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Chapter 11

Chapter 11 . Key Issue 4 Why are location factors changing?. Changing Location Factors. Attraction of new industrial regions Proximity to low-cost labor Outsourcing Renewed attraction of traditional industrial regions Proximity to skilled labor Just-in-time delivery.

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Chapter 11

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  1. Chapter 11 Key Issue 4 Why are location factors changing?

  2. Changing Location Factors • Attraction of new industrial regions • Proximity to low-cost labor • Outsourcing • Renewed attraction of traditional industrial regions • Proximity to skilled labor • Just-in-time delivery

  3. Attraction of New Industrial Regions • To minimize labor costs, some manufacturers are moving to locations with lower wage rates

  4. Proximity to Low-Cost Labor • Textile & apparel industry • Moved to lower wage locations within and between countries • United States • Northeast: textile industry • European immigrants, long hours, low wages • Buyers came from around the world • Jobs moved to Southeast • Lower wages, lack of unions • Interstate highways for transporting to pop. centers

  5. Sock & Hosiery Manufacturing Fig. 11-21: 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.

  6. Proximity to Low-Cost Labor • Southeastern mills in US can’t compete with LDCs • $10-15/hour vs $1/hour • US & Europe loss apparel workers • Apparel imports increased (China, LatAmer, Asia) • ¾ of shirts, trousers, underwear are imported

  7. Labor Cost per HourMDCs and LDCs Fig. 11-22: Hourly wages can be under $1 in many LDCs compared to well over $10 in many MDCs.

  8. U.S. Clothing Production1994 - 2005 Fig. 11-23: The percent of U.S. made clothing has declined sharply since the 1990s while imports have increased.

  9. Outsourcing • Transnational Corporations look for low-cost, low-skill labor in LDCs • Highly skilled workers remain in MDCs • New International Division of Labor • Selective transfer of some jobs to LDCs • Outsourcing: turning over much of responsibility for production to independent suppliers

  10. Computing Equipment Manufacture Fig. 11-24: High skill workers are needed for manufacture of computing equipment. California, the Northeast, and Texas are the major sites.

  11. Women’s and Girls’ Apparel Fig 11-25: Products that require more skilled workers are still produced in or near New York City. Other items are produced in sites with lower cost labor.

  12. Renewed Attraction of Traditional Industrial Regions • Why would any industry locate in northeastern United States or northwestern Europe??? • Proximity to Skilled Labor • Just-In-Time Delivery

  13. Proximity to Skilled Labor • Skilled labor found in “traditional” industrial regions • Fordist: workers assigned to just one specific task to perform repeatedly (Henry Ford, autos) • Post-Fordist: flexible production workers • 1. Teams • 2. Problem solving • 3. Leveling

  14. Proximity to Skilled Labor • Computer Manufacturing: high-wage, high skilled labor • California, Mass, New York, Texas • Skilled workers, proximity to major universities • “High-end” clothing • Northeastern US • More skill in cutting, assembling

  15. Just-in-Time Delivery • Proximity to market: extremely important for some manufacturers • Shipment of parts/materials to arrive moments before needed • Materials arrive hourly/daily • Dell & Gateway: eliminated inventory, computers only built when ordered • Less inventory to “cushion” any disruptions • Strikes • weather

  16. Fedex Sorting and Loading Packages picked up by Fedex are transferred to planes, flown to sorting centers, transferred to other planes and flown to other cities, then loaded onto trucks for delivery the next day.

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