Key Issue Three

Site Factors: location factors relating to the costs of factors of production

inside the plant

Land, labor, and capital are three production factors that vary among
locations

Labor:

The most important factor at a global scale is labor

Worldwide, about one-half billion people are engaged in industry

China: of workers

India: 1/5

Other MDCs: 1/5

Labor-Intensive Industries:

Labor-Intensive Industry: an industry in which the wages paid to the workers

makeup a high percentage of the overall expenses

The US has an average of 11% of the overall manufacturing costs in

the US. A labor-intensive industry would have much higher.

The average wage of a manufacturing worker in North America is over $20

an hour

In LDCs, they are less than $5

A labor-intensive industry is not the same as a high-wage industry

Labor intensive is measured as a percentage

Motor-vehicle workers are paid much higher than textile workers are, but
they do not use up a large amount of the expenses. More money is used
buying the parts than for paying the workers. In the textile industry, more
money is used to pay the workers than buying the supplies.
Textiles: Labor-Intensive:

Textiles: Woven fabrics

3 steps:

1. Spinning of fibers to make yarn from natural materials

2. Weaving or knitting yarn to make fabrics
3. Cutting and assembling fabrics to make the clothing or products-

Textile and Apparel Spinning:

Fibers can be spun from natural or synthetic elements

The principle fiber is cotton

Before the Industrial Revolution, the spinning of cotton was for unmarried
women, called a spinster

Children performed carding, which is the untangling of fibers and putting

them onto rolls, called cards

Because it is still labor intensive, it is done in low-wage countries

China produces 2/3 of the worlds cotton thread

The first commercially successful regenerating synthetic fiber was rayon,

made by processing the cellulose in wood pulp

The first true synthetic fiber was nylon, produced from petroleum in 1937

Polyester is the leading synthetic

Textile and Apparel Weaving:

For thousands of years, thread was woven with a loom

One set of threads, warp, is strung lengthwise and the other, weft, is inserted
over and under and over and under

This was for men because it was physically hard

For mechanized weaving, labor is a high percentage of the cost

93% is done in LDCs

China: 60%

India: 30%

Textile And Apparel Assembly:

Sewing is the oldest activity

The first sewing machine was invented by Barthelemy Thimonnier in 1830.

He installed 80 machines to sew uniforms for the French army. Fearing that
he would put them out of business, Parisian tailors stormed the factory

The first successful sewing machine in the US was invented by Isaac Singer
during the 1850s

He was convicted of infringing a patent filed by Elias Howe in 1846d.

Four main types of textiles: garments, carpets, home products (bed linen,
curtains), and industrial items (headliners inside cars)

MDCs play a larger role in assembly

Land:

Rural Sites:

A city offers an attractive situation

Close to a local market and convenient means of shipping to a national

market by train

A city offers an attractive site

Close to a large supply of labor as well as people to sell it to

There is not a lot of land, though

Early factories were multistory

Raw materials were hoisted up to become smaller, then they were sent down
through a chute

Water was stored in tanks on the roof

New factories are more efficient as one story

Raw materials are sent in at one end and move through the factory on
conveyors or forklifts

In the past, the railway would come by the factory. Now they dont rely on
trains.

Environmental Factors:

Not all locations are the same

Factories are built depending on the climate, topography, cultural reasons,

sports franchises, and cost of living

Factories used to be built near forests and rivers because water and wood
were the most important sources for energy

Now, they are concentrated near coal fields

A factory also chooses its location based on the cost of electricity

The aluminum industry requires a lot of electricity to separate bauxite ore

They will locate near dams to use hydroelectric power

The oldest aluminum factory in the US is at Massena, New York est. 1902 by
the Pittsburgh Power Co. (now Alcoa, inc.) near a dam on the St. Laurence
River

Capital:

The US motor-vehicle industry is located in Michigan because banks up there

were more willing to give them money
The banks in Californias Silicon Valley also provides money for new software
companies

Because LDCs do not have money from banks, they are forced to borrow
money from MDCs

Some MDCs will not lend money to a country that has an unstable economy,
high debtlevels, or bad economic policies