ECONOMIC SYSTEMS AND DEVELOPMENT Secondary Industries ►What factors influencethelocation of industry ? ►How has thelocation of industries changed over time?
INDUSTRY AS A SYSTEM Industry as a whole, or a factory as an individual unit, can be regarded as a system. INPUTS •Raw materials •Human input •costs
PROCESSES •Manufacturing processes generally in a factory. •Value added
OUTPUTS •End products •income
For a firmto beprofitableand to remain in business, thevalueof its outputs must begreater than thecost of its inputs. Someof theprofit should then bere-invested, e.g. in modernising thefactory and introducing new technology.
What factors are important when locating a factory / industry ? PHYSICAL FACTORS Raw materials Power Flat land
HUMAN AND ECONOMIC FACTORS Labour Capital Markets Transport Government Policies Technology Leisure facilities
What Factors are Important when locating a Factory?
Physical Factors Raw Materials:
Human and Economic Factors
Thebulkier and heavier these areto transport, thenearer thefactory should belocated to theraw materials. This was even moreimportant when transport was poor.
Labour: This includes both quantity (largenumbers in nineteenth-century factories) and quality (as someareas demand special skills as technology develops).
Power – energy: Thisis needed to work the
Capital: Early industry depended on wealthy entrepreneurs. Now banks and governments may providethemoney.
machines in thefactory. Early industry needed to besited near to fast-flowing rivers or coal reserves, but today electricity can betransported long distances.
Site and Land: I ndustries should bebuilt on FLAT land with roomto expand. Theland is often lowquality as it is cheaper to purchase.
Markets: Thesizeand location of markets havebecome moreimportant than thesourceof raw materials.
Transport: Costs increasewhen items moved arebulky, fragile, heavy or perishable. I ndustries want to savemoney.
Economies of scale: scale Small units may becomeunprofitable and so mergewith, or aretaken over by, other firms.
Human and Economic Factors Government Policies: Governments control most wealth so can offer industries money
Improved Technology: Thebetter the technology, thefaster thespeed of production.
to locatein certain areas. Leisure Facilities: Both within thetown and the surrounding countryside, leisureactivities arebecoming more desirable.
Questions: 1. Describe and explain an example of an industry where being located near to the following factors is important: • raw materials •labour • market • transport • Government help e.g. grants 2. What arefootlooseindustries?
HOW HAS THE LOCATI ON OF I N DUSTRY I N THE UK CHANGED ? Secondar y indust r ies, of t en called manuf act ur ing indust r ies, pr ocess r aw mat er ials f r om pr imar y indust r ies t o pr oduce f inished or semi-f inished pr oduct s. I ndust r y does not st ay t he same but changes over t he year s. New pr oduct s ar e developed, new t echniques int r oduced and dif f er ent locat ion f act or s become incr easingly mor e or less impor t ant . As a r esult , t he t ype and dist r ibut ion of indust r y acr oss t he count r y also changes. POW ER • I ndust r ies ar e no longer locat ed near coalf ields. • Coal is no longer needed t o power indust r ies. • Elect r icit y, t r ansmit t ed t hr ough t he Nat ional Gr id is now t he maj or power sour ce. • I ndust r ies now, have a wider choice of locat ion and of t en locat e in an at t r act ive envir onment , wit h good t r anspor t links and near a lar ge mar ket . MOST PEOPLE EMPLOYED I N TERTI ARY I NDUSTRI ES Ther e has been an over all decline in t he number s employed in manuf act ur ing as t he UK moves t owar ds a mor e t er t iar y-based economy.
Main Changes in UK Manuf act uring I ndust ries
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OVERSEAS COMPANI ES I NCREASE A lar ge number of over seas manuf act ur er s have been at t r act ed t o t he UK e.g. elect r onics and car s.
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I NCREASE I N TECHNOLOGY Changes in t echnology have r esult ed in a r educt ion in t he labour f or ce wit h comput er s and r obot s r eplacing people. J obs ar e t hen lost .
CHAN GE IN TYPE OF I NDUSTRI ES • Many of t he t r adit ional ‘heavy’ manuf act ur ing indust r ies e.g. ir on and st eel have been r eplaced wit h ‘light ’ assembly manuf act ur ing indust r ies such as elect r onics. • These indust r ies can locat e anywher e and ar e descr ibed as FOOTLOOSE. They of t en locat e on GREENFI ELD SI TES on t he edge of built -up ar eas away f r om inner cit y ar eas.
CHANGING INDUSTRIES CASE STUDY : SOUTH WALES Why did iron and steel declinein Wales? 2. Wherearenew iron and steel factories located ? Why ? 1.
HOW MANY MINERS ARE THERE IN WALES ? 500 450 400 350 300 250 200 150 100 50 0
number of coller ies number of miner s (' 000s) 1925
1981
2000
CHANGING INDUSTRIES CASE STUDY : SOUTH WALES Port Talbot integrated Steelworks
Integrated Steelworks at Port Talbot
Why do heavy industries locate at Port Talbot? 1) cheap, flat and plentiful reclaimed land 2) accessible – near the M4 and on the coast (port)
BOC at Port Talbot
Traditional Industries on the coast - Integrated Steelworks There is only one remaining steelworks in South Wales. This is located at Port Talbot (Llanwern steelworks closed in 2001 causing 1340 jobs to be lost). The Port Talbot steelworks is called an ‘integrated’ steelworks because all stages of manufacture take place on one site. The high quality coal and iron ore have now been exhausted in South Wales. Nowadays coal and iron ore are imported from abroad where high quality raw materials can be extracted more cheaply. It is therefore more efficient for the steelworks to be located on the coast. Give reasons why raw materials can be extracted more cheaply from abroad.
CASE STUDY : THE UK I RON AND STEEL I NDUSTRY ►
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As theraw materials aremainly imported by bulk carrier ships, themost favoured locations for iron and steel plants areat BREAK OF BULK POINTS. What are break of Bulk points ? Thebest locations are, therefore, at deep water ports wheretheheavy imported raw materials are unloaded eg Port Talbot. Largeintegrated iron and steel works arethemost efficient locations. Largeareas of flat land are needed and again, coastal areas havelargeexpanses of land availablefor development.
How have governments tried to encourage industry in the UK ? CASE STUDY : SOUTH WALES Look at p 24 in booklet What are … 1. DEVELOPMENT ZONES ? 2. ENTERPRISE ZONES ? Who did this encourageto locatein Wales ?
Ebbw Vale – Festival Park Shopping
The WDA (Welsh Development Agency), local authorities and the private sector spent ÂŁ60 million on converting the area from a wasteland of spoil heaps into the Ebbw Vale Garden Festival. Festival Park Factory Shopping Village is now located on this site.
What has been done ? The Valleys are a Development Area. This means that industries are encouraged to the area by offering them incentives such as grants, reduced business rates, planning permission and premises. Sources of Regional Assistance
European Regional Development Fund UK Government
WDA (Welsh Development Agency)
Who gains from regional assistance? Rhondda gains new jobs Fenner is closing its Hull and Peterborough factories to move its production to Maerdy. The company has been attracted to the Rhondda by £12 million in government grants. The factory is a godsend. Maerdy’s colliery closed in 1990 putting 400 out of work and male unemployment stands at 25%. The new factory will be built on this site. Eventually, the factory, which makes mouldings for the car industry, will employ 500 people. 1995
Why did Fenner move its production to Maerdy? Who loses and who benefits from Fenner’s decision?
Lucky Goldstar in Newport
LG, a South Korean multinational company, decided to locate a semi conductor plant in Newport, South Wales in 1996.
South Wales celebrates with Korean multinational investment Lucky Goldstar (LG) plans to build a new factory on a 250 acre site at Imperial Park in Newport. The factory, which eventually aims to employ 6,100, will produce semi conductors and television parts. It is likely that another 15,000 support jobs will be generated. LG were given a generous subsidy in order to attract their investment to South Wales. The WDA refuses to confirm rumours that the grant was as much as ÂŁ200 million. This is equivalent to ÂŁ20,000 per job. July 1996
Why do you think LG located in Newport? What type of support jobs may be generated?
Summary – selected industries in South Wales
Nickel and copper plating, DVLA HQ (Driving License) Corus Integrated steel works
Lucky Goldstar tertiary and quaternary Business parks E.g. Sony and Hotpoint in Bridgend Industrial Park
Tourism in the Valleys – Big Pit at Blaenavon and Rhondda Heritage Park at Trehafod Ebbw Vale – Corus galvanizing steel and tin plating
HOW HAS INDUSTRY CHANGED IN SOUTH WALES ? ►
Look at page27 in booklets
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FROM ‘SOOT’ TO ‘SONY’ !!! South Wales was oncefamous for its coal and steelworks in valleys such as theRhondda. Theindustrial scenetoday, is very different. Theold ‘heavy’ industries havegoneand new industries fromOVERSEAShavelocated theredue to INWARD INVESTMENT. What is Inward Investment ? This is wherea government officeeg Welsh Development Agency, has offered financial incentives to companies to set up in thearea. (This area also received financial support fromtheCentral government under Assisted area scheme). Much of thenew industry is HI-TECH INDUSTRY. This is a general termused to describea rangeof recently developed information technology industries involving micro-electronics and related activities. South Wales has therefore, moved fromheavy industries to light manufacturing industries such as electronics etc.
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Summary In the nineteenth century and first half of the twentieth century, the coal and iron and steel industries dominated the landscape of the _______ of South Wales. These industries prospered due to the accessibility of raw materials and due to the fact that Britain had an _______ which provided a ready market. These industries declined in the latter half of the twentieth century because Britain lost its Empire, the raw materials became exhausted and there was competition from abroad. In addition, coal is no longer the major source of _______ in Britain. Coal is an example of a _______ industry. Iron and steel is an example of a _______ industry. The raw materials that make iron are iron ore, _______ and _______. Steel production increased because it is stronger and less _______ than iron. brittle
limestone
steel
coal
fuel coast
malleable Valleys
Empire
tertiary
secondary
primary