Chapter 11: Key Issue 2

Involve transporting materials to and from a factory. A firm seeks a location that minimizes the cost for transporting inputs to the factory & finished goods to consumers.

Result from the unique characteristics of a location.

An industry in which the inputs weigh more than the final products.

Makes something that gains volume or weight during production. To minimize transportation costs, need to locate near where product is sold.

Fabrication of parts & machinery from steel & other metals. -ex. Steelmakers locate near raw materials -ex. Steel Fabricators locate near markets -ex. Beverage bottlers locate near markets

1) Mining copper ore bc the heavy, bulky ore that is extracted from mines is mostly waste. -The 2nd step=concentration mills that grind ore into fine particles that produce copper concentrate that is only 25% copper. -Copper smelters remove more impurities. Concentration mills & smelters built near mines. Since so much waste has already been disposed of, proximity to mines=less critical factor in determining location of refineries. 2) Steelmaking (locates its facilities bc of situation factors) -Two changes in situation factors have influenced changes in the distribution of steel mills within the US & worldwide: a) Changes in importance of main inputs b) Increasing importance of proximity to markets rather than proximity to inputs.

One or two customers

Close proximity to customers

-Producer of buttons, zippers, clips, pins, or other specialized components attached to clothing. -Also makers of parts for motor vehicles. (seats bc large & bulky) -Proximity to the assembly plant bc of the diffusion of "just-in-time" delivery.

-Bakers & milk bottlers -Newspaper

Bc it contains dated info & ppl demand theirs as soon as printing is possible.

Short distance delivery bc can be loaded & unloaded quickly & cheaply. -Advantageous if the driver can reach the destination within 1 day, before making a stop.

-Used to ship to destinations that take longer than 1 day to reach (btw E & W coasts of US) -Take longer than trucks to load, but aren't required to make daily rest stops.

-Very long distances bc cost per kilometer is low. -Slower than land based transportation, but can cross oceans (N. Amer. from Europe/Asia)

Most expensive for all distances, so it's usually reserved for speedy delivery of small bulk, high-value packages.

A location where transfer among transpiration modes is possible. -ex. A steel mill near the port of Baltimore receives iron ore by ship from S. Amer. & coal by train from Appalachia.

Sea ports and air ports

Mining-->Concentration-->Smelting-->Refining

It powers the energy-demanding operations. -Metal industries such as copper locate near economical electrical sources & negotiate favorable rates form power co.

-Mid 19th C -US Steel industry concentrated here bc iron ore & coal were mined here. It no longer has steel mills now, but remains the center for research & administration.

-Late 19th C -Steel mills built here bc of the discovery of iron ore in Mesabi Range (series of low mt. in N. Minnesota) -Became source for most all iron ore used in US steel industry -Ore transported by Lake Superior, Lake Huron, & Lake Erie. -Coal shipped from Appalachia by train.

-Early 20th C -Main raw materials Iron ore & coal, but changes in steelmaking required more iron ore in proportion to coal. -New steel mills built closer to Mesabi Range to minimize transportation costs. -Coal avail. from nearby S. Illinois, & Appalachia.

-These coastal locations reflected further changes in transportation cost. -Iron ore came from other countries (Venezuela, Canada & locations near Atlantic & Pacific oceans) -Scrap iron & steel (metropolitan areas) became an important input in the steel production process.

-More important than traditional situation factor of proximity to inputs. -Coastal plants provide steel to large E. Coast pop centers & S. Lake Michigan plants centrally located to distribute their products countrywide.

-Main input=scrap metal -Less expensive to operate & can locate near their markets bc main input is widely avail.

-World steel prod. declining in developed countries & increasing in developing. -World steel production doubled btw 1980 & 2010, w/biggest increase in China.

Carmakers manufacture vehicles at final assembly plants, using thousands of parts supplied by independent co. -3/4 of vehicles sold in N. Amer. are assembled in N. Amer. -Most vehicles sold in Europe, Japan, & China are assembled in the same country. Carmakers' assembly plants=30% of the value -Independent parts makers supply other 70%

*House 80% of world's final assembly production. 1) 40% in E. Asia: China's in E to be near large pop centers. Most car buyers in large cities (Beijing & Shanghai) 2) 25% in Europe: E-W corridor btw UK & Russia. Ger=leading producer of vehicles here (since end of communism-1990s, most growth in production) 3) 15% in N. America: Located in interior of US btw Michigan & Bama, centered in an "auto alley," formed by N-S interstate highways 65 & 75, w/an extension into SW Ontario. Outside auto alley, clustered in Mexico. -US owned carmakers in Michigan & nearby N. States -Foreign owned carmakers in S. portion of auto valley.

Most are clustered in E. Asia, Europe & N. Amer. regions bc most of the world's carmakers are there.

1) Labor: Minimizing labor costs=important for some industries & variation of labor costs around world is large. -Motor vehicle workers paid much higher hourly wages than textile workers. 2) Capital: US motor-vehicle ind. located in Michigan in early 20th C bc that region's financial institutions were more willing than E. banks to lend $$ to the industry's pioneers. -High tech=risky (about 2/3 fail) -Silicon Valley Financial Institutions lend $$ to engineers who have good ideas. -Ability to borrow $$=critical factor in distribution of industry in developing count. 3) Land: Contemporary factories operate most efficiently when laid out in one-story buildings (avail in suburban & rural areas). -Raw materials laid delivered at one end & moved through the factory in conveyors/forklift trucks. -Proximity to major highways=important for factories -Esp. proximity to junction of a long distance route & beltway (ring road)

An industry in which wages & other compensation paid to employees constitutes a high % of expenses. -ex. Textile Industry

An industry with a much lower than average % of expenditures on labor. -ex. Auto Industry

-Labor intensive=measured in % -High wage=measured in $$

-Proximity to major highways=important for factories -Esp. proximity to junction of a long distance route & beltway (ring road) -Lots of land in Suburban & rural areas (also cheaper)--->located near suburban highway junctions.