Transcript iron collar
Chapter 9 Livelihood & Economy: From Blue Collar to Gold Collar Secondary Activities • Manufacturing industries: turning raw materials into usable products – adding value to a raw material or resource – “blue collar” jobs Location • Manufacturer’s considerations: – – – – – 1. 2. 3. 4. 5. Cost of raw materials Distance from them & from markets Wages of labor Outlays for fuel Capital availability & rates Principles of location • • • • “Ground Rules” 1. Spatially fixed costs 2. Spatially variable costs 3. Profit maximization, or least total cost • 4. Locational search for minimization of variable costs • 5. Transportation charges – Accumulation & distribution = orientation • 6. Manufacturing industries – Interdependence, linkages Location factors • • • • • 1. 2. 3. 4. 5. Raw materials orientation Power supply orientation Labor Market orientation Transportation Spatial orientation Types of transportation • Water transport • cheapest for long haul / one leg of transport • oceanic, inland routes non-perishable bulky products • containerization • flexible • Rail lines • • • • cheap for long-distance / one leg of transport non-perishable bulky products containerization inflexible Transportation • Trucking • cost effective for local movement & perishable products • low efficiency for long-distance & bulky products • containerization • high maintenance costs • flexible • Increasingly combining water+rail+truck transport costs • containerization streamlines this process Transportation • Pipelines • • • • efficient, speedy for liquids, gases multi-purpose expensive to install inflexible • • • • for industries not locationally significant long distance passenger, high value freight expensive flexible • Air transport Distance & rate efficiency Containerization -2004: more than 75% of all international shipping -more efficient ships can carry over 8000 containers -need for deeper ports, dredging Transportation costs • Freight rates – Charges for loading, transporting, unloading • Fixed costs – company’s investment • • • • • 1. 2. 3. 4. 5. land plant equipment terminal – loading, packing, unloading line-haul – over-the road-expenses • Processed products can bear more costs • Each shipment bears costs of freight rates and fixed costs Transportation considerations • Usually locations that fall between material sources and final markets are more expensive: – two short hauls = more expense than one long haul • 2 exceptions: – Break-of-bulk-points – In-transit-privilege Modeling theories • Weberian (Alfred Weber, 1868-1958) • Least-cost theory – variable costs • Optimum location for manufacturing minimizing three costs: – relative transport costs, labor costs, agglomeration costs – Weber concluded transport costs are major consideration • If agglomeration or labor costs are sufficient this can change sole determination by transportation costs Weber’s locational triangle Diagram costs: weight, movement, distance Equilibrium point – from “pull” Locational Interdependence Theory • When the locational decision of one firm is influenced by locations chosen by its competitors – Creates spatial monopoly – Maximizes return, does not minimize costs Profit-maximization approaches • The correct location of a production facility is where the net profit is greatest • Substitution principle • “Footloose” firms – Neither resource or market oriented Additional locational considerations • 1. fordism • Mass production, assembly lines • 2. flexible manufacturing • Just-in-time production • Labor flexibility, more skills • 3. agglomeration • Mutual benefit concept • Sharing of infrastructure • Can grow due to multiplier effects • Can lead to deglomeration/diseconomi es • 4. comparative advantage • Specialization • Outsourcing / maquiladoras • 5. additional imposed considerations • Land-use zoning controls • Environmental standards • Government induced development • Local tax abatements Transnational corporations (TNCs) • 21st century = 62,000 TNCs – employing approximately 56 million workers • of world’s largest economies over ½ are TNCs – primarily in primary & secondary economy sectors Investment locations • Foreign direct investments – concentration in 10-15 countries – south, southeast, east Asia (China is biggest), Latin America & Caribbean – increasingly directed towards developing countries primary & secondary investments • Secondary: • computers, electronics, petroleum/mining, motor vehicles, chemicals, pharmaceuticals • Primary: • wheat, maize, coffee, cotton, iron ore, timber • Bepal, India World industrial regions areas not continuous or “solid” as map suggests industrial regions Tertiary activities • Services to primary & secondary sectors, to the general community, and to the individual • Broad term covering large range of activities • Restricted to lower-level services related to day-to-day needs of people “postindustrial” economies • Developed world transitioned from secondary economies to tertiary & quaternary • Pressures: • • • • • Rising energy costs Labor costs Growth of TNC Outsourcing Transfer of technology to developing countries United States • Most advanced “postindustrial” economy • Japan, Australia, Canada, Israel, Western Europe • Growth of tertiary activities is characteristic of complex social, economic, administrative structures • Locational controls for tertiary activities: market oriented • Change from subsistance, in-house lifestyle – Home & business “outsourcing” of certain activities • Housecleaning • Fast food, prepared food, restaurants • Service maintenance Tourism • Travel undertaken for pleasure, rather than business • The single most important tertiary activity, and world’s largest industry in jobs and total value generated – 250 million jobs generated – official employment positions + 15% of world’s work force – informal sector number is unknown – 2000 = $400 trillion value – 14% of world’s GDP • Tourism represents important opportunities to the developing world Quaternary activities • “white collar” jobs • Advanced form of services involving: – – – – specialized knowledge technical skills communication ability administrative competence • Knowledge/information sector: – – – – Production Storage Retrieval Distribution • Location – Can be spatially isolated from clients – Dependent on communication capabilities – Spatially “freeing” Quinary activities • “gold collar” professions • Special highly paid skills of CEOs, government officials, researchers, financial/legal consultants • Location specific: – major metropolitan cities – prestigious addresses /streets /universities /research parks /medical centers /signature buildings THE HIERACRCHY OF INTERNATIONAL FINANCIAL CENTERS