What are situation and site factors?
- Situation: involves the transport to and from materials in a factory
- Firms want to minimize transport costs of both products and raw materials
- Site: result from the unique characteristics of a location
What are the two factors regarding situation? Ideal location?
- Proximity to inputs: is as close as possible to inputs if transport cost of inputs > transport cost of products
- Proximity to markets: is as close as possible to markets if transport cost of inputs < transport cost of products
What are is the main situation factor in regards to proximity to input? Why? Which countries have the most?
Location of minerals:
- Minerals are useful for industry. 'Nuff said.
- Australia and China have some of the most important minerals!
What 3 kinds of industries want to be closer to markets?
- Single market
- Perishable products
What are single market manufacturers? Why would they want to be closer to markets than inputs (2 reasons)?
They are specialized manufacturers with only one or two customers, so they are close to them.
- To cut costs from giving products -> distributors -> market (instead, products -> market)
- "just-in-time" delivery; i.e., manufacturing parts to be used withi
Examples of perishable products?
- Fresh produce
What are the characteristics of a bulk-reducing industry?
- Industry in which weight of input > weight of output
- To minimize costs, they are located near input, not market
What are some examples of bulk-reducing industries?
- Copper production
- Steel industry
- Paper, pulp, sawmills
- Canning of fruits and veggies
What are the characteristics of a bulk-gaining industry?
- Industry in which weight of input < weight of output
- To minimize costs, they are located near market, not input
What are some examples of bulk-gaining industries?
- Auto production
- Fabricated manufacturing
- Beverage production
What are the three major site factors?
What is the most important site factor?
What is a labor-intensive industry?
An industry in which wages and other compensation are high %s of a company's costs.
What is a capital-intensive industry?
An industry in which wages and other compensation are lower-than-average %s of a company's costs.
Difference between labor-intensive vs. high-wage?
Give an example:
- Labor: measured as a % of overall cost
- High-wage: measured in amount of $$$ a worker makes
- Auto workers = high wages, but the company's expenses are more towards getting the auto parts, not paying wages
- Textile workers = low wages, but the c
What is capital?
The funds to establish new factories or expand existing ones.
Silicon Valley attracted the interest of many high-tech companies because _________________.
Banks were willing to lend capital!
The ability to borrow capital has become a crucial factor in what countries? Why? Why may they not get loans?
LDCs because there is usually a lack of funding in LDC banks, so they seek to borrow money from MDCs (see World Bank and IMF).
They may not get loans if countries have essentially "bad credit scores".
What does "land" encompass?
- Ability to build factories (actual land)
- Contains neccessary natural and human resources, too
Why did early factories locate inside city land? (know both situation/site factors)
How were these factories built? Why?
- Attractive situation: near large market, as well as transportation from railways
- Attractive site: large labor supply and capital funds
Were built multi-story to conserve space.
Why do modern factories locate inside of suburban and rural areas? (know both situation/site factors)
How were these factories built? Why?
- Situation: as trucks are the most common method of transport, truck transport is located around cities, not in them
- Site: more land and cheaper land!
Tech innovations -> one-story buildings that need land.
What is the most common method of transporting cargo today from cities? In past?
The farther something is transported, the ______ the cost per km. This is largely because firms must __________________ whether the material travels 10 or 1000 kilometers
The lower the cost per km.
This is largely as firms must pay workers to load goods on/off vehicles, no matter the distance.
Characteristics of trucks? (what distance are they best for, what their load costs are, they are most useful __________)
- Cheap load/unload costs
- Most useful: when destination can be reached in less than a day!
Characteristics of trains? (what distance are they best for, what their load costs are, they are most useful when __________)
- Slightly more expensive loading costs
- Most useful: when they need to reach longer than a day destinations
Characteristics of ships? (what distance are they best for, what their load costs are, they are most useful when __________)
- VERY long-distance
- Expensive loading costs
- Most useful: when packages have to travel across oceans
Characteristics of planes? (what distance are they best for, what their load costs are, they are most useful with what packages + delivery times (2 traits)?)
- Any distance
- VERY expensive loading costs
- Most useful: when LIGHTWEIGHT packages have to be delivered QUICKLY
What is containerization and how has it made transport easier?
- Containerization: act of shipping products in large, stack-able con trainers
- Made it quicker to transfer between modes
Regardless of modes, cost _______ every time because ___________________________.
- Cost decreases when modes of transport switch
- This is because loading costs are added between stops
What are break-of-bulk points? Give examples!
- A location where transfer among multiple (3+) transport modes is possible
- Includes seaports and airports
Where are the world's heaviest shipping routes (hint: where are most consumers located)?
- Across Atlantic to NA
- Across Pacific to NA
Why has the steel industry changed to the East Coast and NE U.S.?
- Increasing importance of proximity to markets vs. inputs
- Changes in the relative importance of main inputs
What mainly influences distribution of car manufacturing factories?
- As the markets for cars change, so do they.
Why was the NE US and NW EU popular for industries in past? Why do they still remain?
- Proximity to market!
- Skilled Labor
- Rapid delivery to market! (just-in-time)
Why are industries relocating to South US, E. EU, and other emerging industrial areas? How is this factor changing in the 21st century?
- Cheap Labor!
- Labor is site factor changing esp. dramatically in 21st century