Chapter 13: Geographies of Energy and Industry

• Economic activities depend on the following:
  • Primary Activities - occur where appropriate resources are available.
  • Secondary Activities - they convert primary products into items of more value.
  • Tertiary Activities - are involved in moving, selling and trading the goods produced at the first two levels.
  • for example it provides services.
  • Quaternary Activities - specializes in assembling, transmitting, and processing information and controlling other business enterprises.

Industrial Location Problem

Early Location Theory

• Early day economists believed that industrial location was related to the location of agricultural food surpluses that could be used to feed industrial workers.

Factors Related to Location

• Relevant factors include

  • transport;

  • distance from raw material sources,

  • energy supplies, and the market,

  • availability of labour and capital,

  • the nature of the industrial product; internal and external economies

  • entrepreneurial uncertainty; and governmental considerations.

Least Cost Theory

• Least-cost theory, developed by Weber and published in 1909, is a normative theory that identifies where industries ought to be located.
• Following a series of simplifying assumptions, Weber concluded that industries locate at least cost sites are determined by transport costs, labour costs, and agglomeration–deglomeration benefits.
• Solving locational problems required defining concepts such as material index, locational figure, isodapane, critical isodapane, and isotim.

The Industrial Revolution

• Between about the mid-eighteenth and mid-nineteenth century industrial geography of England transformed; and England became the first industrial area.
• Factories replaced households as production sites, mechanization increased, and localized energy sources were used.
• All these changes were related to the rise of capitalism, which emphasized individual initiative and profits.
• New industrial landscapes appeared on the coalfields of Britain and were accompanied by city growth, rural-to-urban migration, and a series of transport innovations.
  • Inner-city slum landscapes developed in many of the new agglomerations on coalfields and in the traditional textile areas of northern England.
• After 1825 the technological advances started to diffuse to mainland of Europe (particularly Belgium, Germany and France), to North America, and to Russia.
• In the United States, Pennsylvania and Ohio became the early industrial leaders because of their high-quality coal sources, while in the Russian Empire; Ukraine became the driving force when coal was discovered there.

Fossil Fuel Sources of Energy

• The more successfully we can utilize energy sources, the more easily we can fulfill our needs and wants.

Oil

• Oil prices are determined by supply and demand considerations but with the added complexity that the price is established through binding market agreements to purchase oil at a predefined price on a predefined date in the future (i.e. futures contracts).
• Its discovery, development, and sale have for about 150 years brought wealth to a few, convenience to some, and avarice to many.
• OPEC is the major supplier of oil, with its principal purpose to set levels of production in order to affect the price of oil.
  • Therefore, the organisation is able to wield enormous influence on the economies of more developed countries.
• In 1060, the major sources of oil were the United States, Russia and Venezuela; only about 15% can from the Middle East. Today, this area dominates oil production, with 32.2% of the global total
• According to sources, United States is the world’s leading consumer of oil, with about 21.9% of global consumption, followed by China and Japan.

Natural Gas

• Gas was first used commercially in the 1960s as an alternative to home heating oil, so the price was closely tied to that of oil.
• Unlike oil, gas is bought and sold in three markets today—North America, Europe, and Asia—and prices can vary markedly.
  • In the deregulated North American market, prices are much lower than oil prices;
  • Asian prices are high because gas is traded through long-term contracts linked to the price of oil; and European prices are moderate.
• Use of natural gas comes with some environmental consequences;
  • Carbon dioxide emissions are lower because natural gas has a lower carbon intensity than either oil or coal and thus burns more cleanly.
• It is used particularly in the electric power and industrial sectors
• Despite several decades of extraction, the known reserves of natural gas have been rising in many countries since the 1990s. This increase is a result of new technologies allowing for the development of unconventional resources, particularly natural gas in shale formations.
  • Horizontal well drilling and hydraulic fracturing are two common kinds of natural gas extraction methods.
• There are two main ways of moving this fuel: directly through pipelines or transportation in liquid form (LNG).

Coal

• It is the major source of energy.
• The major producers generally are also the major consumers, and China’s contribution to both production and consumption is especially striking.
• Coal is removed by two methods mainly;
  • opencast mining and
  • by ground mining
• There are several types of coal, depending on how far along the deposit is in the process of coal formation, or coalification.
  • The first stage is peat, then brown coal or lignite, then sub-bituminous and bituminous coals, and finally anthracite
• Extracting coal (especially underground coal) is a hazardous activity, and loss of life is all too common.
• Historically, coal production has been a leading cause of environmental damage. Major concerns relate to the release of methane, the presence of various waste products, the effects on groundwater, and impacts on visible landscape.
• There are two principal regional coal markets, Western Europe (primarily the United Kingdom, Germany, and Spain) and East Asia (mainly Japan and South Korea). Australia is a major supplier of the Asian market.
• Short distance movements are usually by truck, train, or barge, while ships are used for overseas movement.

World Industrial Geography

• The global manufacturing system is dominated by three regions: North America, that is, the United States and Canada; Europe, particularly Germany, Italy, the United Kingdom, and western Russia; and Pacific Asia, especially Japan, South Korea, and eastern China.
• the United States continues to be the world’s leading producer of manufactured goods by far, followed by China, Japan, and Germany.

Industrial Regions in More Developed Countries

• Four of the five principal centres are in the more developed world— eastern North America, Western Europe, western Russia and Ukraine, and Japan. The fifth region is in China, a country of the less developed world.
  • Notably, the Pearl River Delta in southern China is the world’s most dynamic industrial region.

Eastern North America

• This part is highly productive industrial region.
• Following European settlement it developed as an industrial geography based on close ties to Europe, the proximity of raw materials such as coal, iron ore, and limestone, availability of labour, rapid local urbanization and market growth, easy movement of materials and finished goods along the natural waterways, and the building of canals and railway.

Western Russia and Ukraine

• Those industrial centres based in Moscow and Ukraine were established in the nineteenth century.
• The Moscow area is market oriented and began its industrial development specializing in textiles—today it is diversified, with a wide variety of metal and chemical industries using oil and gas.
• Industry in Ukraine is centred on a coalfield but also has access to supplies of iron, manganese, salt, and gas; Ukraine is a major iron and steel and chemical industrial area. The other three regions were developed by the USSR government after the 1917 revolution and are located in southern Russia.
• Its major industries are machinery, chemicals, and food processing.

Industry in Japan

• During the 1950s and 1960s Japan excelled in heavy industry, particularly shipbuilding, but by the late 1960s the emphasis had shifted to automobiles and electronic products, and Japan has most recently focused on computers and biotechnology.
  • During each of these three post–World War II phases, Japan has been a world industrial power.

Newly Industrializing Countries

• Industries in the Pacific Rim countries follow the Japanese example of low labour costs and high productivity.
• All these countries have high growth rates and are experiencing the same labour shifts from agriculture to industry that much of Europe experienced in the nineteenth century.
• Until 1950 South Korea was a poor, less developed country characterized by subsistence rice production; at present, it is an industrial giant that began with heavy industry, then focused on automobiles, and now specializes in high-technology products.
• Industries are attracted to EPZ zones for three general reasons: inexpensive land, buildings, energy, water, and transport; a range of financial concessions in such areas as import and export duties; and low workplace health and safety standards and an inexpensive labour force made up largely of young women, who are regarded as less likely than men to be disruptive and more willing to accept low wages and difficult working conditions.

Industry in China

• Liberalization of China’s communist economy began in 1978 with the opening up of the country to international trade and foreign investment.
• Since the 1980s both the agricultural and industrial economies have undergone reform and modernization.
• During the 1950s industrial development was based on a combination of large technology-intensive, state-funded factories and small labour-intensive, locally organized units.
• A reform program was initiated in 1984 that involved less state control, decreased subsidies, and increased response to market forces and that encouraged local collective and private industrial enterprises.
  • One result was that China’s industrial production outstripped that of South Korea, increasing at 12 per cent per annum between 1980 and 1990.
• The special economic zones have played a major role in the recent expansion of Chinese industrial activity.
  • Four zones were established in various parts of China.

Globalization and Industrial Geographies

Fordism to Post-Fordism

• The term Fordism refers to the methods of mass production first introduced by Henry Ford in 1920s America, particularly fragmentation of production—best illustrated by the use of assembly lines that reduced labour time and related costs.
• The Fordist system gave workers the necessary income and leisure time to become consumers of the many new mass-produced goods.
• One important outcome of the recession of the early 1970s was industrial restructuring in the more developed world. This restructuring involved deindustrialization, especially in such traditional industrial activities as textiles and shipbuilding and in automobile manufacturing, and corresponding reindustrialization as firms established branch plants overseas, either in NICs or in less developed countries.

Industrial Restructuring

• Following three technological changes are most significant:

  1. Production technologies, such as electronically controlled assembly lines and automated tools, are increasing the separability and flexibility of the production process.
  2. Transaction technologies, such as computer-based, just-in-time inventory control systems, also increase locational and organizational flexibility.
  3. Circulation technologies, such as satellites and fibre optic networks, facilitate the exchange of information and increase market size.

• These three changes represent a transition to flexible accumulation.

• The subsequent industrial restructuring takes three principal forms:

  1. The relationship between corporate capital and labour is changing as machines replace people, manufacturing industry declines, and transnationals seek locations with low labour costs.
  2. Both the state and the public sector are playing new roles with the shift away from collective consumption in areas such as education and health care to joint public–private projects and deregulation.
  3. There is a new division of labour at various spatial scales as the new technologies allow corporations to respond rapidly to variations in labour costs.

• Deindustrialization and reindustrialization are spatial trends caused by economic restructuring.

• A simple way to conceptualize industrial change is to recognize following stages:

  1. Infancy: Initial primary activities and domestic manufacturing.
  2. Growth: The beginnings of a factory system.
  3. Maturity: Full-scale development of manufacturing and related infrastructure.
  4. Old age: Decline and inappropriate industrial activity resulting in a depressed economic region.

• In short, deindustrialization is a reduction in manufacturing in more developed countries that is usually most easily measured by reference to employment data,

Information Technologies and Location

• A major debate in studies of industrial activity, especially location decisions, concerns the implications of labour costs on the one hand and the costs of information exchange on the other.
• For many industrial activities, information can be rapidly exchanged at low cost by electronic means, but there is a danger in such impersonal exchanges if the information is lacking in clarity.
• Firms that make location decisions on the assumption that they will be able to exchange information successfully are able to seek out locations with low labour costs. The result is a decentralized industrial pattern.

Service Industries

• As part of the process of economic restructuring and the transition from Fordism to post-Fordism, industrial societies are moving to a post-industrial service stage.
  • Because the service industry is so diverse, a wide range of factors may determine locations.
• Central place theory offers the most important set of explanatory concepts, but behavioural approaches also seem relevant. New information technologies are undoubtedly affecting the location of services.

Outsourcing

• Outsourcing refers to the situation where a company hands work that was previously completed in-house to other firms.
• If this involves work being outsourced to other countries in order to take advantage of inexpensive labour, it is a type of offshoring, adding to the internationalization of employment.
• Service activities generally are increasingly outsourced offshore as companies are able to hand over work to specialist service suppliers located elsewhere.
  • This is occuring largely because of the improved communications associated with the globalizing economy.

Industry and Society

• Industrial geography, like other branches of economic geography, has largely neglected social issues. Now that industrial geography is becoming more concerned with issues such as the gender division of labour, it is increasingly turning to various social theories.

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