chap 11: industry envs 204. industry -- defined industry -- production of goods, especially through...
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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 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
11.4 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
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
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
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
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
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
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