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 • • • • • 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 • • • • • 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.