Chap 11 Industry Envs 204 Industry Defined INDUSTRY

Chap 11: Industry Envs 204

Industry -- Defined INDUSTRY -- Production of goods, especially through manufacturing techniques, and a group of firms with similar technical structures for production. a. Method of adding value such as man-made value, from motive force, or other outside source to create a final product b. Includes factory system, limited stock companies, integrated activities, specialization, scale economies, . . .

Industrial Revolution • “The root of the Industrial Revolution was technology involving several inventions that transformed the way in which goods were manufactured” – Unprecedented expansion of output and productivity – Substantial increase in standard of living – Resulted in a Demographic Boom and Transition (In the Western World)

Good 3 minute overview https: //www. youtube. com/watch? v=OF 7 -v. N-a. LOM

http: //www. youtube. com/watch? v=a. O 3 AW 0 JAHm. U – 2 minute overview http: //www. youtube. com/watch? v=E_t. FFQy. Eu_Q&feature=related – 2 minute view of child labor with musical background http: //www. youtube. com/watch? v=Jh. F_z. Vr. Z 3 RQ BBC 1 hour documentary

Industrial Revolution • Resulted in and from new social, economic, and political inventions/organization and developments – not just industrial ones • Changes were gradual • Diffused outward across the globe from England after 1750 • Diffusion continues today

Change & Impacts 1. Industrial Revolution -- completely changed a) b) c) d) How goods were produced. How economy was organized How people worked & organized How goods were consumed - formerly “folk” based activities became “economic” based (much like the change from folk to popular customs)

Hearth Areas 2. Hearth Area - England after 1750's a. Key Invention - Steam Engine -- non-natural power source

Diffusion to and impact on other industries § Coal -- key new input, why? ? ? Hint birth of the “energy slave” § Iron Production -- vastly increased why? ? ? § Transportation & Spatial Interaction -- both infrastructure and technology changes the world’s spatial geography (resulted in a time-space compression – speeds up diffusion) § Textiles – becomes first leading industry § Engineering – emerges from the inventors of these new technologies § Food Processing – necessary input to support urban labor concentration

Diffusion of Railroad Technology – Time-Space Compression • Hierarchical diffusion – note nodes from which it spreads • Contagious diffusion – spaces in between nodes

Diffusion • Relocation – immigration brought new technologies to distant locations – Also the British attempted to limit this by forbidding skilled textile “engineers” from emigrating • Hierarchical – between Major centers of commerce like London, Paris, Berlin, NYC • Contagious – exponential outward expansion as everyone wants to participate – both production & consump.

11. 1 Distribution of Industry Tools • Hearth Area • Diffusion – Relocation – follows immigration – Hierarchical – transferred between major metro areas – Contagious – acceptance expotential – Stimulous – principles most easily shared

11. 1 Distribution of Industry Tools cont… • Pattern – High clustering in few countries at first – Clustering apparent even at present • High density concentration = efficiency • Spatial Interaction – Space-Time compresion results from process

11. 2 Distribution of Industry Tools cont… Site & Situation – both key to eventual sitting of activities • Site Factors include: resources, labor, capital (human and monetary), land, and markets – China today focuses on cheap Labor • Situation Factors focus mainly on long distance transportation routes – Coastal China today

11. 2 Distribution of Industry Tools cont… • Resources & Markets – Each exerts influence on locating industry

Major Centers in Europe

Major Centers in East Asia Manufacturing Zones in China Click here

Major Centers in US & Canada Turning to Robots for Manufacturing click here http: //tlc. discovery. com/videos/understandingrobots-mass-customization. html

11. 2 Situation – Transport Costs Think Networks for Trade • Bulk Reducing Activities – Locate near raw material – By reducing bulk final cost reduced – Example Copper smelting • Bulk Gaining Activities – Locate near final market – Add bulk at last minute – less trans cost – Example Beer production

11. 2 Situation Factors Bulk Gaining

11. 4 Changes in Steel Location • 1770 s Near Energy Source – locate iron/steel forges in mountain valleys and use wood/charcoal • 1850 s Near Energy Source – coalfields because greatest bulk – Pittsburgh favored • 1890 s In between coal and iron ore – Lake Erie sites favored • 1910 s Move closer to markets as coal requirements drop – South Lake Michigan favored • 1950 s Move closer to East Coast – More dependent on foreign iron inputs & local markets • Today – foreign sites & major US Market sites – Foreign producers lower labor cost in integrated mills – Major markets switch to scrap iron as input and mini-mills Steel has changed from bulk reducing to market sensitive locations in the USA while moving to Labor sensitive locations internationally

11. 4 Changes in Steel Location • 1770 s Near Energy Source – locate iron/steel forges in mountain valleys and use wood/charcoal • 1850 s Near Energy Source – coalfields because greatest bulk – Pittsburgh favored • 1890 s In between coal and iron ore – Lake Erie sites favored • 1910 s Move closer to markets as coal requirements drop – South Lake Michigan favored • Today – foreign sites & major US Market sites – Foreign producers lower labor cost in integrated mills – Major markets switch to scrap iron as input and mini-mills http: //www. youtube. com/watch? v=_hlfqgg. GOZw&feature=related Steel has changed from bulk reducing to market sensitive locations in the USA while moving to Labor sensitive locations internationally

Creative Destruction? http: //www. youtube. com/watch? v=V-w. Rygi 2 Pa. Q http: //www. youtube. com/watch? v=7 O 3 ye 1 h 60 q. U Overproduction in China https: //www. youtube. com/watch? v=Wfa 2_t. P 4 Kmw http: //www. youtube. com/watch? v=Pr 3 EJ-I 1 va. U

Site vs Situation for Steel • 1770 s Near Energy Source – Site condition dominates – Energy & Bog Iron very close – site – Transport of output to market -- situation • 1850 s Near Energy Source – Site condition dominates – What Site conditions favored Pittsburgh? • 1890 s In between coal and iron ore – Situation condition dominates – What Situation conditions favored Lake Erie ports? • 1910 s Move closer to markets as coal requirements drop & iron increases – Site conditions dominate – What Site condition favored South Lake Michigan? Favored • 1950 s Move closer to East Coast change to foreign supplies – Situation conditions dominate – More dependent on foreign iron inputs & local markets • Today – foreign mills & major US Market sites – Site conditions dominate – What Site conditions favors LDC Foreign producers for integrated mills? – What Site conditions favor large urban markets like Seattle for mini-mills?

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

Modern Mini Mill http: //www. youtube. com/watch? v=v 0 F 5 ITiv. Fzo

Some Mini Mills in US & Mexico Tend to favor Site Conditions – Locate close to markets and scrap iron/steel sources

11. 5 Auto Production Situation Sensitive – Why?

Changing pattern of plants to reflect just-in-time system & unionization Situation based Network of assembly Site based lower cost Southern Labor

Auto Alley: Focused on I 65 and I 75 Example of Just-in-time delivery and assembly 70% of the value in a car comes from independent suppliers Situation: Over time auto suppliers and assemblers have migrated to the center of the country to minimize distribution cost of final products Site: Suppliers and assemblers have also migrated south to lower cost labor

New Car Plant Locates in Indiana http: //www. nytimes. com/2015/08/12/business/merc des-and-global-trade-revive-auto-plant-gone-silent-indiana. html? _r=0

11. 3 Transport Modes

Break of Bulk Point • Place where move from one mode of transport to another – good place to process goods – Seaport, airport, rail yard… – Opportunity for further processing before sending on – Example wheat from farms may be assembled at a port for export and milled there into flour

Just-In-Time Production • Low stockpiles at assembly plant • Multiple suppliers concentrate in same region • Japanese automakers developed this system due to small land area for factories James Rubenstein talks about Auto Production – video 30 12: 15 minutes “Just in time” example – truck seats click here http: //www. youtube. com/watch? v=JTJLh. WGVQQs

Mode of Transport • Variations based on cost & speed • • Air Truck Rail Boat High Cost High Speed Just in time possible Low Cost Low Speed Just in case or large stockpiles

11. 7 Site Factors

Site: Three of most important Factors • Labor – currently most important in labor intensive industries like textiles • Land – causes industry to migrate to the edge of urban areas – looking for “green field” sites encouraging sprawling single floor factories • Capital – can either be locally available or from outside – FDI – foreign direct investment – such as capital flows to China – Venture Capital – readily available in Silicon Valley

Textile & Apparel Spinning: Labor intensive mainly done in LDCs

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

11. 8 Textile & Apparel Production

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

Labor-Intensive Industries

Labor-intensive Industries • Consideration – Balance of lowest cost per hour of labor versus skills embodied in labor – And transportation cost versus timeliness of delivery – Example cheap to make Christmas toys in China, but if early supplies sell out difficult to restock due to the distance

Decline in Labor Intensive Clothing in USA Migration of “skilled” textile jobs abroad

Comparative Labor Costs for Clothing Manufacturing Note how Indonesia could be the next large textile producer Notice where Pakistan falls

11. 9 Emerging Industrial Regions • US Shifts – From high labor cost/protection areas to low areas • Movement out of US – Outsourcing – China as workshop of the world – BRICS as possible future manufacturing centers

Santa’s Helpers http: //www. youtube. com/watch? v=MQh 2 CZZK 1 YU