Chapter 11 KI3 (class notes)

Why are Site Factors Important?

Site Factors
Takes cost of Labor, land, and capital into
consideration(want cheapest of each)
Labor
Labor-intensive Industries: industries
where the cost of labor is a high percentage of production
cost
the more labor intensive, the
more likely it will be located in a low-wage area
Examples Spinning(making
yarn): highly labor intensive
in
LDCs
Weaving(fabric
making): even more labor intensive
86%
in LDCs ( is China)
Land
Look at availability of natural(minerals,
Energy, climate) and human resources (attractions:
sports, cultural facilities, cost of living)
Modern factories in suburban and rural
areas
need larger land area
land is cheaper in rural
areas
Access to energy resources
Amenities at the site
EXAMPLE
Aluminum
Industry

 Requ
ires intense energy to create aluminum
from bauxite ore

a
lway located near an inexpensive
hydroelectric power supply
Capital
Companies usually borrow money to
expand their business or build new ones
Local and national governmentsfinancial incentives
Ability to borrow money has become
critical factor in the distribution of industry in LDCs
Must seek loans from MDCs
May not be able to borrow if
seen as politically unstable, have high debt or poor
economic policies
EXAMPLE
Silicon Valley, California
#1 region for
high-tech industries because banks more
willing to loan money to people seeking to
open these types of businesses despite the
risk.
Obstacles to Optimum Location
Footloose industries- can located in a wide variety
of places without a significant change in their cost of
transportation, land, labor, and capital.
E: uses fax machines, internet, email,
smart phones
Reasons for location:
Personal preference
Inherited through a merger
Etc...