3. Site Factors
Result from the unique characteristics
of a location
The cost of conducting business
varies among locations, depending on
the costs of three factors
– Land
– Labor
– capital
4. Land
– modern factories tend to be more
suburban or rural
– need for large tracts of land; single story
buildings
– cheaper in rural or suburban locations
– accessible to energy sources: water,
wood, coal, hydropower
– other amenities including climate,
recreation, culture, topography, cost of
living
5. Labor
labor intensive = labor cost is a high
percentage of expenses
highly skilled vs less skilled
clothing: LDC’s (Asia); in US from NE to SE
(less union)
Levi’s: no plants in US after Dec 2003; jobs
have been outsourced to China
wool remains in NE
electronics requires skilled workers in NY,
Mass, CA near major University centers
6. Capital
refers to the availability of investment
funding
California’s Silicon Valley
financial incentives are a means of
luring a business to locate in your
community; incentives include grants,
low cost loans, tax breaks
7. Situation Factor
Involve transporting materials to and
from a factory
– Transportation of raw materials to factory
– Transportation of finished goods to
market
8. Location Near Inputs
Include resources or parts or materials
made by other companies
(outsourced)
Copper Industry-Arizona
– BR: final product weighs less than inputs
– Also energy hungry
Steel Industry
– Map on page 382
9. Location Near Markets
Bulk Gaining
– Gains volume or weight during production
– Soft drinks/fabricated metals
Single Market Manufacturers
– High fashion apparel/motor vehicle parts
Perishable Products
– Dairy/newspapers
10. Ship, Rail, Truck or Air
The farther something is transported the
lower the cost per mile
– Decreases at different rates for each mode
because loading/unloading costs vary with mode
Trucks used most often for short distance
Trains used most often for long distance
Ship is attractive for longest distances
Air most expensive alternative but valued for
speedy delivery of small bulk, high value
packages
