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Industrialization: The Future of Industry in the 21st Century

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  1. Industrialization #2 The future of Industry

  2. 21st Century • Labor most important factor changing location of industry in the 21st century • Shifts within MDC • US • Europe • Japan • International Shifts • Countries • Distribution • outsourcing

  3. Changing Industrial Distribution within MDCs • Industry is shifting away from traditional areas of northwestern Europe and northeastern United States • In U.S. it has shifted west and south • In Europe, government has encouraged relocation toward economically distressed areas

  4. The United States • NE U.S. lost 6 million jobs in manufacturing between 1950-2009 • Especially large declines in NY and PA • Once served as hub of clothing, textiles, steel, and fabricated metal manufacturing • 2 million jobs added to the South and West between 1950-2009 • Why the south? • Right-to-work laws • Enacted in South • Requires a factory to maintain “open-shop” and prohibits “closed-shop” • Closed shop • A company and union agree that everyone must join a union • Open shop • A union and company must not negotiate a contract that requires workers to join a union • Textile Production • Also moved to south and west • Lower wages • Little interest in joining unions

  5. Europe • Manufacturing has shifted from NW Europe to southern and eastern Europe • European government policies have encouraged • EU provides assistance to convergence regions and competitive and employment regions • Convergence= Eastern and Southern Europe • Competitive and Employment= Western Europe’s traditional core • Spain has had most manufacturing growth since late 20th century • Growth had been retarded by physical and political isolation • Regions east of Germany and west of Russia have become industrial centers since fall of Communism • Called “Central Europe” • Poland, Czech Republic, and Hungary • Two attractive site and situation factors • labor, market proximity • Good value for money

  6. International Shifts in Industry • In 1970 nearly ½ of world industry was in Europe and nearly 1/3rd was in North America • Today both regions only account for ¼ • Increasingly important industrial areas • East Asia • Rapid industrial growth in China • Also includes Japan and South Korea • South Asia • Led by India • Textiles, motor-vehicle production • Important center for business services • Latin America • Brazil leading industry country • Closest low-wage region to the United States • Cost of shipping lower • Maquiladoras

  7. International Shift in Industry • Changing distributions • Shift to new industrial regions can be seen clearly in steel and clothing • MDCs losing production to these key industries to LDCs • Steel production declined in MDCs 40% and increased in LDCs by 60% between 1980 and 2008 • Labor-intensive industries have been especially attractive • U.S. apparel workers declined from 900,000 in 1990 to 150,000 in 2009

  8. Industrial Shift in Industry • Outsourcing • Transnational corporations have been especially aggressive in using low-cost labor in LDCs • Operations that can utilize low-skill, low-wage workers will relocate to LDCs despite increase in transportation costs • Selective transfer of jobs to LDCs is known as the new international division of labor • TNCs corporations allocate production to low-wage countries through outsourcing • Definition: turning over much of the responsibility for production to independent suppliers • Outsourcing contrasts vertical integration • Outsourcing has had a major impact on the distribution of manufacturing • Each step scrutinized closely in order to determine the optimal location

  9. Outsourcing

  10. Maquiladoras • Definition: • Foreign owned factories located in Mexico • Spatial distribution: • Located close to U.S. border/ major cities/ entry points • Why Mexico? • Inexpensive labor costs • NAFTA • Mexico’s proximity to U.S. market • Improved transportation

  11. New International Division of Labor • Reorganization/relocation of economic activities (jobs) from a national to a global scale • LDCs now ideal for manufacturing jobs • Features: • MDCs rely on lower-cost production from LDCs • Comparative advantage • Offshoring/ outsourcing • Trade agreements • Consequences: • Unemployment in MDCs • Deindustrialization • Internal migration • International migration • In LDCs • Added job opportunities • More gender equality • Increase in wage gap • Migration • Environment issues • westernization

  12. Renewed Attraction of Traditional Industrial Regions • Two factors encouraging some industries to located in traditional regions • Availability of skilled labor • Rapid delivery to market • Proximity to skilled labor • Skilled labor often found in traditional industrial regions • Example: Computer Industry • Traditional approach= Fordist (mass production) • Today = post- Fordist • Teams • Problem solving • Leveling • Just-in-time delivery • Increased in importance

  13. The Future? • BRIC?? • Brazil • Russia • India • China

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