Commack Schools
Changing Location of IndustryDomestic shift: NE SE, S, and WGlobal shift: Old Industrial hearths to: East Asia (China’s the largest in the world at 31%), Latin America (Maquiladoras)Western Europe Central/Eastern EuropeWhy is the distribution changing?1. Countries/states/cities attracting industries with incentives2. Industry focus on proximity to cheap labor3. Industry focus on skilled labor4. Role of TNCs/MNCs5. Changing business practices (J-I-T delivery)1. Ways Countries Attract IndustrySEZ: “Special Economic Zone (a.k.a. Export-Processing Zones” EPZ or Free Trade Zone” FTZ)Government creates small regions… 47910758382000without regulationssubsidized rentslow or no tax rates,few environmental laws,paid for infrastructureWhen labor costs go up, factories move elsewhereEx: Maquiladoras: tax free zones built within 35 miles of US border prior to NAFTA ( US companies receive tax breaks if they ship materials from the United States, assemble components at a maquiladora plant and export the finished product back to the US. Lower wage rates (labor-intensive industries) and laws governing air and water-quality standards are less stringent than in the US and CanadaGoal is to attract export-oriented businesses 14382758128000Deindustrialization in the CoreRegions with high labor costs & old technology may experience deindustrialization (core countries, “Rustbelt”) as new technology can be more cheaply appropriated elsewhere US Sunbelt drew investment away from NE because of lower rates of unionization, higher amenity values (i.e. place), government contracts, …Other Ways to Attract Businesses“Right-to-work laws” – Less powerful UNIONS!! (Worked out well for the people in Fast Food Nation!!)Educate/Train your people for youGrowth (Techno) PolesOffer Amenities (quality schools – leads to gerrymandering)Right to Work States0508000RTW is a state law that prohibits employers and unions from requiring an employee to pay dues or fees to a union in order to keep his or her job. Currently, 22 states have right-to-work laws. While right-to-work laws do NOT allow individual workers to negotiate their own contracts, they do protect a worker from having to involuntarily support a union.Advantages? Disadvantages?2. Proximity to Cheap LaborOutsourcingLow level tasks look for cheap laborCall centers and tax accountants to Bangalore Textile manufacturers in East Asia, Latin AmericaOpposite of vertical integration employ someone else to perform a task because cheaper & more efficientOutsourcing “New International Division of Labor”Periphery regions are dependent on core for manufacturing jobs, likewise … Core TNCs are dependent on periphery for cheap labor, fewer environmental regulations, and expanding markets3. Proximity to Skilled LaborOld days: Fordism One worker: one taskSpecialization = unskilled laborRepetitive motion leads to stress injuriesNow in high-tech industries: Post-Fordism Work tasks spread out throughout the worldOutsourcing/New International division of laborWork in teams performing many tasksWorkers solve problems for several tasks in a team (more flexible)Caused, in part, by time-space compression4. Role of TNCs/MNCsOver 70% of Ford’s workforce overseas Mergers and acquisitionsHuge capital concentrations Exxon & Mobil = $77 billion merger in 1998 (ExxonMobil now most valuable business in the world – made $41 billion last year)CBS and ViacomTime Warner and AOLAT&T and CingularTremendous worldwide influence Can choose to locate ANYWHERE to minimize costsWal-Mart ($422 billion in sales) would rank 31st in GDP in the world by itselfConglomerate corporations more and more commonCompanies in different industries merge togetherExamplesPhilip Morris = TobaccoMiller BeerKraftConagraGeneral FoodsPepsico (Frito Lay, Quaker Oats, Tropicana, Gatorade)5. Changing Industrial PracticesJust-in-Time DeliveryCompanies minimize storage costsNeed proximal suppliers for timely deliveryIndustry moving back to coreCombination of cheap labor while meeting J-I-T delivery could be nextProblems:StrikesWeatherWar/Terrorist Attacks ................
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