Industry and Services

1. Industry and Services Rimma

2. Key Questions • Where did the industrial Revolution begin, and how did it diffuse? • How do location theories explain industrial location? • How has industrial production changed? • What are the major industrial belts in the world today and why? • What is the service economy, and where are services concentrated?

3. Where did the Industrial Revolution begins, and how did it diffuse? Industrial Revolution

4. Industrial Revolution • The first steps did not use revolutionary energy sources. • 18th century was marked by a series of new inventions that brought new uses to known energy sources. • The flow of capital into Western Europe enabled investors to fund inventors and to perfect inventions. • Innovations in iron manufacturing enabled the production of the steam engine and other products made of iron. • The use of molds allowed more consistency in iron parts and increased production of components. • Steam engine was used to pump water out of coal mines, enabling coal workers to reach deeper coal streams; and to create a new mode of transportation, the railroad. • Ocean shipping also entered a new age when the first steam-powered vessel crossed the Atlantic in 1819.

5. Where did the Industrial Revolution begins, and how did it diffuse? Diffusion of Industrialization

6. Diffusion to Mainland Europe • Proximity to coal fields and connection via water to a port same as in industrial ports in Europe • Railroads • Railroad systems connecting to Paris strengthened the city’s position as the largest local market for manufactured products for hundreds of miles.

7. How do location theories explain industrial location? Location Theories

8. Weber’s Model • German economic geographer Alfred Weber (1868-1958) • Least cost theory accounted for the location of a manufacturing plant in terms of the owner’s desire to minimize three categories of costs. • Excessive agglomeration leads to high rents, rising wages, and circulation problems. • Deglomeration is when factories lead many industries to leave the crowded urban centers of the US eastern megalopolis and move to other locations.

9. Least Cost Theory

10. Hotelling’s Model • Harold Hotelling (1895-1973) sought to understand the issue of locational interdependence • Ice cream stands • Concluded that two vendors will start locations distant from one another so that they could each be as close to as many customers as possible. • Purpose was to show that the location of an industry could not be understood without reference to the location of other industries of like kind.

11. Losch’s Model • Lösch (1967) tried to determine locations which would maximize profit. • Would locate in areas where at least some profit was expected • Firms will try to situate themselves away from the margins of that zone.

12. How do location theories explain industrial location? Manufactoring Belts

13. Manufacturing Belts • Before 1960, the main locational costs for industries were transportation of raw materials and shipping of finished products. • Before 1950, only a small minority of countries were major industrial economies.

16. How has industrial production changed? Fordist vs. Post-Fordist

17. Fordist vs. Post-fordist Fordist • The basic principles of Fordism were the foundation of a large processing plant marked by inflexibility in a process that was overseen by a bureaucratic and hierarchical managerial system. • Focused on protecting the national market: it sought to keep jobs within its own borders with the purpose of selling mainly to citizens of its own country • Allowed for the production of consumer goods at a single site on a previously unknown scale. • Recognition that the large-scale, bureaucratic organization doesn't apply and, in fact, hinders the process. • More flexible system of set production practices in which goods are not mass produced. Post-fordist

18. How has industrial production changed? Global Division of Labor

19. Television- The Core, the Semi-Periphery, and the Periphery • Production of televisions allows us to understand the workings of global labor and the shifts in production that occur as goods become standard commodities of trade. • Research and design of televisions continue to be located in the home countries of the major television manufacturers. • Labor is moved into the periphery and semi-periphery to take advantage of lower labor costs.

20. New Influences on Geography of Manufacturing • Any multinational country is involved in designing products and finding buyers for the new products.

21. How has industrial production changed? Intermodal connections

22. Intermodal Connections • Places where two or more modes of transportation meet in order to ease the flow of goods and reduce the cost of transportation • Includes air, road, rail, barge, and ship • Container system – goods are packed in containers that are picked up by special, mechanized cranes from a container ship in an intermodal connection and placed on the back of a semi-trailer truck, barge, or railroad car

23. Where are the major industrial belts in the world today and why? Deindustrialization

24. Deindustrialization • Deindustrialization is a process by which companies move industrial jobs to other regions with cheaper labor, leaving a high rate of unemployment. • The economic processes leading to deindustrialization in some parts of the world have led to industrialization in other parts of the world.

25. Outsourcing and Offshoring • Outsourcing: when production is turned over in part or in total to a third party • Offshoring: to outsource to a third party located outside of the country • Example: China

26. China • Major industrial expansion occurred during the communist period. • Vast country with a substantial resource base. • The second largest industrial region in china developed around the country’s biggest city. • China’s large labor force could attract hundreds of companies around the world-economy’s global division of labor. • Pushing industrialization to the center of the country. • Major recipient of industrial work that is outsourced or moved offshore.

27. What is the service economy, and where are services concentrated? Service economy and Technopoles

28. Service Economy • Service industries do not generate an actual, tangible product; instead they include the range of services that are found in modern societies. • In the global economic core, service industries employ more workers than primary and secondary industries combined.

29. Geographical Dimensions of the Service Economy • Deindustrialization and the growth of the service economy unfolded in the context of a world-economy that already characterized by wide socioeconomic disparities. • The Sunbelt is a region of the United States, stretching through the Southeast to the Southwest. • New Influences on Location • Useful to go back to our distinction among tertiary, quaternary, and quinary industries. • If they are located too far from their consumers, they are unlikely to succeed.

30. High Technology Corridors • An area designated by local or state government to benefit from lower taxes and high technology infrastructure with the goal of providing high-technology jobs to the population. • Technopole is an area planned for high technology where agglomeration built on synergy among technological companies occurs.