Industrialization Key Issue #3: “Where is industry expanding?”

Industr

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Key Issue #3: “Where is industry expanding?”

Changing Distributions Within PEDs• Intraregional Shifts in

Manufacturing:• Historically – factories

located inside cities• Situation – proximity to

market• Site – lots of labor and

sources for capital• Increasing Site Problem –

obtaining enough land for manufacturing

Where could you locate this factory for maximum profit?

Modern Factories

• Likely to be suburban or rural• Require large tracts of land• Land is cheaper outside of a city• Location near highways is more

important than railways• Factories cluster in industrial

parks near suburban highway junctions Where is this GM plant

located?

Interregional Shifts in Manufacturing• Manufacturing has shifted towards the South and West in the United

States• In Western Europe, governments have encouraged relocation toward

economically distressed areas• Result = the distribution of manufacturing is less clustered

Southern and Western U.S.• The NE U.S. has lost 1 million manufacturing jobs in the last

few decades• Manufacturing jobs have grown by 1/6 in the South and West

since the early 70’s

Right-to-work laws• A right-to-work law requires a factory to maintain a so-called

“open shop” and prohibits a “closed shop”• A “closed shop” = a company and union agree that everyone

must join the union in order to work• Southern states have made it difficult for unions to organize

workers, collect dues, and bargain with employers

A “closed shop” – Workers in the Garment Industry Strike

Manufacturing in the South• Steel, textiles, tobacco

products, and furniture industries are scattered across the South

• The Gulf Coast has become an important industrial leader because of oil and natural gas

Katrina threatened oil supply by cutting power to the refineries in Mississippi

Colonial Pipeline brings oil and natural gas to the South

Manufacturing in the West• Completion of the LA harbor (1910) and Panama Canal (1914)

allowed the West Coast to open up to processing• LA is the country’s leading producer of textiles and second largest of

furniture and food processing• A large pool of unorganized workers has been assembled in LA

through immigration, especially from Mexico and Asia

Interregional Shifts in Western Europe• Manufacturing has diffused from traditional centers in NW

Europe to southern and eastern Europe• European governments have explicitly encouraged this

industrial relocation• Western Europeans used incentives to lure industry into

poorer regions• The EU assists in lagging regions• Spain

New Industrial Regions• Example – Steel: In 1980, 80% of the world’s steel was

produced in PED• In 2005, just 45% is produced in PEDs• China = the world’s largest steel producer

China• The largest manufacturer of textiles, steel, and household

products• Two principal assets:

• Largest supply of low-cost labor• The world’s largest market

Chinese Population = 1,343,239,923 (2012)

Other Asian Countries

• Thailand – set a 120% tariff on imported vehicles in 1974; lowered to 20% in the 90s

• India – liberalization program in 1991 eliminated many restrictions on foreign investment

Latin America• Mexico and Brazil are the two leading industrial centers in

Latin America• Manufacturing is clustered in the largest city: Mexico City and

Sao Paulo – proximity to the major market• North American Free Trade Agreement (NAFTA) – eliminated

restrictions on trade• Average wage = $400 per month

“Central” Europe• Poland, Czech Republic, and Hungary have had the most

industrial growth• Central Europe offers two assets:

• Labor• Market proximity