• Ford Motor company and the Model A

export processing zone (EPZ)

• Special area(s) of a country where some normal trade barriers are eliminated and bureaucratic requirements are lowered in hopes of attracting new business and foreign investments.

• Maquiladoras along the U.S./Mexico border.

footloose industry

• An industry whose location is not strongly influenced by access to materials and/or markets, and can operate in a wide range of locations. Usually industries with lightweight products.

• Examples: diamonds, hi-tech (computer chips)

Fordism

• Form of mass production in which each worker is assigned one specific task to perform repeatedly.

• Automobile assembly lines (under Henry Ford!)

just-in-time production

• Method of inventory whereby companies keep on hand just what they need for near-term production, planning so that what they need for longer-term production will arrive only when needed.

• Example: Automobile parts arriving only when needed, grocery store products arriving and put directly on shelves for sale

industrial inertia

• when an industry stays in a location even after the advantages for locating there have ceased to exist

• Examples: survival of the steel works in Sheffield due to the prestige of Sheffield cutlery, delay in shift to non carbon based energy sources

Industrial Revolution

• A series of improvements in industrial technology that transformed the process of manufacturing goods from hand made to machine made. English midlands, late 18th century.

• Example: n/a

infrastructure

• the underlying framework of services and amenities needed to facilitate productive activity

• Examples: power grid, roads, highways, airports, water, sewage systems, fiber optic cables, telephone…

maquiladora

• Factories in a special economic zone on Mexico's northern border with the United States built to take advantage of low cost labor and tax and tariff incentives.

new international division of labor

• Phenomenon whereby corporations and others can draw from labor markets around the world, made possible by the compression of time and space through innovation in communication and transportation systems.

• Example: refrigerators! (Made first in U.S. rust belt, then U.S. South, then Mexico, then Asia.)

nonbasic industry

• Industries that sell their products primarily to consumers in the community

• Grocery stores, dry cleaners, barber shops

outsourcing

• A decision by a corporation to turn over much of the responsibility for production to independent suppliers, often overseas

• Automobile industry

Post-Fordism

• Fast, flexible production to meet rapidly changing niche markets

• Also includes workers working in teams and are on equal terms with managers

• Associated often with outsourcing around the world (rather than one big central assembly line factory as in Fordism)

site factors in industrial location

• Location factors related to the costs of factors of production inside the plant, such as land, labor, and capital

• Example: n/a

situation factors in industrial location

• Location factors related to the transportation of material into and from a factory

• Example: how far a factory or production facility is from a) raw materials and b) market

secondary vs. primary industry location

• Primary (extractive industries: farming, mining, forestry) are located in rural areas

• Secondary (manufacturing industries) are located either close to raw materials or markets.

Transportation Comparison: Truck, Train, Ship, Air?

• Short distance (less than a day): Truck best because terminal (loading, unloading) costs are lowest. For long distances cost of paying driver to rest adds up.

• Medium distance: train (higher terminal cost than trucks but drivers don’t have to rest)

• Long distance: ship (lowest overall cost per mile)• Air: Very expensive (jet fuel cost) so only if it

absolutely, positively has to get their overnight.

Weber's Least Cost Theory

• Model developed by Alfred Weber according to which the location of manufacturing establishments is determined by the minimization three critical expenses: labor, agglomeration and ESPECIALLY: transportation.

• Hint: Weber was TALL (Transportation, Agglomeration, LLabor

(I actually have no idea if he

was tall or not.)

Hotelling’s Model of Locational Interdependence

(aka “why are gas stations and coffee shops always right next to each other?”)

Model of the locational interdependence of industry developed by Harold Hotelling stressing that the location of industries can't be understood without reference to the location of other industries of like kind. Used ice cream vendor on beach example.

Two ice cream vendors on the beach. What is the optimal location for each to optimize sales

1.Each vendor sets up so that their market shares are equal.

2.Vendor A realizes if he moves next to vendor B, he will sell to all of the customers to his left, capturing 75% of the market.

3.The next day, both vendors realize that setting up in the center of the beach is the only way of keeping the other vendor from “stealing” part of their market share.