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Industrialization: The Future of Industry in the 21st Century

Explore the changing distribution and outsourcing trends in industrialization, including shifts within MDCs, international shifts, and the impact of outsourcing and the new international division of labor. Learn about the renewed attraction of traditional industrial regions and the consequences of these changes.

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Industrialization: The Future of Industry in the 21st Century

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  1. Industrialization #2 The future of Industry

  2. 21st Century • Labor most important factor changing location of industry in the 21st century • Shifts within MDC • US • Europe • Japan • International Shifts • Countries • Distribution • outsourcing

  3. Changing Industrial Distribution within MDCs • Industry is shifting away from traditional areas of northwestern Europe and northeastern United States • In U.S. it has shifted west and south • In Europe, government has encouraged relocation toward economically distressed areas

  4. The United States • NE U.S. lost 6 million jobs in manufacturing between 1950-2009 • Especially large declines in NY and PA • Once served as hub of clothing, textiles, steel, and fabricated metal manufacturing • 2 million jobs added to the South and West between 1950-2009 • Why the south? • Right-to-work laws • Enacted in South • Requires a factory to maintain “open-shop” and prohibits “closed-shop” • Closed shop • A company and union agree that everyone must join a union • Open shop • A union and company must not negotiate a contract that requires workers to join a union • Textile Production • Also moved to south and west • Lower wages • Little interest in joining unions

  5. Europe • Manufacturing has shifted from NW Europe to southern and eastern Europe • European government policies have encouraged • EU provides assistance to convergence regions and competitive and employment regions • Convergence= Eastern and Southern Europe • Competitive and Employment= Western Europe’s traditional core • Spain has had most manufacturing growth since late 20th century • Growth had been retarded by physical and political isolation • Regions east of Germany and west of Russia have become industrial centers since fall of Communism • Called “Central Europe” • Poland, Czech Republic, and Hungary • Two attractive site and situation factors • labor, market proximity • Good value for money

  6. International Shifts in Industry • In 1970 nearly ½ of world industry was in Europe and nearly 1/3rd was in North America • Today both regions only account for ¼ • Increasingly important industrial areas • East Asia • Rapid industrial growth in China • Also includes Japan and South Korea • South Asia • Led by India • Textiles, motor-vehicle production • Important center for business services • Latin America • Brazil leading industry country • Closest low-wage region to the United States • Cost of shipping lower • Maquiladoras

  7. International Shift in Industry • Changing distributions • Shift to new industrial regions can be seen clearly in steel and clothing • MDCs losing production to these key industries to LDCs • Steel production declined in MDCs 40% and increased in LDCs by 60% between 1980 and 2008 • Labor-intensive industries have been especially attractive • U.S. apparel workers declined from 900,000 in 1990 to 150,000 in 2009

  8. Industrial Shift in Industry • Outsourcing • Transnational corporations have been especially aggressive in using low-cost labor in LDCs • Operations that can utilize low-skill, low-wage workers will relocate to LDCs despite increase in transportation costs • Selective transfer of jobs to LDCs is known as the new international division of labor • TNCs corporations allocate production to low-wage countries through outsourcing • Definition: turning over much of the responsibility for production to independent suppliers • Outsourcing contrasts vertical integration • Outsourcing has had a major impact on the distribution of manufacturing • Each step scrutinized closely in order to determine the optimal location

  9. Outsourcing

  10. Maquiladoras • Definition: • Foreign owned factories located in Mexico • Spatial distribution: • Located close to U.S. border/ major cities/ entry points • Why Mexico? • Inexpensive labor costs • NAFTA • Mexico’s proximity to U.S. market • Improved transportation

  11. New International Division of Labor • Reorganization/relocation of economic activities (jobs) from a national to a global scale • LDCs now ideal for manufacturing jobs • Features: • MDCs rely on lower-cost production from LDCs • Comparative advantage • Offshoring/ outsourcing • Trade agreements • Consequences: • Unemployment in MDCs • Deindustrialization • Internal migration • International migration • In LDCs • Added job opportunities • More gender equality • Increase in wage gap • Migration • Environment issues • westernization

  12. Renewed Attraction of Traditional Industrial Regions • Two factors encouraging some industries to located in traditional regions • Availability of skilled labor • Rapid delivery to market • Proximity to skilled labor • Skilled labor often found in traditional industrial regions • Example: Computer Industry • Traditional approach= Fordist (mass production) • Today = post- Fordist • Teams • Problem solving • Leveling • Just-in-time delivery • Increased in importance

  13. The Future? • BRIC?? • Brazil • Russia • India • China

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