Chap 11: IndustryChap 11: Industry

Envs 204

Industry -- Defined

INDUSTRY -- Production of goods, especially through manufacturing techniques, and a group of firms with similar technical structures for production.

 a. Method of adding value such as man-made

value, from motive force,or other outside source to create a final product

b. Includes factory system, limited stock companies, integrated activities, specialization, scale economies,...

11.1 Industrial Revolution

• “The root of the Industrial Revolution was technology involving several inventions that transformed the way in which goods were manufactured”– Unprecedented expansion of output and

productivity– Substantial increase in standard of living– Resulted in a Demographic Boom and

Transition (In the Western World)

http://www.youtube.com/watch?v=aO3AW0JAHmU – 2minute overviewhttp://www.youtube.com/watch?v=E_tFFQyEu_Q&feature=related – 2 minute view of child labor with musical backgroundhttp://www.youtube.com/watch?v=JhF_zVrZ3RQ BBC 1 hour documentary

Industrial Revolution

• Resulted in and from new social, economic, and political inventions/organization and developments – not just industrial ones

• Changes were gradual

• Diffused outward across the globe from England after 1750

• Diffusion continues today

Change & Impacts

1. Industrial Revolution -- completely changed

a) How goods were produced. b) How economy was organizedc) How people worked & organizedd) How goods were consumed

- formerly “folk” based activities became “economic” based (much like the change from folk to popular customs)

Hearth Areas

2. Hearth Area - England after 1750'sa. Key

Invention - Steam Engine -- non-natural power source

Diffusion

Diffusion to and impact on other industries Coal -- key new input, why??? Hint birth of the “energy

slave” Iron Production -- vastly increased why??? Transportation & Spatial Interaction -- both

infrastructure and technology changes the world’s spatial geography (resulted in a time-space compression – speeds up diffusion)

Textiles – becomes first leading industry Engineering – emerges from the inventors of these

new technologies Food Processing – necessary input to support urban

labor concentration

Diffusion of Railroad Technology – Time-Space Compression

• Hierarchical diffusion – note nodes from which it spreads

• Contagious diffusion – spaces in between nodes

Diffusion

• Relocation – immigration brought new technologies to distant locations– Also the British attempted to limit this by forbidding

skilled textile “engineers” from emigrating

• Hierarchical – between Major centers of commerce like London, Paris, Berlin, NYC

• Contagious – exponential outward expansion as everyone wants to participate – both production & consump.

11.2 Distribution of Industry

Tools• Hearth Area• Diffusion

– Relocation – follows immigration– Hierarchical – transferred between major

metro areas– Contagious – acceptance expotential– Stimulous – principles most easily shared

11.2 Distribution of Industry

Tools cont…

• Pattern– High clustering in few countries at first– Clustering apparent even at present

• High density concentration = efficiency

• Spatial Interaction– Space-Time compresion results from process

11.2 Distribution of Industry

Tools cont…

Site & Situation – both key to eventual sitting of activities

• Site Factors include: resources, labor, capital (human and monetary), land, and markets

– China today focuses on cheap Labor

• Situation Factors focus mainly on long distance transportation routes – Coastal China today

• Resources & Markets

11.2 Distribution of Industry

Tools cont…

• Resources & Markets– Each exerts influence on locating industry

Major Centers in Europe

Major Centers in East Asia

Manufacturing Zones in ChinaClick here

Manufacturing Zones in ChinaClick here

Major Centers in US & Canada

Turning to Robots for Manufacturing click herehttp://tlc.discovery.com/videos/understanding-robots-mass-customization.html

11.3 Situation – Transport CostsThink Networks for Trade

• Bulk Reducing Activities– Locate near raw material– By reducing bulk final cost reduced– Example Copper smelting

• Bulk Gaining Activities– Locate near final market– Add bulk at last minute – less trans cost– Example Beer production

11.3 Situation FactorsBulk Gaining

11.4 Changes in Steel Location• 1770s Near Energy Source – locate

iron/steel forges in mountain valleys and use wood/charcoal

• 1850s Near Energy Source – coalfields because greatest bulk– Pittsburgh favored

• 1890s In between coal and iron ore– Lake Erie sites favored

• 1910s Move closer to markets as coal requirements drop– South Lake Michigan favored

• 1950s Move closer to East Coast– More dependent on foreign iron inputs & local

markets• Today – foreign sites & major US

Market sites– Foreign producers lower labor cost in integrated mills– Major markets switch to scrap iron as input and mini-

mills

Steel has changed from bulk reducing to market

sensitive locations in the USA while moving to Labor

sensitive locations internationally

11.4 Changes in Steel Location• 1770s Near Energy Source – locate

iron/steel forges in mountain valleys and use wood/charcoal

• 1850s Near Energy Source – coalfields because greatest bulk– Pittsburgh favored

• 1890s In between coal and iron ore– Lake Erie sites favored

• 1910s Move closer to markets as coal requirements drop– South Lake Michigan favored

• Today – foreign sites & major US Market sites

– Foreign producers lower labor cost in integrated mills

– Major markets switch to scrap iron as input and mini-mills

Steel has changed from bulk reducing to market

sensitive locations in the USA while moving to Labor

sensitive locations internationally

http://www.youtube.com/watch?v=_hlfqggGOZw&feature=related

Creative Destruction?

http://www.youtube.com/watch?v=V-wRygi2PaQ

http://www.youtube.com/watch?v=7O3ye1h60qU

http://www.youtube.com/watch?v=Pr3EJ-I1vaU

Site vs Situation for Steel• 1770s Near Energy Source – Site condition dominates

– Energy & Bog Iron very close – site– Transport of output to market -- situation

• 1850s Near Energy Source – Site condition dominates– What Site conditions favored Pittsburgh?

• 1890s In between coal and iron ore – Situation condition dominates– What Situation conditions favored Lake Erie ports?

• 1910s Move closer to markets as coal requirements drop & iron increases – Site conditions dominate– What Site condition favored South Lake Michigan? Favored

• 1950s Move closer to East Coast change to foreign supplies – Situation conditions dominate

– More dependent on foreign iron inputs & local markets• Today – foreign mills & major US Market sites – Site conditions

dominate– What Site conditions favors LDC Foreign producers for integrated mills?– What Site conditions favor large urban markets like Seattle for mini-

mills?

Migration to lower cost developing nationsSide note: ownership of mills even in MDCs also migrates to LDCs like China and India

Modern Mini Mill

http://www.youtube.com/watch?v=v0F5ITivFzo

Some Mini Mills in US & Mexico

Tend to favor Site Conditions – Locate close to markets and scrap iron/steel sources

11.5 Auto ProductionSituation Sensitive – Why?

Changing pattern of plants to reflect just-in-time system & unionization

Situation based Network of assembly

Site based lower cost Southern Labor

Auto Alley: Focused on I65 and I75

Example of Just-in-time delivery and assembly

70% of the value in a car comes from independent suppliers

Situation: Over time auto suppliers and assemblers have migrated to the center of the country to minimize distribution cost of final products

Site: Suppliers and assemblers have also migrated south to lower cost labor

New Car Plant Locates in Indiana

11.6 Transport Modes

Break of Bulk Point

• Place where move from one mode of transport to another – good place to process goods– Seaport, airport, rail yard…– Opportunity for further processing before

sending on– Example wheat from farms may be

assembled at a port for export and milled there into flour

Just-In-Time Production

• Low stockpiles at assembly plant

• Multiple suppliers concentrate in same region

• Japanese automakers developed this system due to small land area for factories

“Just in time” example – truck seats click here

http://www.youtube.com/watch?v=JTJLhWGVQQs

James Rubenstein talks about Auto Production – video 30 12:15 minutes

James Rubenstein talks about Auto Production – video 30 12:15 minutes

• Variations based on cost & speed

• Air• Truck• Rail• Boat

Mode of Transport

HighCost

Low Cost

HighSpeed

LowSpeed

Just in timepossible

Just in case or large stockpiles

11.7 Site Factors

Site: Three of most important Factors

• Labor – currently most important in labor intensive industries like textiles

• Land – causes industry to migrate to the edge of urban areas – looking for “green field” sites encouraging sprawling single floor factories

• Capital – can either be locally available or from outside– FDI – foreign direct investment – such as capital flows

to China– Venture Capital – readily available in Silicon Valley

Textile & Apparel Spinning: Labor intensive mainly done in LDCs

Woven Cotton: Dominated by low cost labor and readily available raw materials in China and India

11.8 Textile & Apparel Production

Production of Men’s & Boy’s Trousers: Higher skill then weaving, currently migrating to LDCs

Labor-Intensive Industries

Labor-intensive Industries

• Consideration– Balance of lowest cost per hour of labor

versus skills embodied in labor– And transportation cost versus timeliness of

delivery– Example cheap to make Christmas toys in

China, but if early supplies sell out difficult to restock due to the distance

Decline in Labor Intensive Clothing in USA

Migration of “skilled” textile jobs abroad

Comparative Labor Costs for Clothing Manufacturing

Note how Indonesia could be the next large textile producer

Notice where Pakistan falls

11.9 Emerging Industrial Regions

• US Shifts– From high labor cost/protection areas to low

areas

• Movement out of US– Outsourcing– China as workshop of the world– BRICS as possible future manufacturing

centers

Santa’s Helpers

http://www.youtube.com/watch?v=MQh2CZZK1YU