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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. Phases in Manufacturing. 1- Commodities. 2- Intermediate Goods.

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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. Phases in Manufacturing 1- Commodities 2- Intermediate Goods 3- Final Goods Raw materials Manufacturing and assembly Distribution Market Stage Attributable to climatic (agricultural products) or geological (ores and fossil fuels) conditions. Transformation that confers added value. Metals, textiles, construction materials and parts used to make other goods. Goods shipped to large consumption markets. Flow and inventory management. Locational Behavior Resulting spatial structure

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

  5. 1. Disconnection of Global Production and Distribution Core Base R&D Distribution Marketing/Retail Manufacturing Base

  6. 2. Global Manufacturing, 2009

  7. 2. World Manufacturing Concentrations • North America • The North American Manufacturing belt. • 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

  8. 2. World Manufacturing Concentrations • Europe • Northern Lowlands: Encl. Both 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.

  9. World Manufacturing Concentrations • Asia • Japan: Highly concentrated. • China: Special economic zones along the coast.

  10. Major Japanese Conglomerates

  11. 3. De-Indsutrialization • Context • Decline in manufacturing capacity and employment. • Particularly prevalent in developed countries (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.

  12. GDP Share of Manufacturing, Selected Countries, 1970-2010

  13. Factors Impacting De-Industrialization

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

  15. B – Manufacturing Systems Globalized Manufacturing

  16. 1. Globalized Manufacturing

  17. Automobile Production, Selected Countries,1950-2010 (in millions)

  18. 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

  19. 1. Globalized Manufacturing

  20. Moore’s Law: Transistors per Microprocessor, 1971-2011

  21. Value Creation and Capture, iPhone 4 (in USD) Korea Inputs ($80.05) Germany Distribution ($90.00) Inputs ($16.08) Inputs ($24.63) Retail ($600) France USA China ($329.95) Inputs ($3.25) Misc. ($45.95) Japan Factory Gate Price ($194.04) Inputs ($0.70) VA ($6.54) Other Inputs ($62.79) Apple ($269.05) International trade figures are therefore skewed…

  22. C – Flexible Manufacturing Fordism The Emergence of Flexible Manufacturing (Post Fordism)

  23. 1. Fordism • Impacts of mass production system (Fordism) • Customization before mass production. • Mass production and assembly lines. • Mass production (e.g. shopping mall). • Economics of scale locked into a lack of flexibility (little customization). • Fordism reached technical/social limits in the late 20th Century.

  24. 2. Post-Industrial Revolution

  25. 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).

  26. 2. Fordist and Post-Fordist Corporate Structure

  27. Topper the Trick Terrier Voice Recognition Requirements: (San Francisco) Voice Recognition Programming: (Taiwan) Plastic Eyes: (Shenzhen, China) Plastic Body: (Malaysia) Microfiber for Coat: (Korea) Speaker for voice: (Dongguan, China) Transistors: (Shenzhen, China) Motors for legs: (Shaoguan, China) IC chips: (Taiwan) Plastic legs: (Taiwan) Wiring: (Dongguan, China) Packaging: (Hong Kong)

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