The Geography of Manufacturing Whitney Plaizier Shirley Soon Local and Regional Development March 18, 2009.

The Geography of Manufacturing

Whitney PlaizierShirley Soon

Local and Regional DevelopmentMarch 18, 2009

New Industrial Spaces

New areas of manufacturing concentrations

Beyond those already developed in Europe or North America

Not limited by geographical boundaries or established notions

Examples:Advanced Countries (Italy)Developing Countries (Mexico and China)

Established or NISAdvantages on Building on Established

Areas:Existing pools of skilled laborInfrastructure

Advantages of New Industrial SpacesEasier implementation of new forms of

work organizationNew employment conditionsNew plant configurations

Geographic Unevenness of Manufacturing

Industrialization and investment is geographically selective

Results in highly variable rates of manufacturing growth

Industrialization has been a profoundly regional phenomenon

The Issue of Exports Source of competitive stimulus and tension

between places Industrialization is tied to the terms of trade Geographical concentrations rely upon

interregional and international exports Create tensions between new and old

industrial spaces as exports replace domestic industries

Protectionist policies

Pre/Post Industrial Revolution & The

Third World Pre-Industrial Revolution

Manufacturing production directly correlated with population

3/4 of production located in “Third World Countries” such as China, India and Pakistan

First Wave UK industrializes as leading power (1830-1860) - Third

World declines (60% in 1830) Second Wave

Development of factory system in UK, Europe, US - Third World declines (7.5% in 1913)

Since 1960 Importance has grown (17% in 1990)

Powerhouse Timeline 1750 - China, India, Pakistan 1830-1860 - UK - World’s largest industrial power 1880 - UK peaks 1900 - US > UK with Britain and Germany following 1913 - Established order of US, UK, Germany (total

60.4%) followed by Japan Post WWI and WWII - Russia growing in importance 1953 - US level of 44.7% of world production due

to MNC and FDI development Declining importance of many European countries

including the UK

JapanPost WWII as most dramatic riserWorld’s second largest industrial

powerIndustrial economy comparable to US

and double the size of GermanyMassive increases to jobs (4.1 million)

while UK is drastically cutting jobs (3 million)

Newly Industrialized Countries

Fastest rates of growth outside the OECD Spain, Portugal, Greece, former Yugoslavia,

Mexico, Brazil, Hong Kong, Singapore, Taiwan and South Korea

Four Asian Tigers - domination in the 1990s until the currency crisis

Employment rapidly increasing even though portion of world manufacturing production is minimal

“Shift of manufacturing value added, production and employment to new industrial spaces in the Third World”

Contemporary Global Patterns of Trade

Historic connection between industrialization and trade

Leads to development of geographically concentrated, specialized industrial regions

Increase in manufactured exports from developing countries and NICs to those established industrial countries

Regional Variations - Example Canada

Trade within bordersNatural resourcesService IndustriesVariations in export sales rations

BC and Saskatchewan (24.5% and 27.4% of GPP)

Alberta and Manitoba (19.5% and 13.4% of GPP)

Variations in Imports to Exports

Recent trend towards deficits in terms of trade

More nations leaning towards affordable imports versus supporting more expensive domestic products

Harms domestic employment and profitability

Visible trade versus invisible trade

The Softwood Lumber Issue

Canada versus United StatesEconomically intertwined, especially

with trade25% of US softwood lumber from

CanadaSparked protectionist action on a

regional level in the United StatesDamaging to Canadian producers

Regionalization

American Manufacturing Belt Industrial heartland for the continent Developed transport networks Zones: Consumer goods, producer goods (machinery),

less-specialized goods

Axial Belt in the United Kingdom Industrial strengths coupled with access to the London

market

Ruhr Region Important centre of industry - access to the Rhine River,

European and world markets Foundation for Europe’s coal, iron, steel and heavy

engineering region

De-industrializationMany areas of the American

Manufacturing BeltLoss of manufacturing jobs versus

sustained national averageSpatial shifts towards new areas able

to support new industriesAerospace, electronics and chemicals

The Economics The richest, powerful = most industrialized

(OECD nations) Per capita and income gross domestic

product increases Three-sector “stage” model

Primary, secondary, tertiary industries dominate the economy at different times

But they all lead to the next stage together Manufacturing and industry are still important

as a knowledge based society takes hold Job opportunities!

The Job IssueManufacturing capabilities have

outstripped the need for as many workers

Creation of jobs will be a difficult task for future

Government commitment and involvement

Smith versus List Economic Liberalism

Division of labor and pursuit of self-interest Fair competition Minimal government involvement Economic freedoms - trade, investment, labor

movement Economic Nationalism

Development of “productive forces” Interrelationships between industry, agriculture,

commerce, and transport Tied to improvements in heath, education, religion

and family life - therefore a government intervention

Liberalism verus Nationalism

Decide industrial development Technology transfer, capital goods development,

skill formation, inter-firm relations

Liberalism Support FDI

Nationalism Cautious towards FDI Legislation and bureaucracy

Canada and Sweden Canada

Encourages competition and FDI for increased knowledge consumption

Cheaper than developing independently

Sweden Development of domestic industries Heavy research and development utilized around

the world Dated technology for employees to develop on

TodayNICs incredibly important in export-

oriented activitiesCountries unable to change status

levels since the 1930s Periphery, semi-periphery, core country

status

UrbanizationGreat ties to industrializationManufacturing anchored by

metropolitan cities with high growth Development of inner-city suburbs

supporting manufacturing employmentNon-metropolitan industrialization

trend