11.12: Industrial Geography

Industrial Geography

How is industry related to geography? For one thing, industrial societies have more goods in them. Since the goods are cheaper, people just have more things. For another, the means of production, the factories, shipping terminals, and distribution centers are visible for anyone to see. The lifestyles of industrialized people are different. Pre-industrialized societies are not regulated by clocks, for example, people wear lass-produced similar clothing. They listen to globally marketed music. If it seems like you already read this in the chapter on pop culture, you have. Pop culture is a function of industry. Geography is concerned with places and industry changed the way the world operates. It changed the relationships between places. Places that industrialized early gained the ability to economically and politically dominate other parts of the world that had not industrialized. Something as simple as having access to cheap, mass produced guns had impacts far beyond mere trade relationships.

Figure | Map of Medium- And High-Tech Manufacturing Value Added Share in Total Manufacturing1 Author | David Dorrell Source | Original Work License | CC BY SA 4.0

Over time industrial production changed from one that disrupted local economies to one that completely changed the relationship that most human beings had with their material culture, their environment, and with one another. Industry has improved standards of living and increased food production on one hand and it has despoiled environments and promoted massive inequality on the other.

Industrialization is about applying rational thought to production of goods. Specifically, this form of rational thought refers to discovering ways to reduce unnecessary labor, materials, capital (money), and time. In the same way that factories changed how things were produced, it also changed where things were produced. Locational criteria are used to determine where a factory even gets built.

Marx’s Tendency of the Rate of Profit to Fall

Karl Marx spent his working life trying to understand the nature of production. One of the things he noticed was that products have lifespans. When they are invented, they are new on the market and the producer has a monopoly. As soon as a product is released, competitors will quickly begin to provide alternative products at a lower price. The race begins to produce the product at an ever cheaper price, but also with an acceptable level of profit. This process occurs across both time and space as any mechanism possible to reduce the cost to manufacture the product is discovered and used.

Advancements in materials will often occur. Instead of using a metal case, plastic may be good enough. Capital infusion may allow automation of the production. Eventually, after every other possibility to reduce costs is exhausted, the only way to maintain production is to cut labor costs. Few workers will accept a dramatic reduction in pay. It’s time to move the factory to a place with lower labor costs. Marx called this footloose capitalism. We call it offshoring. It’s the same thing and it has always been part of capitalism. One aspect of this is that we who have grown up in a capitalistic world just naturally expect the price of goods to fall over time. In the United States we experienced a shift in manufacturing from the Northeast to the Midwest, then to the South and West. People in the United States have long moved to follow employment, and only stopped doing so when it left the confines of the country.

Factors for Location

Industrial location is a balance between capital, material, and labor and markets. The goal is overall lowest cost. Sometimes pushing down one category, like labor, can increase other costs, like transportation. Substitution is possible across categories. For example, additional capital can replace labor through automation.

Earlier factories were built in cities in order to use the labor that was available there. Building in the middle of nowhere could have created an immediate labor shortage. Of course, labor will also migrate to places with available employment.

Some industrial activities are determined by site, the physical characteristic of a location. If you want to have a coal mine, it is probably a good idea to locate in a place that has coal. This is the most extreme form of restriction, but bear in mind that many places have mineral wealth, but not all of them are extracting that wealth right now. Many places that would otherwise be candidates for resource extraction are not currently being used because the resources cannot be extracted and sold for a profit. If the resource cannot make money, it will not be used. Remember that government subsidies can make some resources more profitable than they normally would be.

Other industrial locations are products of their situation. The maquiladoras that line the southern side of the Rio Grande (Rio Bravo in Mexico) border would not be there if the United States were not on the other side of the river. The proximity to the United States is the determining characteristic in the choice to locate there. Industries moved to Mexico because it appeared to make economic sense to do so. They were able to lower labor costs while remaining within the US/Canadian market. Transportations costs increased initially, but transportation costs overall have fallen due to more efficient methods of moving goods. Were the North American Free Trade Agreement (NAFTA) to be revoked the situation of Mexico would change, their access to the markets of the United States and Canada would diminish, and the factories that are there would have a much harder time selling their goods.

Land (or Materials/Energy) Costs

Classic economics lumped raw materials and energy under the category of land. Few companies bother to buy the land that produces a particular material, nor do they generally invest in power generation, or their own oil fields. These inputs are subject to the same price pressures as everything else in the manufacturing process.

The land that a factory sits on has become less important over time. In earlier factories, most workers walked to work and factories were compelled to locate on expensive land in cities. That is no longer the case. Due to the widespread diffusion of the automobile, factories can be built in more suburban or even rural areas and workers will commute to the factory. This shifts part of the cost of securing labor onto the workers themselves. It lowers costs for the company. It is still necessary for the company to have access to the transport network, so new factories are usually built to take advantage of existing road networks, often next to interstates.

Sourcing materials has become global. Commodified inputs like steel are bought wherever they are relatively cheap and are shipped to where they are needed. Whichever source provider has the lowest cost, including shipping, will likely be chosen by the company. If you have ever bough something online, generally you want to know which company has the product with the lowest overall price. Companies operate the same way.

There are differences in energy costs across space. For energy intensive industrial activities, cheap energy is essential. China rose from producing very little steel a few decades ago to leading the world today. It this by leveraging low labor costs and a very cheap energy source- vast supplies of (highly-polluting) coal.81.3.2 Labor

Labor costs can be reduced in a number of ways. One way is simply to pay the workers that you have less money. Workers, however do not like having their pay cut. Sending the work to a place with lower wages has been a common response to higher wages. A large portion of industrial labor requires minimal education. A company can choose to hire high school graduates in wealthy countries for a high wage or equivalently educated workers in poorer countries for far less. The labor pool has thus become globalized. Instead of competing for jobs with the other workers in a particular city, today’s workers are competing for jobs with much of the human population. Labor-intensive industries are particularly sensitive to labor costs. Clothing production has shifted to places with cheap labor as wages in developed countries have increased.

Besides the option of simply shipping jobs offshore, there is also the option of replacing workers outright. Most of the industrial jobs that have been lost in the United States in the last 30 years have not been to overseas production, they have been due to automation. Replacing people with machines is as old as industry itself. The difference now is that machines are much more capable than they were in the past and they are much cheaper. Referencing the earlier example of clothing manufacture, production of athletic shirts in the United States got a large boost with the introduction of a factory in Little Rock, Arkansas that relies on a robot called Sewbot. The factory will produce millions of shirts at very low costs ($.33 in labor per shirt). This low cost of labor renders in nearly negligible in importance compared to other factors, such as transporting the materials to the factory and transporting the finished clothes to market. The factory was built by a Chinese company in the center of the United States to minimize transport costs. More factories will likely migrate nearer their markets as the cost of labor becomes less important. Developed countries are already seeing an expansion of manufacturing, but not an expansion of manufacturing employment, due to the influence of automation.