Location & Location & ManufacturingManufacturing

Geographic IssuesGeographic Issues

Business PlanBusiness Plan

A business plan is required by A business plan is required by anybody wanting to start a new anybody wanting to start a new companycompany

A business plan will provide a detailed A business plan will provide a detailed outline explaining why the company outline explaining why the company will be successfulwill be successful

The Bank will require yourThe Bank will require yourBP before they loan you $$$BP before they loan you $$$to get startedto get started

Location FactorsLocation Factors

DefinitionDefinition Factors … that help explain the Factors … that help explain the

location of cities & industrieslocation of cities & industries

(Page 491….Geographic Issues)(Page 491….Geographic Issues)

Location FactorsLocation Factors

The location of any particular factory The location of any particular factory is influenced by a unique set of is influenced by a unique set of circumstances, such as the presence circumstances, such as the presence of specific raw materials or the of specific raw materials or the location of customers.location of customers.

Location FactorsLocation Factors

Availability of Raw MaterialsAvailability of Raw Materials Location of marketsLocation of markets Availability of fresh water & powerAvailability of fresh water & power Labour SupplyLabour Supply TransportationTransportation Political FactorsPolitical Factors CircumstancesCircumstances

1. Availability of Raw 1. Availability of Raw MaterialsMaterials

Raw Material:Raw Material: something used by an something used by an industry to be processed into a industry to be processed into a finished statefinished state

Iron ore (raw material) is made into Iron ore (raw material) is made into steel (product) & steel (raw material) steel (product) & steel (raw material) is made into an automobile (product)is made into an automobile (product)

Availability of Raw MaterialsAvailability of Raw Materials

2 main reasons why it is important 2 main reasons why it is important to be located close to raw materialsto be located close to raw materials

1.1. Fruits / vegetables should be Fruits / vegetables should be processed quickly after being processed quickly after being pickedpicked

Many companies tend to be located Many companies tend to be located in area where crops are grown.in area where crops are grown.

Availability of Raw MaterialsAvailability of Raw Materials

2. Some factories use great amounts 2. Some factories use great amounts of bulky raw materials (such as of bulky raw materials (such as timber) to produce smaller finished timber) to produce smaller finished productsproducts

These companies tend to be located These companies tend to be located near bulky raw materials, which are near bulky raw materials, which are more difficult to transportmore difficult to transport

McCain Foods CanadaMcCain Foods Canada

18,000 employees18,000 employees Based around agriculture (potatoes)Based around agriculture (potatoes) Located in New Brunswick, PEI, & Located in New Brunswick, PEI, &

ManitobaManitoba Factories are located around major Factories are located around major

potato growing areaspotato growing areas

2. Location of Markets2. Location of Markets

Market:Market: any place where goods & any place where goods & services can bought & soldservices can bought & sold

Locating near customers reduces Locating near customers reduces delivery costs & time.delivery costs & time.

Provides advantages over Provides advantages over competitors located far awaycompetitors located far away

Location of MarketsLocation of Markets

Why companies locate away from Why companies locate away from customers?customers?

1. Customers are spread out over great 1. Customers are spread out over great distances (Canada or world)distances (Canada or world)

2. 2. Other location factors may be more Other location factors may be more important than having nearby marketsimportant than having nearby markets

Cardium Tool ServicesCardium Tool Services

Produces oil/gas production Produces oil/gas production equipmentequipment

Located in Edmonton, within range of Located in Edmonton, within range of the oilfields of Leducthe oilfields of Leduc

Located close to the customer is Located close to the customer is important for delivering parts/supplies important for delivering parts/supplies quickly when neededquickly when needed

Located in oil producing locations Located in oil producing locations world-wideworld-wide

3. Availability of Fresh Water & 3. Availability of Fresh Water & PowerPower

Used by steel & oil refiners for Used by steel & oil refiners for cleaning & coolingcleaning & cooling

These companies must locate near These companies must locate near major rivers & lakesmajor rivers & lakes

Cheap hydro-electricity also Cheap hydro-electricity also determines the location of a companydetermines the location of a company

Availability of Fresh Water & Availability of Fresh Water & PowerPower

Cheap power sources are very Cheap power sources are very important to Canada’s aluminum important to Canada’s aluminum industryindustry

Smelters are built only in places Smelters are built only in places where electricity is readily & cheaply where electricity is readily & cheaply availableavailable

Alcan AluminumAlcan Aluminum

Canada’s largest aluminum producerCanada’s largest aluminum producer Four smelters in Quebec located Four smelters in Quebec located

close to the Saguenay & Peribonka close to the Saguenay & Peribonka Rivers.Rivers.

Kitimat, BC.Kitimat, BC. Sells products to North America, Sells products to North America,

Europe, Asia, & the Mid-EastEurope, Asia, & the Mid-East

4. Labour Supply4. Labour Supply

In the past, many companies needed In the past, many companies needed a large, low-cost labour force.a large, low-cost labour force.

Now, companies in Canada are more Now, companies in Canada are more likely to need highly skilled likely to need highly skilled employees.employees.

Manufacturers tend to locate in areas Manufacturers tend to locate in areas that have universities colleges, and that have universities colleges, and apprenticeship programsapprenticeship programs

5. Transportation5. Transportation

Every company needs fast and Every company needs fast and efficient transportation.efficient transportation.

Hamilton has two large steel mills Hamilton has two large steel mills that take advantage of raw materials that take advantage of raw materials (coal,iron ore) that are brought by (coal,iron ore) that are brought by ship via the Great Lakes-St. ship via the Great Lakes-St. Lawrence seaway.Lawrence seaway.

6. Political Factors6. Political Factors

Government decisions can either attract Government decisions can either attract or drive businesses away.or drive businesses away.

Two types of support: direct and indrect.Two types of support: direct and indrect. Direct support may be to offer a Direct support may be to offer a

company a tax break for a number of company a tax break for a number of years. (eg. Maple Leaf Foods in years. (eg. Maple Leaf Foods in Brandon)Brandon)

Indirect support may be the building of Indirect support may be the building of a new highway improving transport of a new highway improving transport of goods.goods.

7. Circumstance7. Circumstance

Includes the role of the entrepreneur; Includes the role of the entrepreneur; someone who sees potential and someone who sees potential and develops it. (eg. McCain brothers and develops it. (eg. McCain brothers and J. Armand Bombardier started J. Armand Bombardier started businesses in their hometowns)businesses in their hometowns)

Another circumstance occurred when Another circumstance occurred when high-tech companies (like Corel) high-tech companies (like Corel) were started in the Ottawa area by were started in the Ottawa area by former Nortel Networks employees.former Nortel Networks employees.

Chapter 25: Company ComparisonChapter 25: Company ComparisonConduct a comparison of theses Canadian companies using Conduct a comparison of theses Canadian companies using

information found in Chapter 25.information found in Chapter 25.

Company Location Date Formed Product/Service Location Company Location Date Formed Product/Service Location FactorFactor

McCain FoodsMcCain Foods

Cardium ToolsCardium Tools

Alcan AluminumAlcan Aluminum

Nortel NetworksNortel Networks

Dow ChemicalsDow Chemicals

Toyota MotorsToyota Motors