Session 10: Industry and Services

1) Chapter 13, 13.1: What are industrial and service economies?

2) Chapter 13: 13.2: Where did the industrial revolution begin and how did it diffuse?

3) Chapter 13, 13.3: How do location theories explain historical patterns of industrialization?

Fouberg, E. H., Murphy, A. B., De Blij, H. J. and C. J. Nash (2012). Human Geography: People, Place, and Culture. John Wiley & Sons Canada, Ltd., Mississauga.

March 27, 2015

Section 13.1 – What are industrial and service economies?

Primary activities: involves the extraction or production of raw material (e.g., mining, forestry)

Secondary activities: involves making something from raw materials (e.g., food processing)

Tertiary activities: service industries connecting the manufacturing and industrial processes to consumers

**Table 13.1 – Employment by Industry in Canada

Section 13.2 – Where did the industrial revolution begin and how did it diffuse?

Industrial revolution: The term applied to the social and economic changes in agriculture, commerce, and manufacturing that resulted from technological innovation and specialization in the late-18th

Century Europe.

Changes in technology led to a second agricultural revolution, advances in medicine improved health – death rates went down and birth rates went up

- advent of more efficient forms of transportation (railroad and steamship) enhanced the rate and reach of the industrial revolution

Diffusion to Mainland Europe

Criteria for industrial zones: 1) proximity to coalfields; 2) connection via water to a port

London was ideally suited for industry because of its port location on the Thames River

Belt of major coal fields (west to east): across northern France and southern Belgium, the Netherlands, the German Ruhr, western Bohemia in the Czech Republic, and Silesia in Poland.

In the 1700s and 1800s the colonies of Britain and France were preindustrial and provided raw materials

These were predominantly: tobacco, cotton, lumber, animal pelts, and fish

Imports were necessary for the growth of the industrial revolution

The development of more specialized transportation network was essential to industrialization

source: www.thegeographeronline.net

Modern flows affecting development & industry

Section 13.3 – How do location theories explain historical patters of industrialization?

Economic activities have spatial organizations that are influenced by several factors, including cultural and historical influences

Decisions to locate industry are typically based on access to resources and the availability of skilled labour, as well as adequate connection to the appropriate transportation network.

Location theory (focus of economic geography): A logical attempt to explain the locational pattern of an economic activity and the manner in which its producing areas are interrelated.

Factors Affecting the Theory

Variable costs: Costs that change directly with the amount of production (e.g., energy supply and labour costs).

Friction distance: The increase in time and cost that usually comes with increasing distance.

Distance decay: The effects of distance on interaction; generally the greater the distance the less interaction.

i.e., more efficient to serve local markets

Weber’s Model

Least cost theory: Model developed by Alfred Weber according to which the location of manufacturing establishments is determined by the minimization of three critical expenses: labour, transportation, and agglomeration.

Agglomeration: A process involving the clustering or concentration of people or activities. The term often refers to manufacturing plants and businesses that benefit from close proximity because they share skilled-labour pools and technological and financial amenities.

SiteFactory location

Raw Materials

Finished Products

Raw Materials

Market

d = distance

Deagglomeration: The process of industrial deconcentration in response to technological advances and/or increasing costs due to congestion and competition.

Major Industrial Regions of the World Before 1950

Primary industrial regions: Western and Central Europe; Eastern North America; Russia and Ukraine; and Eastern Asia, each of which consists of one or more core areas of industrial development with subsidiary clusters.

Steel Production by Country (Wiki commons)

Western and Central Europe

Experienced industrialization in the late 18th and early 20th centuries

European Coal and Steel Community (ECSC) emerged from this area

Many areas were damaged during WWII

Germany remains as one of the world’s leading producers of both coal and steel – is Europe’s leading industrial power

The Manufacturing Belts of Germany

Ruhr, Germany: emerged as key region during the industrial revolution; industrial base of coal mines and steel mines

Import of resources followed local depletion

By the 1930s became one of the most important industrial regions in the world

Saxony (present day Germany) became specialized towards lighter and more specialized manufacturing

e.g., cameras, watches

North America

By the beginning of the 20th century rivaled Europe’s production

Canada first developed its agrarian base

Much of the manufacturing was based in urban areas

Taxes and tariffs protected Canada from foreign competition

Established a heartland-hinterlandrelationship between central Canada and the periphery

source: www.canadiandesignresource.ca

Creation of the Canada Pacific Railway helped unite the country industrially speaking

North America’s coal reserves are among the world’s largest and are widely distributed

Steel also played a significant role in the emergence of Canada as a player on the global economy in the 1950s and 1960s

1900s provincial and municipal governments began promoting local iron and steel production

WWII changed production in Canada significantly

Establishment of unions, change in working conditions

Major Manufacturing Regions of North America

Global Shale Gas Deposits

The North American Manufacturing Belt

**Text book (p. 385) describes the manufacturing belt in Sarnia, Ontario

Documentary from Ryerson University:

Chemical Valley: A Toxic Tale

https://www.youtube.com/watch?v=ifxPjKZTgk0

The Former Soviet Union

Industrialization / manufacturing focused in the western part of Russia

Auto manufacturing (Lada) helped boost the economy in the 1980s

Ural Mountains yield a large variety of metallic ores

St. Petersburg area is one of Russia’s oldest manufacturing areas, is also a modern focus for industry

Major Manufacturing Regions of Russia

Eastern Asia

Japan and China – significant areas that avoided European colonization

Japan was a large scale player (more so than China) at the beginning of the industrial revolution – government goals for industrialization built on capital from colonization

The Japanese Manufacturing Belt: the Kanto Plain; contains ~ 1/3 of the nations population

Kantō Region (Wiki commons)

Eastern China

Major expansion during the communist period (starting in 1949)

Vast country with a substantial resource base (e.g., large quantities of coal)

Now a major center for diverse forms of manufacturing

Video: ABC News: Apple’s Chinese Factories: Exclusive

https://www.youtube.com/watch?v=TmLsV9cSk0o

Section 13.4 – What are the spatial implications of changes in industrial production?

Following WWII there was a boom time - in the 1950s

Motor vehicle production became a major focus in industrial production

Mass production and the assembly line were key components of this type of production

Fordism: A highly organized and specialized system for organizing industrial production and labour.

Named after automobile producer Henry Ford, Fordist production features assembly-line production of standardized components for mass production.

Post-Fordist: World economic system characterized by a more flexible set of production practices in which goods are not mass-produced; instead, production has been accelerated or dispersed around the globe by multinational companies that shift production, outsourcing it around the world.

Contributing to this system and the time space compression…

Just-in-time delivery: Method of inventory management made possible by efficient transportation and communication systems, whereby companies keep on hand just what they need for near-term production.

Global division of labour: Phenomenon whereby corporations and others can draw from labour markets around the world, made possible by the compression of time and space.

…has reshaped the role different economic sectors play within countries

e.g.,

Some countries like Mexico focus strongly on agricultural production, which serves the core countries to the north

New Influences on the Geography of Manufacturing:

Importance of Transportation in Industrial Location

Intermodal connections: Places where two or more modes of transportation meet

Container systems play a key role in the modern transportation of goods

New Influences on the Geography of Manufacturing:

Importance of Regional and Global Trade Agreements

Immediately following WWII many countries entered into GATT: the General Agreement on Tariffs and Trading

Reduced trading barriers staring in 1947

Regional trade agreements then came in and influenced how good could be imported and exported between countries

e.g., NAFTA

World Trade Organization (WTO): works to negotiate rules of trade among member states

Nations must be observers before the can accede to full membership

New Influences on the Geography of Manufacturing:

Importance of Energy in Industrial Location

Map: Oil producing countries, 2010

Wikicommons

Time-Space Compression and Deindustrialization

The significance has of locations has been reduced due to improvements in technology

“the end of geograhy” !!

Of course, spatial factors will always influence this world and geography is never going to disappear.

Deindustrialization: Process by which companies move industrial jobs to other regions with cheaper labour, leaving the newly deindustrialized regions to switch to a service economy and to work through a period of high unemployment.

(Likely a major factor in the birth of the share economy!)

Process, Outsource: To turn over in part or in total to a third party

Offshore: a third party located outside of the country ( implies overseas)

Section 13.5 – What is the service economy, and where are services concentrated?

By the end of WWII the saturation of the consumer market:

• saturation of consumer markes

• massive growth of government activities

• rising labour activism

• declines in cost of transportation and communication

This challenged the Fordist economic structure!

Intensified in the 1970s

Was also affected by high oil prices and periods of international financial instability (many period like this throughout modern history)

Core industrial regions had a hard time maintaining their competitive advantage with regards to production

Slowly the core started to shift to an economy dominated by services

Service (tertiary) industries: do not generate an actual tangible product; instead, they encompass the range of services that are found in modern societies

In the global core, service industries employ more people than primary and secondary industries combined!

Range from small to large scale…

Examples?

Has created “post-industrial” societies

Geographical Dimensions of the Service Economy

Deindustrialization did little to change the disparities between the core and the periphery

Also, areas that were deindustrialized are hard to redevelop – very costly

Some areas have transitioned to service economies, while maintaining their manufacturing, example:

Sunbelt: The South and Southwest regions of the US. Many service based companies have established, while industrial and agricultural production has persisted.

New Influences on Service Industry Location

Quaternary services: high-level services that collect, process and manipulate information and capital

Some are strongly geographically tied (e.g., administrative services) and others are not (e.g., telecommunications, social media, etc.)

Corporate headquarters usually located in large metropolitan areas

Technopole: Centres or nodes of high-technology research and activity around which a high-technology corridor is sometimes established