Upload
raymond-burke
View
219
Download
1
Embed Size (px)
Citation preview
Site vs. Situation
• Situation factors: involve transporting materials to and from a factory– Minimize cost of transporting inputs to the
factory & finished goods to the consumers
• Site factors: related to the costs of factors of production inside the plant– Land, labor, capital
• Least Cost Theory (1909) – Alfred Weber’s model – owners of
manufacturing plants seek to minimize three costs:
– 1) Transportation, and– 2) labor
–
• Least Cost Theory (1909)
– Weight-losing case: final product weighs less than raw materials; location = source
– Copper industry: only 0.7% of mined is copper, rest is waste (gangue)• Then concentration process (crush, grind, mix, filter,
dry) results are about 25% copper• Then smelting to reduce impurities
– Bulk-reducing industry (steel is too)– Where should the concentration plant be
in relation to the mine and the customer?
• Soft drink bottling– Empty cans or bottles– Syrup concentrate– Water – =finished product
• Bulk-gaining industry (fabricated metals – cars, refrigerators)
• Where should the bottler be located in relation to the can manufacturer and the customer?
Break-of-Bulk Points
• The location where transfer among transportation modes is possible
• Costs rise each time cargo has to be loaded and unloaded – Ship– Rail– Truck, or – Air
Labor-intensive Industry
• Labor– Labor-intensive industries: Ex. Textiles –
less-skilled, low wages– 6% of dollar value but 14% of employment
• Land– Factors to consider: Climate,Topography,
Low-cost energy sources
• Capital
Location Models
Weber’s Model
Manufacturing plants will locate where costs are the least (least cost theory)
Theory:
Least Cost Theory
Costs: Transportation, Labor, Agglomeration
Hotelling’s Model
Location of an industry cannot be understood without reference to other industries of the same kind.
Theory:
Locational interdependence
Losch’s Model
Manufacturing plants choose locations where they can maximize profit.
Theory:
Zone of Profitability
Hotelling’s Model• Harold Hotelling (1895-1973)
• Locational Interdepedence
• Originally locate near customers – but will gravitate to each other to maximize profits
• The costs for some customers will be greater if the 2 sellers cluster – further to walk. Also fewer customers aware of service. But can’t move for fear of losing customers.
Changing Markets
• Outsourcing
• New international division of labor– Moving industry to low-cost labor
• Just-in-time Delivery
• Post-Fordist system – more flexible, less mass produced (time-space compression)
• deindustrialization
• High tech corridors – area designated by local or state government to benefit from lower taxes and higher technology infrastructure (Silicon Valley)
• Technopole – area planned for high tech where agglomeration built on synergy among tech companies occur (from Dulles Airport – DC has AOL, MCI, Orbital Sciences)