Industry - Stamford High School

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INDUSTRY
Chapter 11.2
WHY ARE SITUATION FACTORS
IMPORTANT?
• Why are industries located where they are?
PROXIMITY TO INPUTS
• The farther something is
transported, the higher the
cost
• Try to locate factory as close
as possible to both buyers
and sellers
• Inputs= Physical or man
made
• Physical= minerals, wood,
animals.
• Man made= parts or
materials made by companies
• Bulk-reducing industry
(BRI)= An industry in
which the inputs weigh
more than the final products
• To minimize transport costs,
BRI needs to locate near its
sources of inputs
COPPER: BRI
• 1st three steps= bulk
reducing activities
• Mining the heavy, bulky
ore extracted is mostly waste
• Concentration always
near the mines because
concentration transforms
the copper ore into a
product of much higher
value per weight.
• Smelting Concentrated
copper=the input. Smelting
produces different forms of
copper, so they want to be
near the input…the
concentration mills
• Refining Little weight loss
occurs so the proximity to
the first three is less critical.
STEEL: BRI
• Located to minimize the
cost of transporting two
inputs (iron ore and
coal)
• Needs large quantities
of bulky, heavy iron ore
and coal steel making
has to be near the
sources of the two
inputs
• Mid-19th century= concentrated
around Pittsburgh
• Late 19th century= Lake Erie,
Cleveland, Youngstown and
Toledo, shifted because of
discovery of rich iron ore, coal
was shipped by train
• Mid 20th century= Southern end
of Lake Michigan, new
steelmaking required more iron
ore than coal
• Late 20th century: Most steel
mills in USA closed, so for those
remaining the proximity to
markets is more important
PROXIMITY TO MARKETS:
BGI
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Fabricated Metals
Brings together metals such as
steel and previously manufactred
parts as the main inputs and
transforms them into a more
complex product
Separate parts are joined together
through welding, bonding, and
fastening
Cost of shipping the final
product is usually the most
important
Located near markets
i.e.: air conditioners, refrigerators,
televisions, cars
•
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Beverage Production
An industry that adds bulk
Empty cans to start, full
cans at the finish
Principal input= water
Added ingredients= syrups,
barley, hops, yeast= less
bulky than water, easier to
transport
Because water is available
almost everywhere in USA,
bottlers can minimize cost
by being near market
SINGLE-MARKET
MANUFACTURERS
• Specialized
manufactureres with
only one or two
customers
• Optimal location is
often in close proximity
to the customer
• Example: producer of
parts for motor vehicles
• “Just in time” delivery
• Parts are delivered to
the assembly plant just
in time to be used
• The seats…
manufactured close to
the customer so that
shipping is quick
PERISHABLE PRODUCTS
• Must be located near
their markets
• Milk, bread
• Frozen, canned, and
preserved products do
not have to be
close…cheese and
butter (Wisconsin)
• Daily newspaper…why?
TRANSPORTATION METHODS
• Firms seek the lowest-cost mode
of transport
• Trucks: Short-distance, fast
loading and unloading time.
• Trains: Used for trips that will
take longer than 1 day, take longer
than trucks to load
• Ships: Good for long distance
b/c cost per km is low, slow
• Air: Most expensive so used for
small-bulk, high value packages
• Some companies have to use
more than one mode of
transportation
• Break-of-bulk point: Multiple
transport modes located here,
which is a location where transfer
among transportation modes is
possible…i.e. a steel mill near the
port of Baltimore receives iron
ore by ship from South America
and coal by train from
Appalachia.

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