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AL Geography Notes (Industrial Landscape)

Industrial Landscapes I. Manufacturing System: A. Introduction:

Manufacturing involves the changing of substances into new products. Manufacturing is carried out by people in all types of economies. Manufacturing does not have to be carried out in a factory nor does it have to involve the use of power-driven machinery.

A feature of the manufacturing of early societies was its reliance on manual methods.

These activities known as handicrafts and workers are craftsmen. Such industries were commonly carried on in the dwellings of the workmen and so this became known as the domestic system of manufacturing. Its great weakness was that total output was limited by the slow and laborious manual techniques.

Now manufacturing is usually taken to mean the processing of raw materials and the

fabricating of finished products in a factory building using mechanized techniques and inanimate sources of power. Manufacturing is often equated with secondary industry which is different from primary industry and tertiary industry.

Manufacturing establishments vary in size. At the lower end of the scale are those small

family works employing one or two men, utilize limited amount of capital equipment, and involves high inputs of labour. An example of this type of manufacturing is domestic handicraft industry. At the other end of the scale are those multi-national corporations with many thousands of employees, involving a high input of capital and equipment, and produce goods that serve very large markets.

The significance of manufacturing as a major economic activities is even more strikingly

apparent when its contribution to world living standards and population pattern is considered.

B. Classification of Manufacturing Industries: There are a variety of ways to classify manufacturing industries. Because of Geographers'

interest in location, manufacturing is broadly divided into two groups: processing and fabricating.

1. Processing industries:

In processing, a material may undergo a change in its physical state, chemical composition, volume or mass in creating a product more useful to man. An example of processing industry is the steel industry in which iron ore, coal, limestone and other raw materials undergo changes in form and state in the manufacturing process.


a. Initial Processing Industries: Those processing industries which are first stage manufacturers treating a single raw material in relatively few manufacturing operations, are example of initial processing, eg. dairy processing. Initial processing industries tend to be material-oriented. This is due to the fact that after processing, there is a considerable weight or bulk loss of the materials thereby reducing the transport cost for the finished product. A firm can therefore reduce the total cost of production by locating near to the source of raw materials.

b. Complex Processing Industries: Some types of processing involve more than a single raw material inputs. Raw materials are frequently obtained from several different sources and are often subjected to a series of lengthy and complex processes that involve a high degree of organization and advanced technology. The processing industry may result in a product available for immediate consumption, or one that requires further processing or fabricating, eg. steel making. However, it is more difficult to classify them into such categories as 'market-oriented' or 'raw material-oriented'. A variety of location patterns are displayed. For example, oil-refining industry is found in both Texas and Philadelphia, the former being raw material-oriented and the latter market-oriented. Some processing industries, on the other hand, do not belong to either category. For example, the aluminum industry is strongly for the largest cost component in the whole manufacturing process.

2. Fabricating industries: Fabricating involved the assembly of a finished or semi-finished product, either from

preprocessed or unprocessed materials, or a combination of both. It involves a change in the form of the original product but not its state, eg. automobile industry, machinery making, furniture and clothing.

In general, fabricating industries tend to be market-oriented because the transport cost

for the finished product is much higher than that for raw materials or parts. Cars, electrical appliances and furniture illustrate this point.


II. Industrial Location: A. Weber's Least Cost Locational Theory 1. Assumptions:

Because of the complexity of human economic activities and the variety of factors which influence location decisions, industrial location theories are based on a number of assumptions to reduce the complexity of the real world to manageable proportions. They are: the motive of the entrepreneur in selecting location is to maximize profits; entrepreneurs have perfect knowledge about all areas; the area in which they seek to locate is perfectly uniform; transport cost are proportional to distance and volume carried. Moreover, government policies are disregarded for simplification.

Alfred Weber publishes his theory in 1909, 'Theory of the Location of Industries'. His

model is to seek the least-cost industrial location. He only considers those influences which seem to have universal application. In essence, his argument is that an industry will be located where total transport costs are least; but that an industry may be attracted away from the site of lowest transport costs by sites of cheap labour or by sites where a distinct advantage gains from agglomeration.

To reduce the complex problem of industrial location to a manageable size, Weber

made the following assumptions:

a. There is the presence of an isotropic plain which is uniform in culture, economic and political system, and climate. That is to say that the object of the analysis is a single, isolated nation that is uniform in landforms, climate, race of people and technical skills, and that the population is under one political authority.

b. Some natural resources are ubiquitous, i.e. they are found everywhere (eg. water, air).

However, many other raw materials are localized and can only be found at fixed locations, eg. iron ore and coal.

c. Transport cost is a function of weight and distance to be carried and the size of the

shipment. Therefore, the cost of transporting raw material or finished product is proportional to the distance transported.

d. Labour has a given pattern of distribution, and workers are available at the specific

locations selected by the firm as its location.


e. Markets for finished products are fixed at certain specific points and do not consist of continuous areas.

f. Perfect competition exists, i.e. there are a very large number of buyers and sellers in

an industry and no individual buyer or seller can influence the price. Since revenue is everywhere the same, the best location will be where costs of production can minimized.

g. Industrialists are 'economic man' who try to maximize his profits and have perfect

knowledge about the industry.

2. Index of Orientation: Weber devised an index which could be used to separate those industries where much

weight of raw materials is lost during processing from those industries where little or no weight of raw materials is lost during processing. This material index is defined as:

Weight of localized raw material inputs Material Index = ---------------------------------------------------------------- Weight of finished products Only those raw materials which tend to occur at particular sites (i.e. localized

materials) are included in the weight calculations - water, sand, clay, which are found virtually every where (i.e. ubiquitous materials), are excluded.

Industries which use every bit of raw materials in the production process (these are

called pure materials) have a material index of 1.0. In this case, the industry would be located at either end of the market and the raw material source, or at an intermediate location. It is regarded as a footloose pattern of location.

Industries which use materials that are greatly reduced in weight during the process of

production (these are called weight-loss or gross materials) have a material index in excess of 1.0. In this case the industry would be raw material oriented.

If the index is less than 1, there would be a gain in weight and/ or bulk during

processing and the industry would be market-oriented.


For example, to produce 10 tonnes of cement, the following are required: Limestone 11.2 tonnes Clay or shale 2.8 Coal 3.0 Gypsum 0.25 ============================= Total 18.25 Material Index = (18.25 tonnes / 10.00 tonnes)

3. Location Triangle: A more complicated situation will arise if an industry draws upon two raw material

sources. The point of least cost is a result of the pull from different directions of the raw material and market. The point tries to minimize the most expensive movement. The following figure shows the situations resulting in a market orientation for the firm.

However, where the raw materials undergoes weight loss during manufacturing, the

least cost site occurs at some intermediate location between the raw material and the market. To find the intermediate location, Weber devised his famous location triangle to resolve the more complicated locational forces. The use of the location triangle in a simple example is given in the following figure.


Other location figures other than location triangles are also used by Weber. From a comparison of the total costs at the four locations it can be seen that the least cost location is the point midway between the raw materials RM1 and RM2. More complex location triangles, and even other geometric shapes, are needed to resolve the location pulls where more than two raw materials are involved and where the raw materials are used in different proportions or with different weight losses in the manufacturing process. Two of these other location figures are illustrated in the beside figure.

4. A cost surface:

Weber devised a useful technique for mapping the spatial variation in transport cost in order to find the least cost location. He constructed isodapanes - lines joining places of equal transport costs.

In the beside figure,

R and M represent a raw material source and a market respectively. The thin lines are isotims which represent transport cost from the raw material source or the market per unit distance. It can be that it costs one money unit to transport the raw material one km. The isodapane is shown by the thicker line joining points A - F. At all these points the total transport cost of transporting the raw material and the product is 7 money units. If the 7 money units isodapane is the one that delimits the area in which a firm can operate at a profit, this will be the critical isodapane outside


which a factory will not locate. Within the area bounded by the critical isodapane, a factory is free to locate at any point, although inside this line transport cost still varied.

5. The Varignon Frame:

The best site for a manufacturing firm, where transport costs are expressed on a weight-distance basis, can be found by a mechanical method devised by Varignon.

It is a simple hardware model known as a Varignon Frame. Pulleys are fixed on a

board at points corresponding to market and raw material sources. Weights proportional to the weights of raw materials and finished products are attached to three strings. The position in the location triangle at which the knot where the three weights are balanced. This position corresponds to the site where transport costs for the manufacturing firm are cheapest. If the pull of any one corner of the locational triangle is greater than or equal to the sum of the pulls of the other two corners, the site with the cheapest costs will be the site with the overriding pull.

A simple example is given in the figure below. C represents the market for 1 tonne of

product X which needs 3 tonnes of the material from M1 and 2 tonnes of the material from M2. In this example, the pull of M1 is the greatest and the plant will be oriented towards M1.

6. The effect of cheap labour:

Weber realized that in some industries labour is an important factor in production and may exert a strong influence upon location. He suggested that in such cases a site of relatively cheap labour in a region may divert a factory from the site of lowest transport costs. The diversion will take place, argued Weber, if the saving in labour cost exceeds the additional costs of transport incurred in moving to the site of cheap labour supply. In


the case of zinc-smelting assume there is a supply of cheap labour at point L1. At this point, labour is 25% cheaper than elsewhere, which represents a saving of $16 in total costs per tonne of metallic zinc.

In the following figure, the isodapanes join points of equal additional transport cost;

they are derived simply by subtracting the transport costs at the least-cost location from each isodapane. The $16 additional transport cost isodapane is drawn with a heavy line. Using Weber's word, it is a critical isodapane. For a factory located on the critical isodapane, the saving of cheap labour somewhere along the critical isodapane, would be just offset by the additional transport costs incurred in moving there.

Point L1, the supply point of cheap labour, lies outside the critical isodapane. If the

zinc-smelting plant were to move to the cheap labour supply, the savings it would gain on its labour bill would be eaten up by additional transport costs. Indeed, the savings on labour would be less than the additional transport costs and the plant would run less profitably than it would at the point of lowest transport costs.

If, however, the site of cheap labour were at point L2, which lies within the critical

isodapane, the additional transport costs incurred in moving to point L2 would be less than the savings made in using cheap labour. Under these circumstances, the diversion from the point of lowest transport costs to the point of cheap labour supply.

Weber found that some industries were more susceptible to differences in labour costs

from one place to another than others. He computed an index of labour cost which, for any industry, measures the average cost of labour needed to produce a unit weight of


product, say a tonne. The higher the index, the greater the likelihood of the industry's diversion from the least transport cost location. But of greater importance in assessing the pull of labour, thought Weber, is the ratio of labour cost per tonne of product to the total cost of the weight of materials and product to be transported; this ratio is called the labour coefficient and it gives an indication of the susceptibility of an industry to regional variations in the cost of labour. The calculation of the labour coefficient is as follows:

Labour costs per tonne of product

Labour Coefficient = ------------------------------------------------------------------------------ Total cost of the weight of materials and product to be transported

If the labour coefficient of a particular industry were high, a pool of cheap labour

would tend to attract that industry to a location different from the one resulting from calculations based on least transport costs provided the savings from cheap labour exceeded the extra transport costs incurred in marketing the finished product.

7. The effect of agglomeration:

Agglomeration means the clustering of industrial plants to achieve the type of economies which can be obtained through the reduction of inter-factory transport costs, greater possibilities of specialization, the utilization of larger machine units, the establishment of a pool of skilled labour and managerial expertise, and the development of localized research and marketing knowledge. Economists describe these savings in total production costs as external economies of scale or agglomeration.

Weber regarded agglomeration, like labour supply, as a factor which may divert a

factory from the site of cheapest transport costs. Imagine five factories producing electronic equipment . (The figure above) Each factory occupies the site of cheapest


transport costs in its own locational triangle. Assume that a factory can save $5 per tonne of output if it locates near to two others. However, to benefit from this agglomeration, no one factory must incur additional transport costs of more than $5. In the figure, critical isodapanes of $5 are drawn around each factory. The areas where just two critical isodapanes overlap, shown by light shading, are not favourable for agglomeration because at least three factories must agglomerate for any reduction in production costs to be made. Where three critical isodapanes overlap, as shown by heavy shading, additional transport costs are more than offset by the gains of agglomeration, and it would be worthwhile for factories A, B and C to move near to one another. But of course, and this is not emphasized in Weber's analysis, it is no use one firm moving to the heavily shaded area on its own - the boards of all three firms must meet and make a decision to move at the same time.

8. A case study of the sugar refining in Australia:

The first attempts to grow sugar cane in Australia seem to have occurred in the early 1820's in the Hastings Rivaer area of New South Wales. However, it was not until 1862 that sugar cane was produced successfully from a plantation near Brisbane, and this event was followed by a period of rapid expansion of the sugar industry. Cultivation spread rapidly along the Queensland coast and into northern New south Wales with the result that sugar cane growing is now found in a 2100 km belt extending from Grafton to Mossman. Production occurs in seven main areas with 95% of the output coming from Queensland. The figure below shows the location of these districts. The average farm is 45 ha, and the cane harvesting season begins in June and ends in December: the period when sugar content is at its peak.


The first stage in the 'industrial processing of the raw sugar is that of milling: the processes involved are briefly illustrated in the following figure.

Questions: 1. What is the material index of sugar cane milling? 2. Based upon the assumptions of Weber, what predictions can be made about the

location of sugar mills (of which there are 33) in Australia? The figure below shows the actual distribution of the mills, and this strongly confirms

our expectation: every mill is located in the midst of its area of cane supply. This close relationship is accentuated by the facts that the cane must be processed rapidly before fermentation can take place, and that the fuel for the processing is supplied by the bagasse (cane fibre).

The majority of the raw sugar is exported. In

1977 this amounted to something over 75% of the total production, much under long-term contracts, the remainder on the free world market. The main customers for raw sugar are Canada, China, Japan, Malaysia, New Zealand, Singapore, South Korea and the USA. The residue is refined within Australia into a variety of different forms ranging from the common white refined sugar to cube sugar, castor sugar, brown sugar and various liquid varieties. Most of the output is sold directly to factories to be used in the manufacture of ice cream, canned fruits, soft drinks, jams and confectionery.


Let us again apply the concepts of Weber to the refining stage of the industry to see if the model provides an insight into the spatial pattern of sugar refining.

One tonne of raw sugar produces something slightly in excess of one tonne after the

refining and packaging processes. This increase in weight is largely the result of the weight of the container, be it drum, glass container or paper packet. Thus, the material index of sugar refining is larger than 1 which suggests that we could expect the industry to be market-oriented, with the major Australian cities with their industries and population forming the major points of consumption. Australia has six refineries.

The following 2 tables show the population pattern and the actual refining pattern .

The correlation between the two tables is quite close. The inclusion of Bundabery in the list of refineries is the only real surprise. The existence of a refinery at Bundabery may reflect several influences: firstly that with a material index which is very close to 1. It is quite understandable that the factory should possess considerable flexibility of choice of location. However a more probable explanation lies elsewhere. The Millaquin refinery is owned by the Millaquin Sugar Company, and is the only independent refinery in the country. The other five plants, plus many of the mills, are under the control of the Colonial Sugar Refining Company Limited (CSR). Whereas the maximizing of profit may be a major consideration for CSR, it may be less important to the family-owned Millaquin Sugar Company. Nevertheless, in spite of this single and fairly insignificant exception, the Weberian model provides a sound basic framework for understanding the spatial pattern of sugar refining in Australia.

Cities Population Refinery Output in 1978

(‘000 tonnes) Sydney 3115200 Pyrmont 282

Melbourne 2694100 Yarraville 237 Brisbane 995100 New Farm 93 Adelaide 930500 Glanville 68

Perth 894000 Cottesloe 48 The Actual Sugar Refining Pattern in Australia

9. Weaknesses and merits: i. Weakness:

Weber is most heavily criticized for the unreality of some of his basic assumptions. Much criticism has been levelled at his treatment of transport costs. To be fair, however, many of the criticisms have only arisen since the technical and economic


changes in modern transportation have invalidated many of Weber's original assumptions. a. Stepping of Freight Rates:

Weber assumed that transport costs increase proportionately with distance and weight carried. This premise of the Weber model has been most severely attacked as being unrealistic. What occurs is that freight rates tend to be 'stepped' rather than increasing progressively with distance. Later workers, such as E.M. Hoover, have shown that freight rates are not directly proportional to distance, but tend to taper off with increasing distance. In other words, transport costs increase at a decreasing rate or the marginal (i.e. extra or additional) cost of transport decreases with increasing distance. Hoover recognized that transport costs usually increase through a series of steps. In many countries, transport rates for a particular mode of transport - rail, road, or water - are divided into a number of zones, the cost of transport tending to decrease with increasing length of haul. In other words, whereas it would cost, say $20 to transport a load of goods 10 km, it might cost only $30, and not $40, to transport the same load of goods 20 km.

The cost of transport consists of two parts: the cost of loading the goods (terminal charges), and the cost of moving the goods (haulage costs). Terminal charges and haulage costs are different for rail, road, and water transport. (The figure above). Water transport has high terminal charges but low haulage costs and is best suited


to long hauls. Road transport has low terminal charges but high haulage costs and is best suited to short hauls.

b. Variations in the Transport Type Used: Transport costs are not the same tonne-for tonne on finished products as they are on raw materials, but vary between sea, rail and road carries, depending on the distances involved. The cost of transport between two points also differs according to the type of transport used.

c. Reduction in the Importance of Transport Costs: Although Weber later made allowances for differing labour costs and agglomeration tendencies, his model is essentially dominated by transport costs, which are totally unrealistic. Transport costs: a cornerstone of the Weber model - make up a relatively small part of the total costs of production for the modern factory. Today, modern carriers can actually move bulkier raw materials at lower costs per unit of mass for a given distance than for finished products. Similarly, new freight rates have been developed for finished products now transported prepacked into steel containers at special rates. Hence, a model whose central focus is transport cost minimization would appear less appropriate today than it was a century ago - especially for 'light' industries for which transport costs account for only a very small proportion of total costs.

d. Weber's Concept of an Isotropic Surface lacks Credibility: In the real world, surfaces inevitably show variations in one or more aspects of their character. One major development which Weber did not foresee was the entry of government as a major economic force, thereby destroying the idea of a surface possessing economic and political uniformity.

e. Importance of Other Qualities of Raw Materials: There is no doubt of the validity of Weber's idea that raw materials can be either ubiquitous or localized and gross or pure. Hoover recognized that in addition to weight changes experienced during processing, there are certain other qualities which may be of equal or greater importance. Hoover's ideas are summarized in the following table.


Factor Location Example Bulk loss Raw material Sugar milling Bulk gain Market Glass bottle manufacture Fragility loss Raw material Packing goods for shipment Fragility gain Market Camera manufacture Hazard loss Raw material Micro-film recording Hazard gain Market Explosives manufacturing Perishability loss Raw material Palm oil refining Perishability gain Market Newspaper printing

Effect of raw materials and products on industrial location

f. Market is not a fixed Point: Weber saw the market as a fixed point on the isotropic surface. However, many firms nowadays attempt to diversify their markets as a measure to increase sales and to provide some degree of economic security.

g. Perfect Competition does not exist: Weber assumed the unrealistic framework of perfect competition. It is now very difficult to find places where perfect competition operates. The present century has witnessed the increasing development of the multi-product, often multi-national corporation whose aim is to eliminate all competitors as far as possible. Some of these corporations have secured an almost complete monopoly in certain fields of manufacturing. Perfect competition assumes that demand is constant spatially. With increased transport costs from the plant, demand must logically decline away from the plant as transport costs push up the price of the product. This assumes, of course, that it is the purchaser who pays the cost of transport incurred. Thus, demand decreases as distance from the plant increases. Good produced by manufactures are not exactly the same, which is one of the conditions of perfect competition.

h. A Static Model: The model is a static one taking no account of spatial changes in the supply of raw materials or demand of markets.

i. Nature of Industries: Industries today are not merely processing industries. The finished products of one industry may form the raw materials of another.


j. Mobile Nature of Labour:

Labour is not fixed in location, but is mobile.

k. Economic Man: Weber assumed that entrepreneurs are rational economic man whose basic aim is to maximize profits through the minimization of the total costs of production. Other workers in this field have demonstrated that this is often not the case.

ii. Merits: Despite these criticisms, Weber's contribution to the theory of industrial location

has been enormous. a. Weber is often said to be the founder of modern industrial location theory and has

had a tremendous influence on other workers in this field. b. The Weber model has provided useful insights into the manner in which location

is determined and has drawn attention to the importance of transport costs as a factor in location.

c. He makes explicit the distinction between ubiquitous and localized raw materials

and also distinguishes usefully between the various orientations of different industries.

d. He has provided a useful conceptual instrument for understanding the broad

locational patterns of industries. With modification, the 'least-cost' assumption of the Weber model is still appropriate, but at a different level of geographic scale from that usually envisaged. At the global scale, large Multi-national Corporation seek cheap locations, for example in Taiwan or Hong Kong, could be readily interpreted through Weber's idea of the critical isodapane.

B. Factors Influencing the Location of Industries: 1. Introduction:

Many factors come into play in determining the best location for an industry. Industries are developed in response to human needs, converting certain raw materials into manufactured goods of greater utility.


When an industrialist sets out to find a suitable location for his factory, he has to assess the various factors which favour a site and set them against the disadvantages. No single factor alone decides the location and growth of an industry. It is never an easy task to find an ideal site, but it is possible to find locations where advantages outweigh disadvantages. the main criterion is cost and the best site gives the greatest cost advantage or the least cost disadvantages.

2. Raw materials:

Raw materials are fundamental to the initiation and sustenance of any industry. Traditionally, the location of the materials required by the processing plants has been one of the most important influences upon factory location. Many industrialists must look to the farms, mines, forests and seas for the supply of many raw materials. These raw materials occur naturally and in a form which requires some modification before man can make full use of them. On the other hand, the products of some industries may constitute raw materials for others. For example, textiles are the raw materials for garment manufacture and pre-manufacture components are the raw materials of assembly industries, like automobiles or electrical equipment. If the appropriate raw materials can be secured close at hand, it will definitely be an advantage as much transport cost can be saved.

i. Characteristics of Raw materials:

a. Amount of weight loss during processing: Raw materials that decrease in either weight or volume after being processed

result in industrial locations which are raw material-oriented. It is clearly most uneconomic to transport large quantities of raw material which will become waste as a result of the manufacturing process.


The greater the loss of bulk, the greater the tendency for the factory to be located at the raw material source. For example, for the forest industry, logs are bulky and awkward to transport and undergo much loss of weight when processed. Some timber, for example, makes up less than 40% of the wood in a log, the rest being waste materials. Thus, most pulp mills and saw mills are located in the forest regions. For mineral industries, minerals are also heavy and bulky commodities, especially when the metal content of the ore is low. To transport the ore would entail enormous transport costs so it is often concentrated and sometimes smelted in the area of production, and then exported in the forms of concentrates, ingots or refined metals, such as gold smelting - one tonne of raw material produces a few grams of metal.

b. Degree of Perishability of the raw materials: Raw material which possess a high degree of fragility or perishability exert a

strong influence of the location of manufacturing plants, for example, grapes for wine-making, milk for butter and cheese manufacture, fruit and vegetables for canning, freezing or dehydrating. These materials deteriorate very rapidly. As a result, the processing plants are found nearby within the area of agricultural production.

c. Value of the raw material per unit of weight: Raw materials of low value cannot stand heavy transportation charges whereas

products of low weight and high value are much better able to do so. Examples of low value raw material are brick clay, metal ores.

d. Availability of substitute materials: For example, in steel making, either pig iron or scrap iron can form the main

charge into the open-hearth furnace. e. Number of materials involved and their relative importance: For example, iron and steel industry uses several important materials including

coke, iron ore and limestone. f. Means of transport and structure of freight rate: In the past, many industries were raw material-oriented, even those with light

weight raw materials such as textiles because roads and railways were less well-developed and means of transport were slow and more primitive. Thus the


'friction of distance' was considerable. A transportation distance of 20 to 30 km was often uneconomic.

g. Source of supply: Industries which rely for their raw materials on other industries are often located

near companies which make their raw materials. For example, heavy engineering works are close to their steel supplies; petro-chemical industries are close to the refineries which provide their raw materials.

ii. Decreasing importance of raw materials:

The strength of the attraction of raw materials for some industries appears to be decreasing. This can be explained by a number of factors.

a. Improvement in Transport Technology: The transportation revolution of the 20th century, in particular the advent of bulk

carriers, improvement in mechanical handling and the development of extensive transport systems, has lessened the cost of moving bulky materials and enabled the efficient movement of materials, and so the pull of raw materials has been reduced in many industries.

Some industries have already been relatively independent of raw materials

supplies. For instance, the cotton textile industry uses light-weight, non-perishable goods which can be easily transported.

b. Advances in industrial techniques: Improved manufacturing processes have decreased the pull of raw materials. Simple on-site processing has led to weight-reduction or enrichment of the raw

materials (i.e. beneficiation of the ore). Improved technology has cut down wastage in processing and so reduced the amount of raw materials which industries need to use.

c. Others: It includes use of substitute raw materials, practice of recycling ore, and greater

attractiveness of the market.

The trend during the last 50 years has been a locational shift away from sources of raw materials towards markets as manufacturing has shifted its emphasis from


processing to fabricating. The latter has its main costs in labour and marketing. Raw materials have declined somewhat in importance as a locational factor of industry.

In fact, many modern industries are so varied and require such a wide range of

raw materials that it is simply not possible to have all these close at hand. The location is therefore dependent on transport which can assemble all the required goods in one place. The cost of transporting the most bulky or the heaviest of the raw materials is usually decisive.

3. Energy:

i. Types of Energy Supply: a. Water:

The Industrial Revolution of the 18th and 19th century, Europe saw the transformation of manufacturing from domestic or cottage system, where goods were made in the home, to the factory system, where powered machines grouped under one roof, enabled a massive expansion of output. This revolution was based upon the application of mechanical energy to the manufacturing process. Initially, this energy was supplied by fast-flowing streams whose energy was harnessed by water wheels. This form of energy was immobile and industries were strongly power-oriented.

b. Coal: With the introduction of stream power and the development of large-scale industries, large quantities of coal were required for almost every industrial activity. In the early days, the fuel efficiency of coal was poor. For instance, as much as 12 tonnes of coal were required to smelt 1 tonne of iron. Under such circumstances, industry became increasingly concentrated in the coalfield areas. The bulkiness of coal required by those early inefficient steam engines plus the unsatisfactory nature of the nature of the existing communications system handicapped any attempts by entrepreneurs to break away from a coalfield location. These events transformed the life and landscape of north-west Europe and north-east USA and produced the pattern of urban-industrial agglomerations which persists to the present day. However, the pull of the coalfields has gradually diminished during the past century for a number of reasons: - The developments in industrial techniques have reduced the amount of coal

consumed by industries. For instance, technological advances have substantially reduced the proportion of coal needed in making steel; the iron industry which


used 8 tonnes of coal per tonne of iron in 1760, now uses less than 1 tonne of coal per tonne of iron.

- The increasing use of electricity has freed industry of the domination of fuel

supply location since electrical energy can be easily transported over great distance from the generating stations to assure widely dispersed industries of a stable power supply, thus facilitating the growth of manufacturing away from the older coalfield regions.

- Development in transmission technology and the ability to use a whole range of

primary energy sources, including coal, water, oil, natural gas, atomic fuel, tidal power and even the sun and the wind, have provided industrialists with a considerable degree of freedom of choice in locational decision-making.

- The improvement in transport technology has facilitated movement of bulky

fuels.

c. Electricity: Electricity can be distributed to places hundreds of km from its source. The

importance of electricity as a dominant locational factor is restricted to those industries which require massive input of low-cost power, generally of hydro-electricity. Electrolytic smelting, particularly of aluminum, is the most common industry of this type. Thus, major smelter tends to be located near hydro-electricity stations.

d. Petroleum and Natural Gas:

Petroleum and natural gas are even less decisive as factors of industrial location. Oil and gas can be conveniently transported by pipelines and tankers to any industrial site so that there are few major industrial districts on oilfields, except where other factors are of importance. Thus, despite the rapid rise in the use of petroleum and petroleum products as fuel, their impact on industrial location has been small.

ii. New Trends of Industrial Location:

In most countries, a drift away from coalfields is well-established to that the coalfield areas suffer a relative decline. In more recent years, new forms of power such as natural gas, petroleum and electricity (most of which is derived from coal or petroleum originally) have played an increasing role in the location and development


of modern industries. The real influence of these new forms of energy has been the freeing of industries from a coalfield location. The new fuels have led to a greater dispersion of possible industrial sites and have allowed other locational factors to have greater significance.

In spite of the greater locational freedom resulting from the discovery of new

forms of power, there does not appear to have been a widespread dispersion of industry, especially in the long-established industrial nations. Most industries remain in the old coalfield locations. In fact, the present world pattern of industrial regions, especially those with many heavy industries, is very closely related to the coalfields. the failure of industries to move immediately from one area to another when locational advantages and disadvantages change is called industrial inertia. it is due to the fact that old industrial centres often possess certain advantages.

a. Concentration of Capital: Investment ion factories, equipment and other facilities were concentrated in

coalfield areas and could not be immediately written off. This concentration of investment discouraged industrial firms from moving to new locations. The cost of building and equipping a factory is extremely high. Industrial establishments do not readily undertake a complete move with the new building and tooling-up costs that this entails. This means that existing sites continue to be occupied long after their original advantages have gone and a move is only made when the disadvantages thoroughly outweigh the advantages.

b. Transport Network (Infrastructure): During a period of over a hundred years of industrial development, the transport

networks of the coalfields had been built up to serve industrial concerns. These transport systems remained an advantage. To move to new sites might have entailed setting up in less accessible regions.

c. Markets (Industrial Linkages): Many companies in coalfield areas had their major customers close at hand. Thus,

component manufactures relied on the market provided by makers of the finished products. For example, in automobile manufacture, and producers of basic commodities such as steel relied on local engineering companies to consume their output. By removing to a new site, some such companies would have been moving from their markets.


d. Labour: The densely populated industrial districts of the coalfields supplied a constant and

skilled labour force. The tradition of industrial employment was strong and workers were easily trained. If companies had moved to alternative sites, they might have experienced labour shortages or have had greater difficulty in obtaining skilled workers.

e. Reputation: The reputation of some firms is strongly associated with their particular locations.

Departure from these locations might undermine the public image of such firms and reduce the demand for their products.

4. Labour:

Labour varies spatially in quality and quantity. It also varies in cost, in its ability and in its reputation for militancy. Characteristic of labour which form the locational influence: 1. The cost of Labour (Wage Levels):

Labour intensive industries which use a large number of workers for each unit of production are strongly tied to sources of labour because labour costs form a very high proportion of total costs. For these industries, labour costs may exert a strong locational influence if labour costs vary considerably from place to place. The availability of a cheap, suitable labour supply is a strong attraction to these industries.

Number employed Labour Intensity Ratio = ------------------------------------------------ Value of Shipments from the Factory Capital intensive industries which substitute machines for labour and thus employ

few workers are less tied to sources of labour, but they must be able to obtain the men they require.

The advantage of a labour force with comparatively low wages is clearly

demonstrated by the success of Hong Kong (50’s-70’s), Singapore (60’s-70’s), South Korea (80’s) and Taiwan (80’s) in the industrial field.

2. The skills of labour:

Different industries require different types of labour.


a. Highly-skilled Labour: The increasingly complex plant and equipment in today's factories require large

number of highly trained operators. Industries like watch-making, diamond cutting, electronics, electrical engineering and aircraft manufacturing demand highly-skilled craftsmen. Apart from these specialized industries, almost all industries need a certain proportion of skilled designers, engineers as well as research workers. Such highly-skilled workers are relatively scarce and rather localized in their occurrence, eg. in advanced countries where facilities for their professional training are available or in some places where there is a tradition of industrial skills.

A ready supply of skilled machinists will save a firm the costs of their training and

ensure the most efficient use of its equipment. b. Semi-skilled Labour: In most industries, semi-skilled workers provide a fair proportion of the labour

force and an area with no semi-skilled workers is not likely to prove an ideal location for industry.

There are many industries which require semi-skilled people, such as electrical,

metallurgical, shipbuilding, automobile, chemicals, certain branches of the textile industries.

c. Unskilled Labour: The bulk of the labour force in most industries is made up of the unskilled

labourers who do mechanical operations, eg. putting in screws, packaging thing, adjusting fixtures.

Women are often preferred because they are more patient; and they can be paid

less usually despite of legislation in many countries. A large untrained labour force can be found in most densely-populated countries, especially in and around the larger towns. Women workers are found in the large urban centres where their husbands may do other work.

Where there is a shortage of unskilled labour as there often is in the developed

countries where everyone has a chance to get a good education and fewer people are willing to do boring, lowly paid work, the problem is sometimes overcome by automation, i.e. by using many labour-saving devices.


3. Labour Mobility:

Highly-skilled workers are much more mobile than the ordinary factory hands and are prepared to move to a new area in order to get a good job or better conditions of employment.

Semi-skilled workers are fairly mobile, especially in countries where the number

of employment opportunities for such workers is limited. For example, many Turks, Yugoslavs, Italians and Greeks have moved to Germany to seek better pay and conditions.

Unskilled workers are the least mobile because they can usually obtain a suitable

job in their own area and also because they have no special skill to offer.

4. Reputation of the local work force: If a particular place has a bad reputation in the field of labour relations, firms may

be repelled for this reason. The good examples are South Korea (90’s) and UK (80’s). Trade unions have an important influence on the locational choice of industries. if

a labour force is highly urbanized and the unions are militant, demanding constant pay rises and increases in fringe benefits, or frequently striking, an industry may be deterred from locating in the area.

A stable work force means that the time lost through absenteeism and labour

turnover will be minimized, and hence labour costs will be reduced.

Labour is declining in importance as an industrial locational factors. As machines and robots do more and more work within factories, there is less need for large, unskilled workforce. This has led to a relative decline in the locational influence of labour upon manufacturing as a whole. One the other hand, the availability of a suitable labour supply is still a strong attraction to industry for modern plants require hundreds or even thousands of workers with particular skills.

5. Transport:

Modern industries require constant supplies of raw materials, often in great bulk from various sources, and finished goods have to be despatched to many destinations. thus, the availability of a good network of transport facilities is another deciding factor in the location of industries as a certain proportion of total costs is made up of transport costs.


Effects of transport on factory location:

a. Transport costs over increasing distance: Short hauls are proportionally

more expensive than long-distance carriage. The effect is to reduce the costs of moving goods over long distances.

b. Transport costs are not the same for

all goods: Fragile goods, perishable

foodstuffs and luxury goods of high value are costly to transport because of the higher insurance coverage, the need for specialized trucks or wagons, eg. refrigerator trucks, and the possibility of breakage, spoilage or deterioration in transit. A market location is thus a strong attraction to these industries.

The cost of transporting raw materials is usually more important than the

distribution costs of the final product because the finished product is more valuable and can stand higher transport costs. For instance, where large quantities of steel are required for heavy engineering, the industry will be located near products, eg. machinery, will still be heavy, but its greater value will mean that transport costs represent only a small proportion of its total costs.

An industry which requires only a small quantity of easily and cheaply transported

goods, eg. assembly of electrical apparatus, is free to locate near labour supplies or major markets because transport costs for raw materials are relatively low.

c. Structure of Freight Rates:

Simple freight rates which increase proportionally with distance are rare. The normal arrangement is for the freight rates to be arranged in blocks. This produces tapering/ stepped freight rates.


The effect of such tapering freight rates is to reduce the impact of distance, especially where large distances are involved. The costs of transporting materials over very long distances will not necessarily very much above those paid by his competitor who is nearer the source of supply.

d. Efficiency of the means of transport:

Where communications are well-developed, transport costs will be relatively low and form only a very small fraction of the total production costs.

In the underdeveloped parts of the world where means of communication are less

well-developed, freight charges, especially for bulky raw materials, can take up a good proportion of the cost of the final manufactured item. Under such circumstances, transport becomes a deciding factor in the success or failure of an enterprise.

e. Improvements in the transport network:

Improvements in the transport network may bring down the freight charges and make a place more conducive for industrial development. For example, the opening of the Erie Canal in 1825 reduced the freight charge between Buffalo and New York from US$100 a tonne to only US$5 a tonne and the freight time was cut from 20 days to less than days.

f. Modes of transport used:

Certain methods of transport are better suited to carrying certain goods. The following figure illustrates the difference among the major means of transport.

i. Water Transport: Water transport is

by way of lakes, rivers, canals as well as sea. It is the cheapest form of transport, especially for bulky goods, such as coal, iron ore, timber, grains, heavy machinery and equipment, over long distances, but expensive on short hauls due to the high terminal costs.


Many rivers and ports have contributed significantly to the industrial and economic development of their respective regions and some of the ports have become the largest industrial centres of the world. However, water transport is slow though it is the cheapest.

ii. Rail Transport: It is cheapest for intermediate distances. It is more rapid than

water transport. Rail links are important, especially for bulky items. iii. Road Transport: It is cheapest for short hauls, and they’re after rises steeply. The

speed and efficiency of road transport, especially the advantage of door-to-door transport, are making it more and more important. this has allowed the decentralization of many industries.

g. Use of containers in transport:

The rapidly increasing use of containers which can be carried equally well by ships, lorries or railways makes transport from trans-shipment point (where there is a change from one type of transport to another, eg. ports) to inland centres more convenient, quicker and cheaper. This may have the effect of halting the decline of inland centres or may make them more competitive.

6. Market:

Markets are where the finished products will finally go. Large urban areas having large concentrations of people with high living standards and high purchasing power constitute markets for the consumption of manufactured goods. However, markets are not merely a question of numbers, but also of the earning capacity of the people and of their willingness to spend. For instance, in many parts of Monsoon Asia, the population does not have a high purchasing power and only industries which produce cheap or highly-essential goods can find an adequate market in such areas. Economic production is based on demand and the ability to pay for the goods.

The influence of markets on deciding where to locate an industry has become

increasing important for a number of reasons: a. By locating in large urban areas which often coincide with large industrial

conurbation, transfer charges for both consumer and producer goods can be reduced because consumers of these manufactured goods are found nearly.

b. The large city possesses the type of infrastructure required by manufacturing, eg.

roads, railways, organizations for handling goods on a large scale.


c. The large city provides a sizable and varied labour force. There is a ready supply of

labour. d. The increased use of electricity as a power source has freed industries from points of

energy production and promoted an attachment to the market. e. The higher level of mechanization of industrial processes, combined with the

increased mobility of labour has broken the grip previously exercised by localized pools of skilled labour.

f. Improved transportation of raw materials in various forms of bulk carriers, along with

the greater utilization of substitutes have resulted in: - more expensive transport freight rates in transporting a packaged and finished

product than a comparable weight or volume of raw materials, and - a decline of the raw material source as the optimum point of industrial production.

g. A number of technological developments have enabled less material to be processed

to make a unit weight of product. The costs involved in transporting raw materials account for a smaller proportion of total costs.

These factors are working together to increase the attraction of a market location. Some industries are more likely to be located near markets than others. there are a

number of considerations which will influence whether an industry is likely to favour a market location. They are as follows:

a. Perishable goods: Some foodstuffs industries must be market-oriented. These are the

ones which produce cooked food, eg. bread, cakes, cooked meat; or deal with other goods which are not normally canned or frozen, eg. egg grading, dairy products. Such food processing will have to be done near the market to ensure ready disposal of the fresh products.

b. Fragile products: Goods that are easily broken in transit will be at a great

disadvantage if they are manufactured well away form the consumers. Proximity to markets is the surest way of reducing loss through damage.


Goods like bottled drinks, glassware, porcelain, are thus made relatively near their markets unless they are of high quality and can stand high transport costs.

c. Goods that are bulky and have low value: Bulky goods, because they occupy more

freight space, entail high transport costs, and if they are also cheap, high transport costs will cut profits. Industries such as brick-making, tile-making, and the manufacture of cheap furniture will be able to make better profits if they are sited near the market.

d. Labour-intensive industries: All areas of dense population which constitute markets

are also potential sources of labour. Labour-intensive industries, especially such light industries as electrical goods, wearing apparel, toy-making and cosmetics, will be in a better position to recruit cheap and abundant labour if they are sited near urban centres.

e. Industries that involve much personal contact with consumers: W here personal

contact between the maker and buyer is very essential, the industries have to be close to the market to be able to build up contacts and promote the goods. Industries which produce goods to individual customers' requirements fall into this category. they include packaging industries which produce special boxes and printed material for specific goods; tailor-made clothing and many other fashion industries such as jewellery, shoes, bags and hats, which have to keep in touch with the requirements of large shops; high quality paper making, printing and publishing.

f. Industries with small raw materials: Almost any industry which requires only small

quantities of raw materials, which can be easily and cheaply transported, and is therefore not tied to special areas, may be drawn to market locations, eg. light engineering, electrical goods, plastics.

g. Specialized goods: Some industries are market-oriented, not in the sense of being near

large concentrations of consumers, but by being near other industries which require their goods. For example, automobile component manufacturers located their factories in the Mid-West of USA near the main automobile-making centres; manufacturers of textile machinery are found in traditional textile areas; marine engineering is found in seaboard locations; agricultural machinery is often made in market towns in predominantly rural districts.


In the cases above, transport costs are greatly reduced if plants are established in the

market areas because expensive handling of finished articles is minimized. Great advantages and transport savings will be achieved by sitting close to the main market.

7. Technology:

a. Importance of Technology: Technology is fundamental to the production process. A new method, technique

or machine can alter the production possibilities open to a manufacturer. Changes may result from a new source of power or raw material being brought into use or from changes in the actual processing. These changes will affect the choice of factor mix. As a result, technology may substantially alter the cost effectiveness of given locational choice.

New technical knowledge does not originate in all regions at the same rate. As a

factor, technology is not perfectly mobile. Its availability at different locations depends on the existing lines of movement and interaction. There are places where it is more available than others. technical knowledge may be considered a spatially localized factor input for most economic activities. Its localization tends to be oriented towards the larger and more successfully existing concentrations of production and the foci of the network of communications. In view of this, its capacity to draw development to its location is especially powerful when other factor inputs such as labour and capital tend to be relatively mobile.

For those technology-based industries like electronics, the relative importance of

'new ideas' as an input is likely to be so great as to encourage a location close to the main foci of technical knowledge in this field even if the cost of other factor inputs at that point is high.

Virtually all technological progress comes from research. Industrial research aims

at more efficient production. The electronic industry and a wide range of chemical industries are in fact new industries created by the success of industrial research teams. Most modern industries and some large firms maintain their own research laboratories.

Research and innovation are vital to the sustained growth of a mature industrial

region. For instance, New England had faced serious decline in its old staple industries especially the textile industry because of competition from more recent


industrialized areas. It begins to turn to advanced engineering industry in which New England keeps ahead by labour skill and continued technological advances.

Concentration of research activities near research institutes will help to attract

modern research-based industries, eg. the great concentration of electronic product and missile industries in the USA are close to the major centres of research.

b. An example - The iron and steel industry:

The iron and steel industry is an excellent example of an industry where changing technology has had a strong effect on location. Iron has been made for many centuries, and during the long history of the industry, two main trends have been apparent:

a. The techniques of smelting, refining, forging and working the iron have been

greatly improved and increased in efficiency. b. In response to changing techniques, different locational factors have become

important at different times. Changing in the technology used by an industry may result from a new external

source of power or raw material being brought into use or from changes in the actual processing. a. Changes in Fuel Sources:

i. Dispersed Small-scale production: Up to the early 18th century, charcoal was used as a fuel in the blast furnaces

to make iron. Scattered ironworks were situated wherever supplies of charcoal and iron ore were available close to each other. Because of the difficulties of the iron-making process and because the iron could not easily be transported to distant markets by the primitive roads of the time, the scale of operation was small. Only enough iron was made to supply local demand. Since forests were widespread and sufficient deposits of iron ore for such small ironworks were available in a large number of places, this led to dispersed small-scale production. iron was made in widely dispersed small units.

ii. Movement to the coalfields: In 1790, cokes were successfully used in iron smelting and the attraction of the

coalfields increased. By the late 18th and 19th centuries, the coalfields were already the major iron-making location which operated strongly in the late 18th and 19th centuries:


- Coalfield regions often had a tradition of iron working. As a result, such coalfields had many advantages in respect of labour and technology.

- In many regions where the earliest developments took place, iron ores were

found interbedded with the coal seams as black-hand ores, and could be easily extracted at the same time as the coal from the same mine. Thus, the ideal location for smelting activities was obviously at or near the pit-head.

- With the existing techniques, eight times as much coal as iron ore was

needed to produce a given quantity of iron. Therefore, it was much cheaper to transport ore to coalfields than to take coal to orefields.

iii. Tide-water location:

As sources of raw materials have been exhausted in those areas where coal and iron ore were once hound in close proximity, it has become necessary for at least one of the main raw materials to be transported to the producing area. The development of modern transport makes it no more difficult. Because of need to import one or both raw materials, a tide-water location which permits the use of bulk carries is thus a strong attraction.

b. Changes in Technique:

The techniques of making iron and steel have continued to change right up to the present day. These changes centre upon two aspects of production: the improvement of fuel use, and the making of steel, as opposed to pig iron.

i. Increased Efficiency in the Use of Fuel:

- With the introduction of 'hot blast' in 1829, i.e. by blowing hot air through the furnace, it was possible to cut coal consumption by as much as a half.

- The merging of iron smelting and steel making, formerly two distinct

industries, into a single process in the integrated and continuous mills led to further reductions in fuel input, since reheating was no longer required.

- In the last decade and a half, further remarkable fuel economies have been

achieved by the introduction into steel making of the oxygen-using process, i.e. by blowing high-pressure oxygen onto the surface of the converter charge and fuel requirements have once again been cut by a third to a half.


- With all these developments continuing, the heat input necessary to produce one tonne of iron had fallen as follows:

Heat Input (tonnes of coal) 1850s 8.0 early 1900s 3.5 currently 0.8 - The economies achieved in the use of fuel have reduced the pull to the

coalfields.

ii. Growth of the steel industry: - Pig iron has a high carbon content and to turn pig iron into steel which is a

much more useful metal, it is necessary to reduce the carbon content. - Before the middle of the 19th century, the making of steel was a slow,

small-scale and therefore very costly business. Steel was produced in small quantities by hammering or by 'puddling'.

- The first breakthrough came with the Bessemer Converter of 1856. By blowing a blast of air through the molten pig iron, the carbon content of the pig iron is reduced from about 4% to less than 0.3% and mild steel (type of steel most widely used) is produced. The Bessemer process yielded cheap steel, but only from non-phosphoric iron ores.

- In the USA in the 1850's, the newly-tapped Lake Superior ores were

non-phosphoric iron ores, and the industry based on these iron ore mushroomed with the demand for its new product. In Great Britain, the only important non-phosphoric iron ores were in Cumberland. Although their presence was enough to draw a few units of the industry to north-western England, the majority of steel-makers had to use imported ores, such as those from Spain.

- The Open Hearth Furnace appeared in 1869. Hot gas and air were forced

across the surface of the molten iron and the impurities were oxidized and removed. Scrap steel and other alloying materials can be added to produce steel of desired qualities. The process made a better quality of steel, but still from non-phosphoric iron ores only.


- The Electric Furnace was introduced in 1899. It can function entirely on scrap. It is used mainly for the production of high grade alloy steels.

- The most recent development in the making of steel was the introduction of

the Basic Oxygen Process which is the method now used to produce over half the world's steel. Pure oxygen is blown into the charge of molten iron to burn out the carbon. This method permits the use of scrap steel in the charge. It gives a better quality steel.

- The extensive use of scrap to replace pig iron in making steel has enable a

steel mill to locate in an area remote from either iron ore or blast furnace, eg. in the vicinity of a large city which is the main source of scrap steel. There is a market orientation in the location of the industry.

- Electricity has joined charcoal, coke and gas as fuel sources for the steel

industry (electric furnaces). This has further freed the industry from the tie of the coalfield location.

- After 1860, steel gradually increased in importance relative to iron. The scale

of production increased and the industry became integrated with all aspects of production being carried out by one firm in one plant. With time, production is concentrated in plants of increasing capacity called integrated iron and steel works. The optimum location of a modern, large, integrated iron and steel works now is one which:

1. is close to the main market for the finished products because of the high

cost of transporting finished products compared with that of the raw materials;

2. provides access to distant raw materials by large ocean-going vessels; and 3. has a large area of level land to permit an arrangement of the plant which

minimizes the distances which raw materials and partially manufactured products have to be moved on the plant.

As a conclusion, the iron and steel industry has been influenced by a whole

series of factors - fuel, ore supplies and market, and today, units of the industry can be found in places which represent all these influences.


c. A summary:

The influence of technological development on the development of industries can be summarized as follows: a. In some cases, technological advances have brought about increased

concentration of industrial activities. For instance, the development of power-driven machinery in textile industry had encouraged the geographical concentration of factories, instead of the more dispersed patterns of domestic systems.

b. In some cases, technological advances allow a wider choice of possible

locations. With the invention of the electric furnace, steel plants are no longer confined to the coalfields, but more widely dispersed since electricity can be generated by many types of energy resources and can be transmitted over great distances easily without much cost.

c. The development of substitute materials may affect industrial location. Scrap

steel and iron can now be fed into the Open Hearth Furnace and turned into steel. In the past, only molten pig iron can be used. This development has freed the steel plants from the iron smelters. Now, steel plants can be located nearer to the market which is also the source of the scrap metals.

d. Advances in the utilization and transportation of raw materials and power

resources can reduce the production costs. e. Improvements in transport technology have made more industries footloose. f. Machines gradually replace labour and factories become less bound by the

factor of labour availability.

8. Behavioural factor: The Role of the Entrepreneur: a. Selecting a site:

In seeking to explain the location of industry, geographers have tended to look at economic factors, in particular raw materials, power, labour, markets, and agglomeration, weighing up the effects of each in a given case.

Most of the theories of industrial location that we have studied deal with these

economic factors. They assume that the entrepreneur is all-knowing and behaves in a


rational and objective way. But this is not usually how decisions about where to locate industries are made.

Economic factors are important but so too are the whims and fancies of the

entrepreneur. This applies where the entrepreneur is an individual and where the entrepreneur is the board of a company. If an entrepreneur knew the expenditure and revenue for all sites in an area, he could select the site which would bring the biggest profits. But this is not usually possible.

Seldom does an entrepreneur have at his disposal enough information to find the

most profitable sites. Indeed, he may not wish to make as much money as possible. He is not a so-called economic man who acts in a rational and objective way. More likely than not, armed with incomplete information, he will either try to come to a rational decision about where to set up his business or he will simply establish a broad area in which it seems feasible to run his business and then select a site according to seemingly irrational criteria such as scenery or nearness to a golf course.

Under these circumstances, the site selected is unlikely to coincide with the site of

maximum profit. Nonetheless, the entrepreneur will be happy with his potential returns as he sees them. He is a so-called satisficer.

The figure above shows three different background against which decisions about

where to locate an industry are made: - The expenditure and revenue for all possible sites are known so the potential profits

at all sites can be mapped. The site selected is the one which offers the largest potential profit. It has been chosen by an entrepreneur acting in a rational and objective way with all the necessary information at his disposal. This kind of entrepreneur is called an economic man or optimizer.


- The information about potential profits is patchy. The entrepreneur, in choosing a site, was happy with a potential profit of $5000 and, armed with his incomplete information, has selected a site with that potential profit. He probably realizes that bigger profits could be obtained elsewhere but he is satisfied with the site he chooses. He is called a satisficer.

- The entrepreneur has simply established an area in which it seems feasible to locate

his industry. Within this area he assumed all sites were equally attractive in terms of profit and his selection of a site has been swayed by personal factors - nearness to a golf course for instance. He too is a satisficer.

b. Spatial perception and decision making: Mental Map

1. Behavioural and Objective Environments: - Human behaviour cannot be ignored in industrial location studies. Among the

personal factors which may influence industrialists' locational choices is their perception of a place - what they think it is like rather than what it actually is like. We may compare the world inside our heads with the real world: the former being termed the behavioural environment and the latter the objective environment.

- The way we perceive the world is important because it affects the way we behave.

The way we behave influences the objective environment (the real world). Therefore, the link between perception, behaviour and reality is quite strong. this is illustrated in the following figure. Information is obtained from reality which forms an image of that reality in our minds. We use the term 'mental map' to refer to our mental images of places. Mental maps make up the world inside our heads and are likely to influence our locational decisions.


2. Influences on our Mental maps: - Our images of places are influenced by the amount of information we obtain about

a place. The amount of information available depends on the following factors: i. the distance we live away from it. ii. the frequency of our visits to it. iii. the degree of exposure it gets in the media. iv. its size. v. our prejudice or emotion. vi. our motivation to known more about the place; and vii. social, economic and political constraints. - Apart from the amount of information we obtain about a place, our perception of

places are influenced by other factors, including age, education, socio-economic status, cultural background, aspiration, place of residence and ways in which we have acquired our information about that particular place.

- The various images people have of different places lead them to prefer some

places to other (space preferences). Subjective factors are always present in the locational decision-making process. Personal factors have greatest influence on the siting of industries which are 'footloose' or likely to be equally successful in a wide variety of locations. Such factors are also most likely to influence the location of small firms which are under the control of a single individual.

c. The Behavioural School:

Attempts have been made to clarify the role of the entrepreneur as a satisficer in industrial location by members of the so-called behavioural school. Allen Pred examined the factors which influence how an entrepreneur behaves in selecting a site. He recognized two key factors:

- the amount of information an entrepreneur has to hand (the perceived environment), and

- the ability of an entrepreneur has to use this information. He devised a 'behavioural matrix' (the figure below). The two axes of this matrix

measure perceived information and the ability to use information. Different parts of the matrix represent different behavioural patterns in entrepreneurs. these differences will influence the site selected to set up a firm. An 'able' entrepreneur with access to a lot of information is likely to locate his firm near the optimum economic location whereas a 'less able' entrepreneur with access to limited information stands a good chance of locating his firm near the margin of profitable production.


An improvement in entrepreneur skill may not only provide the potential to move

the decision-maker closer to the optimum location; it may also produce the potential for the spatial margins to profitability to be expanded. this is because entrepreneurial skill could have the effect of lowering costs, thus pushing spatial margins to profitability further away from the optimum location.

The forces which influence industrial location decisions are extremely complex.

The existence of strong economic forces, the variety of decision-makers, the different motives of the entrepreneurs, the significance of behavioural factors and the influence of past forces and decisions, all combine to complicate our attempts to understand the industrial scene.


9. Institutional factor: Government Influence

a. Introduction: Government policy exercises a major influence upon the development of

manufacturing. The type and degree of this influence varies immensely with different economies. On one hand is the planned economies of the communist states of Eastern Europe, the Soviet Union and China, on the other, the so-called free economies of many western European nations, Australia, USA, Hong Kong and others.

In the communist states, all manufacturing is under the direct control of the

government which plans all aspects of industrial development: types of industry, size of plant, location, production levels, prices and so on. However, in recent years, the governments of the non-communist world have been increasingly involved in the regulation of their economies. The age of 'laissez-faire' has passed. However, it is important to bear in mind that even under 'laissez-faire' conditions, government of played an important, though indirect role, in the development of manufacturing industry. Their influence was felt through the level of the infrastructure which they created: an infrastructure which is fundamental to the establishment of any form of economic enterprise.

b. The cycle of industrial development:

The Davisian life cycle about 'youth, maturity and old age' is employed to trace the development of a hypothetical region.

i. Infancy: In this stage, the region is given over mainly to primary industry on a domestic

scale. Hardly any industrial towns existed at this time, urban centres primarily performing a market function and only secondarily acting as processing centres. Indeed, much manufacturing actually took place in the countryside.

ii. Youth: The youth stage starts with the development of manufacturing in a factory system.

Such development can either initiated by an innovation transforming domestic industry or the discovery of a technique for converting localized raw materials which have weight-loss ratios for industries with a high material index. This initial industrialization is followed by a growing infrastructure - houses for workers, allied industries supplying or being supplied by the pioneer factory, canals, roads, railways, service trades and so on. The initial factory has produced wealth and


employment in the region far in excess of the wealth generated by the factory alone.

iii. Maturity: The arrival of the mature stage implies that the region has experienced large-scale

development of manufacturing industry and economic development over many decades, usually for well over a century. It has evolved a deep-rooted and highly complex system of industries and services, many of which are inter-related in a variety of important ways, and it depends for its survival on the outside sale of its manufactured products. In this stage, derelict building in inner cities, slum conditions and dated infrastructure are all found in mature industrial regions.

iv. Old: The old age stage starts when areas begin to exhibit the well-known features of the

'problem region'; growth is low, the industrial structure is not diversified, extractive industries like coal mining are relatively important, unemployment is relatively high, large numbers of people leave the region for other areas, the region exhibits decrepit by the seemingly impossibility of bringing back the prosperity which it once knew. The closure of a local coal mine or factory means that spending power in the local community is reduced and that service traders such as shopkeepers also suffer as a result.

v. Rejuvenation: If the cycle of industrial

erosion really is a cycle, youth should follow on from old age. This largely depends on the effort of the government (government intervention).


c. Rationale of Government Intervention i. Strategic Factors: Wars, or the prospects of war, have frequently led to increased involvement of

governments in manufacturing. This intervention may take the form of stimulation or control of vital 'war industries' such as iron and steel, heavy chemicals, shipbuilding, munitions and aircraft manufacture.

There may be the need to decentralize industrial development in order to

break down the very vulnerable industrial agglomerations. Decentralization of industries into what are regarded as 'safe area' has been a common practice.

For instance, the WWII saw the movement of Soviet industries to the east of

the Urals, the United States' air-craft industry into the continental interior, and the development of steel and shipbuilding industries at Whyalla in South Australia. The widespread distribution of industry in modern China also reflects strategic considerations.

ii. Economic Factors: The complexity of modern economic systems, which is partly the result of the

existence of a large number of individual entrepreneurs, has created the need for the controlling influence of some form of authority, if the systems are to function efficiently.

Free market forces cannot be relied upon to operate satisfactorily in industrial

location decisions because decision-makers in the real world do not have perfect knowledge about the best place to locate. In fact, the optimum locations are often not sought by industrialists.

If the country is to experience economic growth, it is important that spare

resources are as fully utilized as possible. Without government aid to senile regions, land, labour and capital would be wasted. Labour could move elsewhere, but land and capital are fixed spatially and would be wasted if some form of assistance were not provided.

Concentration of economic activity can produce diseconomies of scale. The

increase in air pollution, congestion, house prices, mental illness are just some of the increased costs society might have to bear if uncontrolled growth of metropolises continued. Regional policy of government can be seen, there fore, as


a two edged sword, controlling growth in certain areas and offering incentives for industry to go to others.

Some of the economic motives of government involvement can be

summarized as follows: - the need to promote overall economic growth through the development of

industry; - the need to promote the growth of a particular industry; - the need to diversify the economy; - the need to ensure regional economic balance; and - the need to ensure efficient utilization of the factors of production.

d. Indirect role Governments in the location of industries:

e. Effects of Government Intervention: i. Extending Spatial Margins: One way of thinking of government policy is to incorporate the idea of

government subsidies into the Smithian space-cost curve. Subsidies can be interpreted as attempts to make profitable those locations which industrialists might otherwise avoid on the grounds of unprofitability. In the figure below, the effect of government subsidies has been to reduce total costs in relation to total revenue in development area AB by pushing down the space-cost curve below the space-revenue curve. Thus, with the subsidies, AB becomes a profitable location whereas without them, it was beyond the spatial margins to profitability.


ii. The Regional Multiplier: The basic theme of the multiplier concept is that if a given amount of money is

injected into a regions, the income of that region increases, not by the value of the injection, but by some multiple of it. To illustrate the idea of the multiplier, two simple assumptions are made:

- The region is a closed system - it has no import or export. - Every person spends 50% of any addition to his or her income and saves the other

50%. (The proportion of an increment of income that is saved is called the marginal propensity to save [MPS] - in our example, the MPS is 0.5)

Suppose the government builds a factory in a development area which creates

additional income for the region's workforce of $1000. If each worker's MPS is 0.5, this means that $500 will be spent on, say beer, thus increasing the incomes of beer producers, who spend 0.5 of their additional income (0.5 of $500 = $250) on, say, clothes, thus increasing the income of the clothes producers by $250. They in turn spend 50% of their extra income somewhere else - and so on, and so on until the multiplier has worked itself out. The value of the multiplier can be calculated by using the following simple formula:

K = 1 / MPS where K is the multiplier and MPS is the marginal propensity to save. In our example: K = 1 / 0.5 = 2.

Thus in our example, an initial increase of income of income of $1000 has, when multiplied by 2, produced an increase in income in the region of $2000 (i.e. $1000 + $500 + $250 + $125 + ...+ $m = $2000).


However, in real life, people living in the region are unlikely to be able to spend their money solely in that region. They will purchase goods made outside the regions; they will purchase imports from overseas; they will pay taxes to the national government. Clearly, the initial investment will do the region less good if a high proportion of people's spending is on items produced outside the region; it will create wealth for someone else and not add directly to the region's wealth. Such expenditures are called leakages. Thus, a more realistic regional multiplier formula can be written as: K = 1 / (MPS + P) where P is the % of additional income spent on leakages. A low regional multiplier means that attempts to resolve a regional problem are likely to be a long process. It is rather like trying to fill a bath with the plug out.

iii. Cumulative Causation: An initial investment by the government will create in the region the impetus for more investments, more jobs and more infrastructure which would in turn induce more factories. Figure below shows how the location of a new industry in a given region leads to, first, an expansion in local employment and population, and in increase in the local pool of skilled labour which will then to further industry coming to the region. Once started, this cumulative process is self-sustaining - it does not need outside help.


Thus, by establishing a new industry in a given region, the government through the multiplier process, has produced more employment in the region than that provided by the initial industry. Service trades, transport employment and linked industries have all been attracted. Of Course, the multiplier works backwards as well. If a steelworks were forced to close down, more people than those formerly employed at the works would eventually be out of work. Because former steelworkers would suffer as their trade declined as a result of the reduced spending power. Such a catastrophe could be averted if alternative employment opportunities were made available in the local area.

10. Agglomeration and decentralization: One of the characteristic features of economic activities is their marked tendency to

occur in spatial clusters, i.e. they agglomerate in certain areas. The study of agglomeration economies emphasizes the connections or linkages between economic activities within a relatively restricted geographic area. Any firm is one part of a complex chain of production held together by direct or indirect linkages between a series of firms.

a. Industrial Linkages:

All firms have links with other firms. These links may be very simple, like raw material links with plant and market links with the finished product, or complex because in the real world, industrial linkage may or may not be with the final purchaser of a firm's product. In the motor industry, for example, the output of many firms passes into the assembly stage of the motor vehicle industry rather than to buyers of cars. Industrial linkage may be defined as 'all the operational contacts, including flows of materials and exchanges of information, between the separate functional elements of the manufacturing system'. These 'elements' may be thought of as whole industries, sectors of the economy, or individual plants, depending on the scale at which one is considering the system. The study of industrial linkage has been seen as an alternative approach towards the explanation of industrial location. Though all firms possess linkages, some are more important in the locational choice for the firm than others. Geographers seek to discover:


i. how important linkage is in the locational choice of firms, ii. how important linkage is in the continuing operation of firms at given locations, & iii. the extent to which linkage acts as a constraint on movement. a. Types of Linkage: i. Material Linkages (Tangible)

- Process Links: Goods are moved between firms at different stages of the production process. For example, the movement of a windscreen wiper from the plant manufacturing windscreen wipers to the car assembly plant.

- Sub-contract Links: Work is undertaken by one firm for another. For

example, if the demand for windscreen wipers suddenly increased and the usual producer's capacity could not meet that demand, the work might be sub-contracted out to a neighbouring firm.

- Service Links: They involve the supply of machinery, equipment or ancillary

parts and the maintenance of a firms' plant and equipment. - Marketing Links: They involve the movement of goods to another plant or

establishment for purposes of marketing and distribution.

ii. Information Linkages (Non-tangible) - They include ties with such establishments as banks, stock-brokers or

insurance agents. They are frequently made between firms engaged in the various forms of tangible exchanges.

- The medium by which such contacts are made is frequently the telephone

and face-to-face contacts are also common.

b. Forms of Linkage: i. Vertical Linkage:

- Each factory forms a separate link in a series of processing operations which lead to the production of a final finished product.

ii. Horizontal Linkage:

- Firms specialize in the production of components which are assembled by another firm.


iii. Diagonal Linkage: - A firm produces an article or a service which is required at various stage

of the vertical or horizontal process.

c. Strength and complexity of linkages:

- A firm is linked to other factories or industries in a variety of ways, but some of these links may not be significant in its location. These 'weak' links will therefore have much less significance in affecting industrial location than those strong links. On the other hand, we need to make the distinction between simple


patterns of connection where firms have relatively few linkages and complex patterns where firms have many linkages.

- According to wood, there are eight types of linkages.

1. These are material linkages that are few in number and of little importance in

deciding about location. Such type of linkage can be found in 'footloose' light industries.

2. In this type, individual weak linkages form a complex organizational

arrangement which is important for successful industrial operation. Industries having this type of linkage of linkage are large scale assembly industry, eg. motor vehicle production.

3. Industries belonging to this type have strong but simple material linkages.

These industries are strongly tied to markets or material sources. Examples of these are heavy industry with high transport costs such as those postulated in Weberian location theory.

4. Material linkages form a complex pattern in the supply and marketing of a

firm. A few strong links, however, dominates the pattern. Lancashire textile fit into this category.


5. It is characterized by few information exchange which are of little importance

in deciding location. 6. This group represents information links exchanges that are individually weak

but which together form a complex system that must be maintained. This is common in manufacturing industries and may have important implications for location change. The attraction of large cities to manufacturing can be explained by this type of linkage although it is difficult to measure them as they are less tangible.

7. Information exchange which is simple in structure but dominated by strong

individual ties to other plants. The link between a subsidiary or branch plant to its head office illustrates this point.

8. A complex set of information exchanges which is dominated by a few strong

ties is illustrated in this type. These will include non-manufacturing commercial and service activities.

d. Variations in the Complexity of Linkages:

i. Linkages as Chains: - Linkages vary in their complexity from the simple movement of a single

product from one plant to another, to a series of inputs from a large number of origins converging on one plant. We can conceive of linkages as chains binding the manufacturing system together. Some of these chains are of considerable complexity, as the figure shows below.


- The concepts shown in the figure may be illustrated by actual examples. In A, for instance, a firm might be sending all its products to one warehouse or retailer. In B, primary metals might be going to various second stage mills. The motor vehicle industry represents a classic example of the situation shown in C (as many as 17,000 different factories supply one US car plant with parts). D - a simple chain - is illustrated by the sequence: logging, sawmill, and furniture.

ii. Scale of Linkages:

- Linkages may be studied at different scale levels, ranging from the localized linkages of the street level to linkages of the national scale. 1. Street Scale: Sub-contract work or particular processes in the manufacture

of a product being undertaken in the workshop next door. 2. Industry Scale: Linkages between the different elements in the iron and

steel industry. 3. National Scale: Natural rubber produced in W. Malaysia being supplied to

the USA for its rubber types industry.

b. Agglomeration: Industrial linkage is a strong force leading to industrial agglomeration. When used in Geography, the term 'agglomeration' incorporates two ideas. Firstly, there is an idea related to space with activities clustering or concentrating in a comparatively small area (i.e. a spatial pattern). Secondly, there is an idea of the process which encourages the clustering of activities in particular areas (i.e. a process). Agglomeration, therefore, refers to both a process of locational decision-making and the spatial pattern which results from the decision to agglomerate. Agglomeration occurs because an individual firm is able to reduce its costs by locating near other firms. In other words, agglomeration enables a firm to achieve external economies of scale which derive mainly from external efforts rather than the own efforts of the production unit. i. Forms of Agglomeration::

- Spatial Clustering: It refers to the clustering of industrial plants within a relatively small geographic

area. For example, the Newcastle of Australia, the Ruhr Valley of Germany and


the Pittsburgh-Cleveland area of the USA are points of concentration of industries based on the steel industry.

- Enlargement of Industrial Plants: Each plant with a complete organization is indirectly a local concentration

compared with production scattered in small neighbourhood plants. The economic advantages of large-scale production as compared with

small-scale production are effective factors of agglomeration. An example is the integrated iron and steel works with all aspects of production

being carried out by one firm in one plant, including iron smelting, steel making, steel rolling and steel fabricating.

ii. Agglomeration Economies (External Economies of Scale)

Agglomeration enables a production unit to achieve external economies of scale. We use the term 'external' because they are benefits which derive mainly economies bring about savings in the production costs. a. Transport Savings: Material inputs may be obtained from nearby factories. Thus, inter-factory

transport costs are minimized. As a result of the clustering of economic activities, transport services will be improved and firms may obtain special rates because of the large volume of traffic provided.

b. Access to skilled labour: A pool of skilled labour tends to build up in an area where a particular type of

manufacturing is localized. A firm locating in the area can therefore save the costs in carrying out costly training programmes. Moreover, with the employment of skilled labour, equipment and machinery can be more efficiently used.

c. Presence of Ancillary Services: In a large and growing industrial centre, there is expansion and development

of many useful services, eg. repair and maintenance facilities, banking, marketing and accounting services.

d. Infrastructure Savings:


Public facilities are usually provided by the government. As the size of the industrial centre increases, the unit cost of providing utility services such as power, water, transport, sewage disposal will fall.

e. Possibility of Internal Economies: The grouping together of firms forms a chain of production which enables

each to specialize in only one or two phases of the production process. Instead of producing all the component parts at a higher cost, the firm can purchase them from a factory specializing in the production of those parts.

Such specialized firms with their large scale of production can benefit from

internal economies of scale and cut down the production costs. Thus, the buyer can obtain these parts more cheaply. Individual firms become more and more efficient in production.

Internal economies of scale are the result of specialization (i.e. division of

labour), buying in bulk, mass production, utilization of large machine units, more efficient use of machinery, special transport rates because of the large volume of traffic provided, and more efficient use of labour since workers have to concentrate on only one aspect of the manufacture of an article.

f. Attract investment: The increasing number of job opportunities will attract more migrants. The

place becomes a centre of purchasing power and there will be higher demand for consumer goods. The areas will become a good site for further investment.

g. Research and development: The large industrial regions usually have their own research organizations

where research is carried out and marketing knowledge is gathered.

iii. The process of Agglomeration: Consider what happens when a new industry is set up in a core region. To start

with, new jobs are generated, people move in to take them, and the purchasing power of the population grows. This increases the demand for houses, schools, consumer goods, and services, so creating even more jobs. The new industry will also attract other industries which supply it with raw materials or use its products. In other words, it triggers small-scale agglomeration. This creates extra jobs in services, public utilities, and construction. Yet more industries are then attracted


to the area by the larger labour pool, a bigger local market, and better developed back-up services in the expanded core region. So the establishment of just one new industry in the core region can, by a complex chain of events, boost the local economy in unexpected ways. This is known as the regional multiplier effect.

A new steel plant in the New York-Philadelphia region goes far beyond the

direct creation of jobs at the plant itself. New employment is generated in many types of manufacturing and service industries. This gives increased scope for new developments in the steel plant and increases the regional population, both of which pave the way to the expansion of the steel plant. And so the cycle goes on.

iv. Industrial Inertia/ Geographical Inertia:

Changing sources of raw material, fuel, changing technology and new modes of transport may lead to a change in the distribution pattern of manufacturing industry. However, once a factory has been built on a particular site, it will tend to remain there even though the original factors, which influenced the manufacturer's choice of that location for his factory, no longer apply. This tendency for a factory to remain in its initial location regardless of the changing nature of locational factors is known as 'industrial inertia'.

The factor of geographical inertia also contributes to industrial agglomeration

since it hinders the movement of industries in spite of the fact that the initial advantages which attracted the industries have already disappeared or declined in importance.


The reasons for industrial inertia are as follows: - The costs of moving and building a new manufacturing plant may be very high,

thus making the move uneconomical. This is especially true for those industries which possess large-scale and costly fixed capital equipments which are relatively immobile, eg. plant, machinery, buildings. For instance, the costs of abandoning an established iron and steel factory to build a new one elsewhere are very high, due to the requirement of a very large-scale plant and the very specialized nature of the iron and steel industry.

- The presence of a pool of high skilled labour may take the move very costly. It

is extremely costly to move a skilled labour force to a factory or to train the existing unskilled labour force.

- The presence of associated industries means a great deal of transport savings.

This is especially important for those industries with strong local linkages (i.e. dependent on local connections), eg. industries taking a sub-contact work.

- A wide range of services, such as roads, water supplies and training facilities

would have developed in the established area. Such services or infrastructure might not be available in the new area.

- The reputation of some firms is strong associated with their particular locations.

Departure from these locations might undermine the public image of such firms for their products.

Industrial linkage has been an important factor affecting the locational choice

of firms. We have seen how industrial linkages lead to a clustering of industries which in turn achieve the economies of agglomeration or external economies of scale. Industrial linkages also play an important part in the continuing operation of firms at a given location long after the original attractive locational factors have disappeared. In other words, industrial linkages act as a 'brake' on movement and lead to industrial inertia.

c. Decentralization:

i. A simple model of suburbanization of industries: The locational behaviour of two hypothetical firms in an urban area can be

summarized by a simple model, as shown in the sequence of diagrams.


Traditionally, but decreasingly so, small firms are born in small premises in

the inner city (the infancy stage). Assuming that they outgrow their original premises, they may either expand in situ (as in the case of X) of migrate outwards (see Y i the youthful stage). By early maturity, X is still centrally located but Y has moved even further outward, perhaps the result of less conservative management or perhaps because space is simply unavailable in the central city. By maturity, both firms are in the big league. They now both own large peripheral sites and also possess administrative offices in the CBD. This model does, in fact, summarize the main elements of intra-urban industrial movement, i.e. suburban ward movement and the eventual divorce of the manufacturing from the administrative functions.

ii. Factors leading to decentralization:

- Expansion of the firm: About 85% of all relocation can be attributed to expansion of the firm. A large

number of industrialists have been prevented in some ways from expanding in situ. We may identify several ceilings on local expansion:

* simply not enough room, esp. those located in inner city areas, * high land prices, and * government refusal to grant permission.


- Redevelopment of Inner Cities: The redevelopment of inner cities has been accompanied by the voluntary and

planned outward movement of industry, for purposes of expansion, for the accommodation of single-storey premises and to satisfy the demands for greater car parking space.

- Inner City Problem: The continuing growth of cities has caused concern because of problems of

pollution and congestion and a general decline in the quality of life brought about by the concentration of people in the large urban complexes.

- Demand for Office Space in the Central City: It seems that offices still need central city locations more than industries. In

addition, many central city areas have been subjected to extensive road improvements which have meant that many small enterprises are often unable to afford the rents for new premises in the central city and new space has subsequently been occupied by offices.

- Suburbanization of the Market: This may make the optimum location of an industry more peripheral and extend

considerably the industry's spatial margins to profitability. - Nature of Industry: Some industries are more likely to suburbanize than others. Decentralization

from the centre to the outer conurbation seems esp. strong for manufacturing industries such as clothing, timber and furniture, paper, printing and publishing.

- Government Encouragement: Governments may initiate policies of decentralization to slow down or even stop

the growth of existing large centres.

iii. Role of Government in Industrial Decentralization: One of the means of bringing about decentralization of the people is to

encourage manufacturing firms to locate in areas other than the already large centres. The intention is to try to counter the comparative locational advantages which the large cities have by offering inducements such as cheap land, freight concessions, or assistance in the housing of employees in the areas where growth


is desired. The savings which can be achieved in the decentralized location are designed to offset the increased costs which result in the location because it does not offer the economies which can achieved from agglomeration.

The government has played a very important role in the decentralization of

industries. An active policy of decentralization requires that the government should intervene to influence the locational decisions of people establishing industries. Among the measures the governments offer to manufacturers to locate their factories in country areas are: - freight concessions on raw materials and manufactured goods, - land on which to build their factories at reduced prices, - the provision of services such as roads, water, sewerage and power, and - subsides to help defray the wages of employees whilst they are acquiring job

skills.

The footloose industries because they do not form strong linkages with other industries and therefore do not have strong locational pulls, are most likely to be attracted away from the metropolitan areas because of the advantages which they gain from a decentralized location.

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