Topic 7 * Location of Manufacturing

Report
GEOG 135 – Economic Geography
Professor: Dr. Jean-Paul Rodrigue
Topic 7 – Location of Manufacturing
A – World Manufacturing
B – Manufacturing Systems
C – Flexible Manufacturing
Hofstra
Department
of Global
Studies
& Geography
HofstraUniversity,
University,
Department
of Global
Studies
& Geography
A - WORLD MANUFACTURING
1.
2.
3.
Manufacturing
World Manufacturing Concentrations
De-Industrialization
© Dr. Jean-Paul Rodrigue
1. Phases in Manufacturing
Stage
Raw
materials
Attributable to climatic (agricultural
products) or geological (ores and fossil
fuels) conditions.
2- Intermediate Goods
Manufacturing
and assembly
Transformation that confers added
value. Metals, textiles, construction
materials and parts used to make other
goods.
3- Final Goods
Distribution
Market
1- Commodities
Goods shipped to large consumption
markets. Flow and inventory
management.
Locational Behavior
Resulting spatial structure
© Dr. Jean-Paul Rodrigue
1. Commodity Chains and Added Value
High
Fabrication
Added value
R&D
Low
Marketing
Branding
Design
Concept
Sales / Service
Distribution
Manufacturing
Logistics
Commodity chain
© Dr. Jean-Paul Rodrigue
1. Disconnection of Global Production and Distribution
Core Base
R&D
Distribution
Marketing/Retail
Manufacturing Base
© Dr. Jean-Paul Rodrigue
2. Global Manufacturing, 2009
© Dr. Jean-Paul Rodrigue
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
© Dr. Jean-Paul Rodrigue
© Dr. Jean-Paul Rodrigue
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
World Manufacturing Concentrations
■ Asia
• Japan: Highly concentrated.
• China: Special economic zones along the coast.
© Dr. Jean-Paul Rodrigue
Major Japanese Conglomerates
Industry
Banking
Finance
Industrial and
Manufacturing
Mitsui
Mitsubishi
Sakura Bank (19902001)
Sumitomo Mitsui Bank
(2001-)
Mitsui Trust & Banking
Mitsui Mutual Life
Mitsui Real Estate
Mitsui Marine & Fire
Fuji Photo Film
Mitsukoshi
Suntory
Toshiba
Toyota
Mitsui Bussan
Japan Steel Works
Mitsui Toatsu Chemical
Fuyo
Sanwa
Sumitomo Bank
Bank of Tokyo(-2001)
Mitsubishi (1996-2005)
Sumitomo Mitsui Bank
Bank of Tokyo-Mitsubishi
(2001– )
UFJ (2006– )
Fuji Bank (-2000)
Mizuho Bank (2000– )
Sanwa Bank (-2002)
UFJ Bank (2002–2006) Dai-ichi Kangyo
Bank of Tokyo-Mitsubishi Bank (-2000)
UFJ (2006– )
Mizuho Bank (2000– )
Tokio Marine and Fire
Insurance
Mitsubishi Trust &
Banking
Meiji Yasuda Life (2004-)
Yasuda Trust & Banking
Meiji Yasuda Life (2004-) Toyo Trust & Banking
Marubeni
Orix
Yasuda Marine & Fire
Kirin Brewery
Mitsubishi Electric
Mitsubishi Fuso
Mitsubishi Motors
Nippon Yusen (NYK)
Nippon Oil
Nikon
Mitsubishi Shoji
Mitsubishi Steel
Mitsubishi Gas
Sumitomo
Sumitomo Trust &
Banking
Sumitomo Mutual Life
Sumitomo Marine & Fire
Sumitomo Real Estate
Asahi Breweries
Hanshin Railway
Keihan Railway
Mazda
Nankai Railway
NEC
Sumitomo Metal
Industries
Sumitomo Chemical
Canon
Hitachi
Matsuya
Nissan
Ricoh
Tobu Railway
Yamaha
Kureha Chemical
Industries
Hankyu Railway
Keisei Railway
Kobe Steel
Konica
Minolta
Kyocera
Shin-Maywa,
Takashimaya
Toho
Nissho Iwai
Nakayama Steel Works
Nisshin Steel
Sekisui Chemical
DKB
Fukoku Mutual Life
Asahi Mutual Life
Nissan Marine & Fire
Taisei Marine & Fire
Fujitsu
Hitachi
Isuzu
Itochu
Tokyo Electric Power
Kawasaki Steel
© Dr. Jean-Paul Rodrigue
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
GDP Share of Manufacturing, Selected Countries, 1970-2010
50%
45%
40%
35%
Brazil
China
India
Japan
Germany
United States
30%
25%
20%
15%
10%
5%
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
0%
© Dr. Jean-Paul Rodrigue
Factors Impacting De-Industrialization
Productivity growth
• More output per workers.
• Price of manufactured goods getting lower.
Outsourcing
• Remove some service activities outside the manufacturing corporation.
• Input costs is essentially "transferred" to the service sector.
Offshoring
• Transfer of a production function to another country.
Added Value
• A growing share of the added value along a value chain is derived from
non-manufacturing activities.
© Dr. Jean-Paul Rodrigue
Hourly Compensation in Manufacturing, 1997-2010 ($US)
0
Germany
France
United States
Japan
UK
Singapore
South Korea
Brazil
Taiwan
Poland
Mexico
India
China
Philippines
5
10
15
20
25
30
35
40
45
$43.76
$40.55
$34.74
$31.99
$29.40
$19.10
$16.62
$10.08
$8.36
$8.01
$6.23
$2.68
$2.51
2010
1997
$1.90
© Dr. Jean-Paul Rodrigue
B – MANUFACTURING SYSTEMS
1.
Globalized Manufacturing
© Dr. Jean-Paul Rodrigue
1. Globalized Manufacturing
Textiles and Garments
• Important component of the industrial revolution.
• Labor intensive activity largely globalized.
Steel
• Material and capital intensive (economies of scale).
• Provides inputs for many sectors.
• Moved to port facilities in developing countries (China).
Automobiles
• Large assembly lines with numerous suppliers (agglomeration
economies).
• Large conglomerates.
© Dr. Jean-Paul Rodrigue
Automobile Production, Selected Countries,1950-2010 (in millions)
60
55
50
45
40
China
Germany
Japan
United States
World
35
30
25
20
15
10
5
0
© Dr. Jean-Paul Rodrigue
The Automobile Supply Chain
Supplying
industries
Steel and
other metals
Rubber
Electronics
Bodies
Manufacture and
stamping of
body panels
Body assembling
and painting
Components
Manufacture of mechanical and electrical
components (wheels, tires, seats, breaking
systems, windshields, exhausts, etc.)
Final
Assembly
Consumer
market
Plastic
Glass
Textiles
Engines and transmissions
Forging and casting of
engine and transmission
components
Machining and
assembly of engines
and transmissions
© Dr. Jean-Paul Rodrigue
1. Globalized Manufacturing
Electronics
• Standard products (e.g. cars) and new applications
(e.g. TC & computers).
• Control of the R&D in developed countries.
• Subcontracting and assembly in developing
countries.
Biotechnology
• Use of living systems and organisms to develop or
make useful products.
• Mostly involved in pharmaceuticals, chemicals and
agriculture.
• Agglomeration economies for skilled workforce.
© Dr. Jean-Paul Rodrigue
Moore’s Law: Transistors per Microprocessor, 1971-2011
10,000,000,000
R² = 0.9929
1,000,000,000
100,000,000
10,000,000
1,000,000
100,000
10,000
1,000
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
© Dr. Jean-Paul Rodrigue
Value Creation and Capture, iPhone 4 (in USD)
Distribution
($90.00)
Retail
($600)
($329.95)
Misc.
($45.95)
Inputs ($24.63)
USA
China
Factory Gate Price
VA ($6.54)
($194.04)
Apple
($269.05)
Korea
Inputs ($80.05)
Germany
Inputs ($16.08)
France
Inputs ($3.25)
Japan
Inputs ($0.70)
Other
Inputs ($62.79)
International trade figures
are therefore skewed…
© Dr. Jean-Paul Rodrigue
C – FLEXIBLE MANUFACTURING
1.
2.
Fordism
The Emergence of Flexible Manufacturing (Post Fordism)
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
2. Post-Industrial Revolution
Economic foundation
Relative shift from manufacturing to services.
In absolute numbers, manufacturing increases.
Capital
Knowledge becomes a form of capital.
Growth
High reliance on innovation.
Labor
Declining importance of “blue collar” tasks.
Increasing importance of technical and creative tasks.
Trade
Highly diversified trade (from resources to high value
goods).
Information technologies
Global telecommunication networks.
IT embedded in products and services.
© Dr. Jean-Paul Rodrigue
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).
© Dr. Jean-Paul Rodrigue
2. Fordist and Post-Fordist Corporate Structure
Characteristics
Fordism
Post-Fordism
Organization
Pyramidal
Networked
Focus
Supply
Demand
Style
Structured
Flexible
Reach
Regional / National
Global
Resources
Physical Assets
Information / Knowledge
Production Mode
Mass Production
Mass Customization
Production Structure
Self-Sufficiency
Alliances
Inventories
Months
Hours
Production Cycle Time
Weeks / Months
Days
Information
Weekly
Real-Time
Product Life Cycle
Years
Months
Quality
Affordable Best
Zero-Defect
© Dr. Jean-Paul Rodrigue
Topper the Trick Terrier
Plastic Eyes:
(Shenzhen, China)
Voice Recognition Requirements:
(San Francisco)
Voice Recognition Programming:
(Taiwan)
Plastic Body: (Malaysia)
Speaker for voice:
(Dongguan, China)
Motors for legs:
(Shaoguan, China)
Plastic legs: (Taiwan)
Microfiber for Coat: (Korea)
Transistors:
(Shenzhen, China)
IC chips: (Taiwan)
Wiring: (Dongguan, China)
Packaging: (Hong Kong)
© Dr. Jean-Paul Rodrigue

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