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Topic 7 – Location of Manufacturing

Topic 7 – Location of Manufacturing. A – World Manufacturing B – Manufacturing Systems C – Flexible Manufacturing. A - World Manufacturing. Manufacturing World Manufacturing Concentrations De-Industrialization. 1. Manufacturing. The relevance of manufacturing

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Topic 7 – Location of Manufacturing

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  1. Topic 7 – Location of Manufacturing A – World Manufacturing B – Manufacturing Systems C – Flexible Manufacturing

  2. A - World Manufacturing Manufacturing World Manufacturing Concentrations De-Industrialization

  3. 1. Manufacturing • The relevance of manufacturing • Fabrication is the foundation of economic activities. • Provides for the material needs of the society. • From tools to consumption goods. • Manufacturing creates growth and employment. • Multiplying effects on upstream manufacturing activities. • Services depend on manufacturing.

  4. 1. Phases in Manufacturing Read this content Research and Development Product design Stages Market 1- Commodities 2- Intermediate Goods 3- Final Goods Distribution center Raw materials Manufacturing and assembly Distribution Storage Warehouse Attributable to climatic (agricultural products, forestry products) or geological (ores and fossil fuels) conditions. Transformation that confers added value. Materials and parts used to make other goods. Goods shipped to large consumption markets (cities). Flow and inventory management. Locational behavior Resulting spatial structure

  5. 1. Commodity Chains and Added Value Read this content High Fabrication R&D Sales / Service Marketing Branding Added value Design Distribution Manufacturing Concept Logistics Low Commodity chain

  6. 1. Disconnection of Global Production and Distribution Read this content Core Base R&D Distribution Marketing/Retail Manufacturing Base Explain the reasons why the core base and the manufacturing base have become increasingly disconnected.

  7. 2. Global Manufacturing, 2009 Read this content

  8. 1. Manufacturing Clusters • Clustering • Proximity to suppliers and customers. • Expand economies of agglomeration. • Network effects of a cluster of manufacturers. • Conventional manufacturing clusters: • Commonly labeled as manufacturing belts. • Often related to a large manufacturer or resource processing plant. • Car manufacturing, metals, petrochemicals. • Emerging manufacturing clusters: • Commonly labeled as technopoles. • Innovation and designs can take place quickly. • Infrastructure in place to scale up production.

  9. Manufacturing Growth Poles Read this content The Setting of a Growth Pole Growth Pole Core Industry Linked Industry Secondary Industry Linked Industry Secondary Growth Pole Emergence of a Secondary Growth Pole

  10. 2. World Manufacturing Concentrations • North America • The North American Manufacturing belt and regional specialization. • New England: Early Manufacture & Water Power mills • Mid-Atlantic: New York City’s vast labor pool • Central New York: The Erie Canal, Niagara, and Aluminum • Pittsburg-Cleveland-Lake Erie: Steel Triangle • Western Great Lakes: Motown • Southeastern states: Textiles and Food Processing • Gulf Coast: Petro-chemicals • California: Silicon Valley • Pacific Northwest: Aviation and electronics

  11. 2. World Manufacturing Concentrations • Europe • The setting of the industrial revolution and the first manufacturing regions. • Northern Lowlands: Including England and France • Upper Rhine: Ample hydropower, central location. • Po Valley: Italian manufacturing. • Ukraine district. • Moscow-Volga: The Russian Mississippi. • Urals: Resource availability and power. • Kuznetsk Basin: The newest Russian district, logistically isolated.

  12. Distribution of European Industrial Regions, 1875

  13. 2. World Manufacturing Concentrations • Asia • Connectivity to trade. • Export-oriented strategies. • Japan and Korea: • Highly concentrated because of geographical restrictions. • China: • Special economic zones along the coast. • Shenzhen (smartphones).

  14. 3. De-Industrialization • Context • Decline in manufacturing capacity and employment. • Particularly prevalent in developed economies (North America, Europe and now Japan). • Decline of the share of GDP in manufacturing. • Impact on the landscape: • Dissolution of industrial cities (e.g. Detroit). • Decline in income and property values. • The “death” of manufacturing has been greatly exaggerated. What are the factors that have incited de-industrialization?

  15. GDP Share of Manufacturing, Selected Countries, 1970-2014 Read this content

  16. Factors Impacting De-Industrialization

  17. Impacts of Deindustrialization

  18. Hourly Compensation in Manufacturing, 1997-2010 ($US)

  19. The Multiplying Effects of Technical and Technological Improvements in Manufacturing Mass production + offshoring + technical improvements + new materials

  20. The Multiplying Effects of Technical and Technological Improvements in Manufacturing

  21. B – Manufacturing Systems Globalized Manufacturing The Emergence of Flexible Manufacturing

  22. 1. Fordism • Impacts of mass production system (Fordism) • Customization before mass production. • Mass production and assembly lines. • Mass consumption (e.g. shopping mall). • Economics of scale locked into a lack of flexibility (little customization). • Wages and productivity increases; creation of a middle class. • Productivity through the intensification of labor. • Fordism reached technical/social limits in the late 20th Century.

  23. 1. Globalized Manufacturing

  24. Automobile Production, Selected Countries,1950-2018 (in millions) Read this content

  25. The Automobile Supply Chain Supplying industries Bodies Manufacture and stamping of body panels Body assembling and painting Steel and other metals Rubber Components Final Assembly Consumer market Manufacture of mechanical and electrical components (wheels, tires, seats, breaking systems, windshields, exhausts, etc.) Electronics Plastic Engines and transmissions Glass Forging and casting of engine and transmission components Machining and assembly of engines and transmissions Textiles

  26. 1. Globalized Manufacturing

  27. Computer Storage Space, 1956-2016 (Dollars per Megabyte)

  28. Value Creation and Capture, iPhone 4 (in USD) Korea Read this content Inputs ($80.05) Germany Distribution ($90.00) Inputs ($16.08) Inputs ($24.63) Retail ($600) USA China France Inputs ($3.25) ($329.95) Misc. ($45.95) Japan Factory Gate Price ($194.04) Inputs ($0.70) VA ($6.54) Other Inputs ($62.79) Apple ($269.05)

  29. 2. Post-Industrial Revolution

  30. 2. The Emergence of Flexible Manufacturing (Post Fordism) • Principle • Allows goods produced cheaply regardless of volume. • Customers, supply firms, and production plant have close, complex relationships. • Customization and flexibility. • Just-in-time manufacturing • Initially developed in Japan. • On-demand manufacturing. • Limited warehousing (saving space). • High reliance on information technologies (process control).

  31. The Four Industrial Revolutions Read this content Production Structure Driver Late 18th – early 19th Century 1.0 Mechanization Substitution Industrial cities Steam engine and mechanical production Late 19th - mid 20th Century 2.0 Mass Production Economies of scale Industrial regions Electricity and division of labor Second half of 20th Century 3.0 Global production networks Automation Input costs Electronics and information technologies Early 21st Century 4.0 Robotization Added value Global value chains Cyber-physical systems

  32. Value Chain Drivers of the Fourth Industrial Revolution Read this content • Value Chain • Added Value • Infrastructure • Labor Open innovation, Collaborative design R&D Flexibility and compliance, New materials Procurement 3D Printing and robotics, Distributed manufacturing Fabrication • Logistics Automation (warehouses, terminals and vehicles) Distribution Marketing Ecommerce, Omni facilities ‘Internet of Things’, Shared services Services

  33. Probability of Automation by Occupation Group, United States, 2018-2030 Read this content

  34. Digitalization Changes Processes but also Locations Non-material inputs High automation potential (>50%) (Labor, Capital, Technology, Policies, Regulations) Transportation and logistics Manufacturing Low automation potential (<30%) Education Healthcare Management Material Inputs Outputs (Markets, Customers) (Resources, Parts, Energy, Land)

  35. The Circular Economy Read this content • Materials Biological Goods Technical Goods • Suppliers Harvesting Recycle Biosphere • Manufacturers Remanufacture Fertilizers • Distributors Biogas Reuse Maintenance Biochemical processing Consumer User Collection Collection Leakage • Burning / Disposal

  36. Essay Explain the fourth industrial revolution and its impacts on the economic geography of manufacturing

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