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Location factors

Location factors. Labour. Points to consider. Labour cost Labour availability Labour quality Labour stability Labour mobility. How important labour is?. ¼ of total costs in manufacturing industry on average 8% of total costs in food industry

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Location factors

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  1. Location factors Labour

  2. Points to consider • Labour cost • Labour availability • Labour quality • Labour stability • Labour mobility

  3. How important labour is? • ¼ of total costs in manufacturing industry on average • 8% of total costs in food industry • 40% of total costs in research-based industry

  4. How does labour cost influence industrial location? • Labour-intensive industries need abundant supply of unskilled to semi-skilled workers. • for example, textiles, garment, clothing, electronics and pottery • Therefore, the labour cost can easily influence the industrial location

  5. How does labour cost influence industrial location? • Labour-intensive industries shift from high labour cost area to low labour cost area • Hong Kong textile industry is a good example.

  6. The global scale • Low wages in LDCs attract large transnational companies (TNCs) • Labour-intensive industries were relocated from MDCs to NICs

  7. Transnational Corporation (TNCs) • Electronics assembly industries making TVs, radios were relocated from the USA , Japan  to S.Korea, Taiwan, Singapore where wages were lower.

  8. Case study • Nike sports goods have moved their mass production of shoes from S. Korea to Taiwan because of lower wages in Taiwan.

  9. Labour availability affected by • Population • Sex ratio • Unemployment rate • Education level/skills • Political stability

  10. Are capital-intensive industries less affected by labour factor? • No, capital-intensive industries may need many workers although mechanization has reduced the pull of labour. • A large automobile factory may need 10,000-15,000 workers working in different parts of the industry.

  11. Labour quality • Labour quality is becoming  important than labour costs as automation has reduced manual jobs. • It is an important factor affecting location of high-tech industries.

  12. Quality of labour • Unskilled labour • Semi-skilled labour • Skilled labour • Automation Increasing input of skills / technology

  13. Unskilled labour • Labour-intensive industries which require repeated mechanical operations • e.g. putting in screws, adjusting fixtures or simply packaging things.

  14. Why female workers are preferred? • they are more patient • More careful • paid lower than the standard wages in some countries

  15. Mobility of unskilled labour • the least mobile because • they can usually obtain a suitable job in their own area • they have no special skill to offer. • Industries which need a large labour force will always be attracted to densely populated areas.

  16. Skilled labour • Some specialized industries demand highly-skilled craftsmen • e.g. watch-making, diamond cutting, electronics, electrical engineering and aircraft manufacturing.

  17. Supply of skilled labour • Such workers are relatively scarce in supply • may live in certain localizedareas. • found only in the More Developed Countries (MDCs) where facilities for their professional training are available, and where there is a tradition of industrial skills. • They demand high wages and favourable conditions of service.

  18. Skilled labour • However, highly skilled labourers are much more mobile as they are looking for • Better wages • Better conditions of employment.

  19. Impact on industrial location • The availability of skilled labour is vital in knowledge-based industries, e.g. hi-tech industries • Skilled labour requires professional training provided by good education. • Found in MDCs with good education system • Lacking in LDCs which require import of skilled workers

  20. Automation Automation (using many labour-saving devices) is common when… • there is a shortage of unskilled labour • usually in MDCs • where the education level is higher • fewer people are willing to do boring, low-paid work

  21. more economical in the long term increase efficiency the quality of the products can also be standardized. a large capital investment is needed cheap, unskilled labour force is often inefficient or lazy. Advantages of automation

  22. Why Government may not like this idea? • Sometimes, the government may intervene to reduce automation if they aim at providing employment in a rapidly expanding population.

  23. Stability of labour • Degree of unionization demand for higher wages, better fringe benefits, frequent striking • Degree of absenteeism raise production costs indirectly

  24. Mobility of labour • Usually highly-skilled labour has higher mobility • They are attracted by good living environment • easy communication • good airport • well-known universities • advanced information • public services. • Example: IT industry

  25. High-tech industries (Knowledge-based, innovative ind.) such as software development. • As the industries depend on R & D and product innovation, highly skilled scientists, engineers and technicians are important.

  26. High-tech industries • Many high-tech industries like to locate in areas where skilled labour are found • e.g. in university towns like Cambridge in UK, in Stanford in USA

  27. High-tech Industries • choose to locate in anenvironmentally attractive location(good climate, landscape, housing services) • where their workers want to live e.g. Denver in Colorado, California.

  28. Locations chosen by high-tech firms in the UK • are not the least-cost ones. • In fact they are the most expensive in the country. • The high quality of the workforce can offset the high costs of rents and local taxes.

  29. Government policy • Laws and regulations to favour labour’s interest • Establishment of technical schools and institutes to improve the quality and productivity of labour force • Example: Trade and Development Council in HK • Example: Singapore government policy

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