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Chapter 11 Lecture
The Cultural Landscape
Eleventh Edition
Industry and
Manufacturing
Matthew Cartlidge
University of Nebraska-Lincoln
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Key Issues
1. Where is industry distributed?
2. Why are situation and site factors important?
3. How does industrialization affect the
environment?
4. Why are situation and site factors changing?
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KEY ISSUE 1:
WHERE IS INDUSTRY
DISTRIBUTED?
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Where Is Industry Distributed?
• Modern concept of industry: the manufacturing
of goods in a factory
– Origin: England in late 1700s
• Industrial Revolution - improvements made in
industrial technology that transformed the
process of manufacturing goods
• Remember: also coincided with Second
Agricultural Revolution
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Industrial Revolution
• Facilitated by the availability of natural resources
in the hearth countries (water power, coal, iron
ore)
• Diffusion of industry led to growing populations
and increased food supplies (remember the
Second Agricultural Revolution!)
• This freed workers from farming and caused
many to seek industrial jobs in cities
• Increased the demand for raw materials and the
search for new markets: led to colonialism
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Diffusion of Industrial Revolution
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Where Is Industry Distributed?
Industry is concentrated in three regions:
1. Europe
2. North America
3. East Asia
Each of these three regions accounts for about
25% of the world’s total industrial output.
Other two main regions of industry:
1. Brazil
2. India
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Europe’s Early Industrial Centers
Europe was the first region to industrialize during the nineteenth century.
Numerous industrial centers emerged in Europe as countries competed with
each other for supremacy.
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North America’s Early Industrial Centers
North America’s manufacturing was traditionally highly concentrated in the northeastern
United States and southeastern Canada. In recent years, manufacturing has relocated
to the South, lured by lower wages and legislation that has made it difficult for unions to
organize factory workers.
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East Asia’s Early Industrial Areas
East Asia
became an
important
industrial region
in the second
half of the 20th
century,
beginning with
Japan. Into the
21st century,
China has
emerged as the
world’s leading
manufacturing
country by most
measures.
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Newly Industrialized Country (NIC)
• NIC: A country whose level of economic
development ranks it somewhere between
developing and developed (“semi-periphery”)
• These countries have moved away from an
agriculture-based economy and into a more
industrialized, urban economy.
– In the 1970s and 1980s, examples of newly
industrialized countries included Hong Kong, South
Korea, Singapore and Taiwan.
– Examples in the 2000s include South Africa, Mexico,
Brazil, China, India, Malaysia, the Philippines, Thailand
and Turkey
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Sectors of the economy
1. Primary - Agriculture, fishing, forestry, and
mining
– Largest sector in low-income, pre-industrial
nations
2. Secondary - Transforms raw materials into
manufactured goods
– Grows quickly as societies industrialize
3. Tertiary - Involves services rather than goods
– Dominates post-industrial societies
– Trade, finance, real estate, government,
transportation, education, entertainment,
media
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Offshoots of Tertiary Sector
4. Quaternary – intellectual activities
– research and development, management and
administration, libraries, information
technology, government, education
5. Quinary - highest levels of decision making in a
society or economy
– top executives or officials in government,
science, universities, nonprofit, healthcare,
culture, and the media
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The most common occupations in America
Retail salesperson
Cashier
Fast-food worker
Office clerk
Registered nurse
Waiter
Customer-service rep
Manual laborer
Secretary
Janitor
General manager
Stock clerk
Bookkeeper
Heavy-truck driver
Nursing assistant
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4.5 million
3.3 million
3.0 million
2.8 million
2.7 million
2.4 million
2.4 million
2.3 million
2.2 million
2.1 million
2.0 million
1.8 million
1.6 million
1.6 million
1.4 million
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The most disproportionately popular job per state
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Basic and Non-basic Industries
Basic
Non-Basic
• Basic industries are cityforming
• Non-basic industries are cityserving
• Provide services to people and • Provide services for people and
business outside the community
business located within the
community
• Bring money into their
community from the outside
• Do not generate money from
outside sources
• Basic industries are the main
business for which a city is
known
• Detroit – automobiles
• Pittsburgh – steel
• San Jose – computer chips
• Milwaukee – beer
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Weber’s Model of Industrial Location
• Alfred Weber – 1909 Germany
• Also called the “Least Cost Theory”
• Explains the location of industries in terms of 3
factors:
1. Transportation – cost of moving raw
materials to factory and finished products to
market
2. Labor – Cheap labor may allow an industry
to make up for higher transportation costs
3. Agglomeration – if several industries cluster
in one city, they can share talents, services,
and facilities
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Weber’s Model
• The substitution principle states that business
owners can juggle expenses as long as labor,
land rent, transportation, and other costs don’t
all go up at once
• Need to find the “sweet spot” that is best for the
company financially
• The sweet spot can move depending on the
variables
– Ex: Nike pays extra for transportation in
exchange for cheap labor overseas
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Weber’s Industrial “Least Cost” Model
Labor
“Sweet spot”
Agglomeration
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Transportation
Contemporary Economic Landscape
The contemporary economic landscape has been
transformed by the emergence of:
1. Service industries
2. High technology industries
3. Growth poles
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Service Industries
• In the global economic core, service industries
(tertiary, quaternary, quinary) employ more
workers than primary and secondary industries
combined
• Quaternary and quinary have experienced rapid
growth in the last 30 years, giving greater
meaning to the word “postindustrial”
• Not all services contribute to an economy
equally
– Ex: you pay $20 for a haircut and $20,000 for
a surgery
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Three Types of Service-Sector Jobs
1. Consumer services (50% of all jobs in U.S.)
– Retail, Education, Health, Leisure
2. Business services (25% of all jobs in U.S.)
– Professional, Financial, Transportation
3. Public services (10% of all jobs in U.S.)
– Government, Security and Protection
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Where Are Services Distributed?
• Rising and Falling Service Employment
– Service sector of the economy has seen nearly
all of the growth in employment worldwide.
– Service sector has also been most negatively
impacted by the recession.
• Change in Number of Employees
– Within business services, jobs expanded most
rapidly in professional services - engineering,
management, and law.
– Within consumer services, fastest increase has
been in health care.
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Economic Bases of U.S. Cities
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Changes in U.S. Employment
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High-Technology Industries
• Designated by government to benefit from lower
taxes, with goal of providing high-tech jobs to
local population
• Attracts designers of computers,
telecommunications, medical equipment, etc.
• Examples of high-technology corridors are
– California’s Silicon Valley
– North Carolina’s Research Triangle
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High-Tech Corridors
• Attracted by prospect of developing links with
existing research communities and availability of
a highly educated workforce
• California’s Silicon Valley (UC – Berkley,
Stanford University) is home to Adobe, HP, Intel,
IBM, Apple, eBay, PayPal, Twitter, Facebook,
Netflix, Dell, YouTube
• North Carolina’s Research Triangle (Duke, NC
State, and UNC – Chapel Hill) is also home to
many high-tech companies
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Major Employers in NC Research Triangle
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
American Airlines
Bayer
The Body Shop
Burt's Bees
Duke University
DuPont
Fidelity Investments
General Electric
GlaxoSmithKline
IBM
PNC
Qualcomm
Quintiles
Sony Ericsson
Toyota
Verizon
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Growth Poles
• Growth Pole Theory: economic development is
not uniform over an entire region, but instead
takes place around a specific “pole” (cluster)
• Like a “magnet”
• Silicon Valley and Research Triangle became
growth poles because the concentration of
businesses spurred economic development in
the surrounding areas
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Rust Belt and Sun Belt
• Rust Belt: The industrial zone of the
northeastern United States (around Great
Lakes) used to be called the Manufacturing Belt
– Evokes image of abandoned, rusted out steel
factories
• Sun Belt: southern region of the United States
– Both population and economy of this region
has grown recently as service sector
businesses have chosen to locate where
climate is warm
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Rust Belt and Sun Belt
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Ecotourism
• Ecotourism is defined as "responsible travel to
natural areas that conserves the environment,
sustains the well-being of the local people, and
involves interpretation and education"
• Helps to protect the environment AND generate
jobs
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Principles of Ecotourism
• Build environmental and cultural awareness and
respect.
• Provide direct financial benefits for conservation.
• Generate financial benefits for both local people
and private industry.
• Help to raise sensitivity to host countries'
political, environmental, and social climates.
• Design, construct and operate low-impact
facilities.
• Work in partnership with indigenous people to
create empowerment for them.
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KEY ISSUE 2:
WHY ARE SITUATION AND
SITE FACTORS IMPORTANT?
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Situation and Site Factors
Geographers attempt to explain why one location
may prove more profitable for a factory than others.
Companies ordinarily face two geographic costs:
1. Situation factors – costs associated with
the established transportation networks
accessible from a specific place.
• The farther something is transported, the
more it costs
2. Site factors – costs resulting from the
unique characteristics of a location.
• Labor, capital, and land vary by location
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Situation Factors
Two main situation factors:
1. Proximity to Input: optimal plant location is near
the raw materials
‒ This is best when raw material transportation
costs are greater than transportation costs of
product to consumer
‒ When raw materials cost more than final
product, it is called a bulk-reducing industry
‒ Examples: lumber turned into paper, iron
turned into steel
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2. Proximity to Market: the optimal plant location is
as close as possible to the customer
– This is best when the cost of transporting raw
materials is less than the cost of transporting
the product to consumers
– When the final product weighs more or takes
up more space than the raw materials, it is
called a bulk-gaining industry
– Examples: beverage bottling, automobile
assembly, potato chips
– Exception: wine is bottled near the raw
materials (grapes) because grapes are very
fragile
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• Manufacturers may also prefer proximity to
market if:
– They are a single-market manufacturer with
only one or two customers
• A manufacturer or buttons, zippers, etc.
makes sense to be located close to a
garment factory (its “customer”)
– They have perishable products
• Bread bakers, milk bottlers, newspaper
printers
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Bulk-gaining: Beverage Production
Beer is a bulk-gaining industry. The cans or bottles are filled mostly with water.
Most beer is bottled near major metropolitan areas, where most of the
consumers are clustered
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Footloose Industries
• For some businesses, transportation costs are
not a factor
• Footloose industries can locate anywhere and
be profitable
• Examples:
– Call centers
– Credit card processing centers
– Online companies
– Computer chips (small and light, easy to
transport anywhere)
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Site Factors: Labor, Capital, and Land
1. Labor –
• Most important factor on a global scale
• Minimizing labor costs is extremely important to
some industries
• A labor-intensive industry is an industry in which
wages and other compensation paid to
employees constitute a higher percentage of
expenses.
• Example: it costs more to make a car but is less
labor intensive than making a t-shirt
– car part manufacturing is more automated; more of a
t-shirt company’s costs go to paying the factory
worker
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Site Factors: Labor, Capital, and Land
2. Capital
• Money available, buildings, machinery,
equipment available
3. Land
• Must consider natural resources and the actual
land itself
• Modern factories are most efficient when they
are in one-story buildings (need more space)
–Mostly available in suburban and rural
locations
–Land tends to be cheaper than land in the city
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Basis for Trade
• Comparative advantage: the competitive edge
enjoyed by one location over another
– Places with favorable growing conditions and
inexpensive labor will become specialized in
the production of something like bananas
– Goes with “international trade” approach to
development
• Complementarity: one place can supply what
another place demands, and vice versa
– Places “compliment” each other
– Some locations specialize in one economic
activity and exchange goods with other regions
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Challenges for Developed Countries
• Trading blocs (groups of countries working
together for trade)
• Three most important trading blocs:
1. NAFTA - North American Free Trade Agreement
(U.S., Canada, Mexico)
2. EU - European Union
3. ASEAN – Association of Southeast Asian
Nations
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Trading Blocs
• Free movement of products across borders in these
regions
• No tariffs or barriers to trade among member
countries
– Example: parts of cars are made in different countries
within the bloc and moved easily across borders
• Competition among blocs: barriers such as taxes,
lengthy permit procedures, and quotas on exports
have been placed between blocs
– Ex: Japanese government maintains quotas on the number
of cars Japanese companies can export to the U.S.
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Problems within blocs
• In the EU – industry is concentrated in Germany,
France, and UK
– Within those countries, some areas are more
industrialized (and thus richer) than others
– France – most industry and wealth are around
Paris
– Germany – eastern part lags far behind the west
• Within NAFTA, Mexico’s economy lags behind
those of the U.S. and Canada
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Transnational Corporations
• Most cooperation and competition within and
among trading blocs takes place through
transnational corporations – companies that
operate factories in countries other than the
ones in which they are headquartered
• Most transnational corporations are
headquartered in the U.S., but some are located
in Japan or Europe
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Transnational Corporations
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Outsourcing
• Where to produce or assemble a product is only a
small aspect of the commodity chain
• A large part of business decision making today
has to do with where to have parts produced and
assembled
• Outsourcing – a company moving production or
services abroad
– Gained a negative connotation as people felt
American jobs were moved elsewhere
– Media focused on outsourcing of jobs to China
and call centers to India
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• Top 5 U.S employers in India:
– General Electric: 17,800 employees
– Hewlett-Packard: 11,000 employees
– IBM – 6,000 employees
– American Express – 4,000 employees
– Dell – 3,800 employees
• Typical salary for a computer programmer:
U.S. - $70,000
India - $8,000
• But remember India’s cost of living is 1/5 of ours!
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Challenges for Less Developed Countries
Challenges for LDCs:
1. Distance from markets – wealthy consumers in
MDCs are generally far away – need to invest a
lot in transportation
2. Inadequate infrastructure – lacking in
transportation, communication, equipment, and
also schools and universities to educate workers,
managers, and executives
3. Competition – companies seek out low-cost labor
in LDCs but keep highly skilled jobs in MDCs
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New International Division of Labor
• Also known as global division of labor or outsourcing
• Key features:
– Core countries depend on periphery and semiperiphery for lower-cost production and massproduced goods
– Efficient transportation leads to separation of
producers and consumers
– Locations are selected that have lower operating
costs (no pollution regulations, no tariffs, etc.)
– Higher-skilled jobs and headquarters are kept in
core countries
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New International Division of Labor
• Impacts on the United States:
– Unemployment
– Deindustrialization – restructuring toward
tertiary/quaternary job sectors
– Migration from areas of unemployment to areas of
employment (Rust Belt to Sun Belt)
– Availability of less-expensive goods changes the
standard of living
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New International Division of Labor
• Impacts on developing countries such as Mexico,
China, and India:
– Added job opportunities
– Entry of women into the workforce
– Child labor
– Increased wage gap
– Migration
– Pollution
– Regional growth and concentration of wealth,
pollution, etc.
– Westernization/globalization effects on society and
culture of region
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U.S. Clothing Manufacturing
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KEY ISSUE 4:
WHY ARE SITUATION AND
SITE FACTORS CHANGING?
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United States’ Top 10 Exports
1. Machinery including computers: US$190.5 billion (13.1%
of total exports)
2. Electrical machinery, equipment: $167.2 billion (11.5%)
3. Aircraft, spacecraft: $134.6 billion (9.3%)
4. Vehicles : $124.3 billion (8.5%)
5. Mineral fuels including oil: $94.7 billion (6.5%)
6. Optical, technical, medical apparatus: $82.0 billion
(5.6%)
7. Plastics, plastic articles: $58.4 billion (4.0%)
8. Gems, precious metals: $57.8 billion (4.0%)
9. Pharmaceuticals: $47.1 billion (3.2%)
10. Organic chemicals: $33.9 billion (2.3%)
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United States’ Top 10 Imports
1. Electrical machinery, equipment: US$336 billion (14.9%
of total imports)
2. Machinery including computers: $315.4 billion (14%)
3. Vehicles: $285 billion (12.7%)
4. Mineral fuels including oil: $163.4 billion (7.3%)
5. Pharmaceuticals: $92.5 billion (4.1%)
6. Optical, technical, medical apparatus: $80.8 billion
(3.6%)
7. Gems, precious metals: $67.3 billion (3%)
8. Furniture, bedding, lighting , signs, prefab buildings:
$63.1 billion (2.8%)
9. Plastics, plastic articles: $50.4 billion (2.2%)
10. Organic chemicals: $49.8 billion (2.2%)
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China’s Top Exports
1. Electrical machinery, equipment: US$557.1 billion
(26.3% of total exports)
2. Machinery including computers: $344.8 billion (16.3%)
3. Furniture, bedding, lighting , signs, prefab buildings:
$89.5 billion (4.2%)
4. Knit or crochet clothing, accessories: $75 billion (3.5%)
5. Clothing, accessories (not knit or crochet): $72.8 billion
(3.4%)
6. Optical, technical, medical apparatus: $67.9 billion
(3.2%)
7. Plastics, plastic articles: $64 billion (3%)
8. Vehicles: $60.4 billion (2.9%)
9. Articles of iron or steel: $53.1 billion (2.5%)
10. Footwear: $47.8 billion (2.3%)
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Changes within Developed Regions
Shifts within the U.S.
• Northeastern U.S. lost 6 million jobs in
manufacturing between 1950 and 2010
• Industry in the U.S. over time has shifted from
the Northeast toward the South and West
• California and Texas had largest increases
• Industrialization during the late 19th and early
20th centuries largely bypassed the South,
because they lacked the needed infrastructure
(had not recovered from losing Civil War)
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Shifts within the U.S.
• More recently, manufacturers have been lured to
the south by right-to-work laws – workers cannot
be forced to join a union (makes it cheaper for the
company to operate)
• Many people in South will work for lower wages
and forego joining a union
• Steel, textiles, tobacco, and furniture industries
have become dispersed through smaller
communities in the South
• Gulf Coast has access to oil and natural gas
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Changes in U.S. Manufacturing
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Interregional Shifts in Europe
• Manufacturing has diffused from traditional
industrial centers in northwestern Europe toward
Southern and Eastern Europe
• European government policies have encouraged
this relocation because incomes in Southern and
Eastern Europe lag behind Europe’s average
– After-effects of Communism
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Manufacturing Value as a % of GNI
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Special Economic Zones (SEZ)
– Designated areas in countries that possess
special economic regulations that are different
from other areas in the same country.
– Companies receive tax incentives, lower tariffs, or
eased environmental restrictions
– China has been the most successful in using
SEZs – allow foreign companies to have free trade
rights and to outsource
– China has even declared an entire province
(Hainan) to be an SEZ
– Most SEZs are cities
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Special Economic Zones
SEZs were created by the governments of various
countries in order to
– Attract foreign investment
– Develop an area by improving infrastructure
– Provide jobs to the local population
– Promote technology and creating skilled
manpower
– Increase the economic growth of a country
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Types of Special Economic Zones
• Free Trade Zone
– Geographic area where goods may be
landed, stored, handled, manufactured, or
reconfigured
– Generally located around major seaports,
international airports, or country borders
– Referred to as “foreign-trade zones” in the
United States - provide exemption from state
and local inventory taxes
• Export Processing Zones
– Specifically export-based
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• U.S. Foreign Trade Zones are located at all Customs Points
of Entry
• Tariff and tax relief is designed to lower the costs of U.S.based operations engaged in international trade
• They are considered to be foreign soil
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What happens in a Foreign Trade Zone?
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Export Processing Zone (EPZ)
• Areas within developing countries
• Offer incentives and a barrier-free environment
to promote economic growth
• Attract foreign investment for export-oriented
production.
• Over 850 EPZs exist today
• Employ 27 million workers – up to 90% female
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Maquiladoras
Example of EPZ: Mexico attracts labor-intensive
industries because of its relatively low-cost labor
and its proximity to the U.S.
– Plants in Mexico near the U.S. border are
known as maquiladoras
– Companies receive tax breaks if they ship
materials from the U.S., assemble
components in Mexico, and export finished
product back to U.S.
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Maquiladoras
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BRICS
• The countries expected to dominate global
manufacturing during 21st century:
– Brazil, Russia, India, China, South Africa
• These countries control 25% of the world’s land
area and contain 3.6 billion people
• Account for 22% of the world’s GDP
• China is expected to pass the U.S. as the
world’s largest economy around 2020
• South Africa was added to the acronym in 2010
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GDP for BRIC Countries
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• By 2050, the world’s largest economies are
expected to be held by:
1. China
2. India
3. United States
4. Indonesia
5. Nigeria
6. Brazil
7. Russia
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Asian Tigers or Asian Dragons
• Hong Kong, Singapore, South Korea, and Taiwan
• Free-market, developed economies
• Had exceptionally high growth rates and rapid
industrialization between the 1960s and 1990s
• Hong Kong and Singapore have become world
leading international financial centers
• South Korea and Taiwan are world leaders in
manufacturing information technology
• They serve as role models for many developing
countries, especially the Tiger Cub Economies
(Indonesia, Malaysia, Philippines, Thailand)
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Tigers (red) and Tiger Cubs (yellow)
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