3. Just-in-Time Delivery
• No overstock
• Use computers/technology/communication
• Produce just enough when needed
• Supply Chains
4.
5.
6. Fordist vs Post-Fordist
Fordist
-Mass Production in one location
-Assembly line
-Know one part of the process
Post-Fordist
Flexible production, adaptation, and
innovation
-Post-Fordism uses workers in teams-all
together working to solve problems,
Post-Fordism outsources certain jobs
Production shifts worldwide
7. Intermodal Connections
• Break of Bulk locations
• Containerization is a system of intermodal
freight transport using standard intermodal
containers.
• These can be loaded and sealed intact onto
container ships, railroad cars, cargo planes, and
semi-trailer trucks.
24. Venture Capital
• What Does Venture Capital Mean?
• Money provided by investors to startup
firms and small businesses with perceived
long-term growth potential. This is a very
important source of funding for startups
that do not have access to capital markets.
It typically entails high risk for the investor,
but it has the potential for above-average
returns.
25. THE MOST IMPORTANT
FACTOR IN THE CLUSTERING
OF HIGH TECH INDUSTRIES IN
SILICON VALLEY WAS THE
AVAILABILITY OF CAPITAL.
30. High-tech industries, needing a highly qualified workforce,
may appear footloose, but in practice they tend to locate
close to universities, research establishments, and
motorways.
33. To Suburbs
• Factories are better one story…need cheaper
land to build out; not up (land cheaper in burbs)
• Trucks and Interstate highways are the major
modes of shipping goods today; not railroads
• Cluster near major highways in industrial parks
• Changing demands (more variety)-Cars!
• Regional plant produced cars for region (past)
• National plant produces 1 car for country
34. Chevrolet Assembly Plants,
1955
In 1955, GM assembled identical Chevrolets at ten final assembly
plants located near major population centers. Why are
cars located near market?
NEAR MARKET
36. Chevrolet
Assembly
Plants
In 2007, GM was producing a
wider variety of vehicles, and
production of various models
was spread through the interior
of the country.
Market is still key
37. Site Selection for Saturn
GM considered a variety of economic and geographic factors when it
searched for a site for producing the new Saturn in 1985. The plant was
eventually located in Spring Hill, TN.
-land costs
-labor costs
-transport cost
-taxes
-infrastructure:
energy, highways
38. To South
• Lower land costs, labor costs, taxes
• Right to Work States:
• hard to create unions, less pay for workers
• Saturn to the South
• Better infrastructure than past
• After Civil War, no railroads, no energy/electricity, poor roads
• Government provides:TennesseeValley Authority, roads
• Air Conditioning
39. BMW plant in South Carolina
• Near major highways; non-union workers!
40. Sock & Hosiery
Manufacturing
Men’s and women’s socks and hosiery manufacturers usually
locate near a low-cost labor force,
such as found in the southeastern U.S.
41. To Gulf Coast
• Oil and Natural Gas over coal
• Natural Resources there
• Oil Refining, petrochemical manufacturing, food processing,
NASA
42. To S. California
• Panama Canal opens
• Aircraft industry
• Light winds; no winters, clear skies
• Textile production (largest in U.S.); Furniture (2nd
largest in U.S.)
• Immigrant labor (no unions)
• High-skill, college-educated workforce
43.
44. But…U.S. Production Workers
1950 & 2005
States in the Northeast and Southern Great Lakes traditionally associated with
manufacturing accounted for two-thirds of manufacturing in 1950 but
only two-fifths of manufacturing in 2005.
47. World Steel Production, 2005
By 2005, steel production had increased in
developing countries but declined in the
more developed countries.
48. Distribution
of Steel
Production
1980 & 2005
Developed countries accounted
for 80% of world production in
1980 but only 45% in 2005.
LDCs increased from 20% to
55%. China is now the world’s
largest producer.
51. Changing Location Factors
• Economic Interdependence/Globalization
• Transnational Corporations seeking high profits (Profit drive)
• Transportation/Communication changes
• Time-Space Compression
• Cheaper Transportation costs
• Internet superhighway
• (Don’t need to be near market as much anymore!)
52. Changing Location Factors
• Proximity to low-cost labor (skilled/unskilled)
• Outsourcing by Transnational corps and other companies
• Other Advantages
• Lower Taxes *Lax environment laws
• Access to new markets
• Supernational Trade Agreements
• NAFTA: Move to Mexico and Maquiladoras
• European Union shift to cheaper labor
53. Changing Location Factors
• Special Economic Zones (SEZ)
• a geographical region that has economic laws that are more
liberal than a country's typical economic laws. Usually the goal
of a structure is to increase foreign direct investment by foreign
investors, typically an international business or a multinational
corporation (MNC).
• Includes Free Trade Zones (FTZ), Export Processing Zones
(EPZ) – like Maquiladoras
• In China, Special Economic Zones -the early 1980s.The most
successful, Shenzhen, has developed from a small village into
a city with a population over 10 million within 20 years.
56. Labor Cost per Hour
MDCs and LDCs
Fig. 11-22: Hourly wages can be under $1 in many LDCs compared to well
over $10 in many MDCs.
57. U.S. Clothing Production
1994 - 2005
Fig. 11-23: The percent of U.S. made clothing has declined sharply since the 1990s while
imports have increased.
58. New Industrial Regions
• China
• low cost labor; new market
• New laws allowing TNC in certain
regions (Special Economic Zones)
• 3 areas: ¼ of pop; ½ of wealth; ¾
of foreign investment; 5/6 of
foreign trade
• BACKWASH EFFECT: population
leaving areas rushing to inudustrial
areas
60. 4 Asian Tigers
• Rapid industrialization between the early 1960s -1990s
• Still industrial but move to tetriary
• Low cost labor + education = skilled labor force; export driven
• For example, Hong Kong and Singapore became world leading
international financial centers, while South Korea and Taiwan
became world leaders in information technology
• The Four Asian Tigers focused on improving the education system
at all levels;
63. Latin America
• Mexico
• NAFTA and Maquiladoras: 1980s HUGE growth in the north in MEXICO
• Cheaper labor than in US; Close to US
• Less environmental restrictions; child labor
• Interregional migration and development problems
• Some have closed due to cheaper labor in Asia (325 of 1122
textile maquiladoras closed and gone to Asia)
• EXPORT-PROCESSING ZONE
66. New Industrial Regions
• EU has encouraged growth by giving capital to companies
who locate in less developed areas
• Spain
• physically isolated and not developed into
• 2nd
largest auto industry in EU
• Poland/Czech Republic
• Low cost labor and great situation (Central Europe)
67. Overall impact on U.S.
• Unemployment (Flint, Gary, etc) due to outsourcing
• Deindustrialization (move from 2nd
to 3rd
service activities)
• Increase in Retail jobs (less $; less benefits)
• Internal Migration (Rust to Sun Belt)
• Decreased Union membership
• Lower-cost goods
68. U.S. Imports From China
0
50
100
150
200
250
300
350
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
China Admitted to WTO
Source: U.S. Census Bureau
$USinbillions$USinbillions
Editor's Notes
China obviously has been a huge beneficiary of this trend. In 1990, U.S. imports from China totaled just over $15 billion. Last year, they exceeded $285 billion – increase of 1,800 percent in 16 years. Substantial percentage of that growth has occurred since 2001, when China was admitted to the World Trade Organization.
