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Chapter11 issue3

The document discusses factors that influence the location decisions of industries, including proximity to markets, raw materials, energy sources, and labor. It notes that while access to raw materials was historically important, developed country firms now prioritize access to markets. Industries vary in their needs for land, labor, capital, and energy. Labor-intensive industries tend to locate near lower-cost labor sources, while capital-intensive industries requiring skilled workers cluster near major population centers. Government incentives also influence industry locations.

Education◦
Key Issue #3
 Locations near markets or break-of-bulk points have become more important than locations near raw materials for firms in developed countries.  However, situation factors do not explain the growing importance of Japanese and other Asian manufacturers.  The cost of conducting business varies among locations, depending on the cost of three production factors: land, labor, and capital.
 Land for one-story  Aluminum plants have factories available in rural been built near sources locations. inexpensive hydroelectric  Attracted to land power, including the TN accessible to energy Valley and the Pacific NW. sources.  Industry may also be  Industries with a attracted to a particular particularly high demand location because of for energy may select a amenities at the site. location with lower electrical rates.  The aluminum industry requires a large amount of electricity.
 A labor-intensive industry is one in which labor cost is a high percentage of expense.  Some labor intensive industries require highly skilled labor to maximize profit, whereas others need less skilled, inexpensive labor.
 Examples of labor intensive industries  Generally require less skilled, low-cost workers.  The global distributions of spinning, weaving, and sewing plants are not the same, because the steps are not equally labor-intensive.  (Some) natural fiber manufacturing is concentrated where the principal input (cotton) is grown.
Fig. 11-15: Production of cotton yarn from fiber is clustered in major cotton growing countries, including the U.S., China, India, Pakistan, and Russia.
Fig. 11-16: Production of woven cotton fabric is labor intensive and is likely to be located in LDCs. China and India account for over 75% of world production.
Fig. 11-17: Sewing cotton fabric into men’s and boys’ shirts is more likely to be located near customers in MDCs, but much production now occurs in LDCs.
 U.S. textile weavers and clothing manufacturers have changed locations to be near sources of low-cost employees.  U.S. textile and clothing firms were concentrated in the Northeast during the nineteenth century (employing) European immigrants.  Workers began to demand better working conditions and higher wages around 1900.  Their claim was bolstered by tragic events, such as the 1911 Triangle Shirtwaist Company fire in NYC
Fig. 11-18: Hosiery manufacturers usually locate near a low-cost labor force, such as found in the southeastern U.S.
Fig. 11-19: Knit outerwear requires more skilled workers, and much manufacturing is still clustered in or near New York City.
 Companies may become more successful by paying higher wages for skilled labor than by producing an inferior product made by lower-paid, less skilled workers.  Computer manufacturers have concentrated in the highest-wage regions in the United States.  These regions have a large concentration of skilled workers because of proximity to major university centers.
Fig. 11-20: Computer and parts manufacturing requires highly skilled workers and capital. It is clustered in the Northeast and the West Coast.
 Financial institutions in many LDCs are short of funds, so new industries must seek loans from banks in MDCs.  Local and national governments increasingly attempt to influence the location of industry by providing financial incentives.  These include grants, low- cost loans, and tax breaks.
 principle whereby places and regions specialize in activities for which they have the greatest advantage in productivity relative to other regions – or for which they have the least disadvantage  principle that an area produces the items for which it has the greatest ratio of advantage or the least ratio of disadvantage in comparison to other areas.
 Create an advertisement for your city to encourage business to locate there. Be sure to highlight the desirable site & situation characteristics of your city  Target your ad toward certain industries that you know are looking for the site and situation characteristics of your city. Choose industries we have discussed in this chapter.
Requirements Points Name of the City 5 Site Characteristics 15 Situation Characteristics 15 Targeted toward specific industries 5 Creative, Colorful, Pictures 10 (Looks like an advertisement) TOTAL: 50
 The location that a firm chooses cannot always be explained by situation and site factors.  Many industries have become “footloose,” meaning they can locate in a wide variety of places.  An industry may be especially footloose if it uses replica machines, electronic mail, the Internet, and other communications systems to move inputs and products.