Chapter 7 Manufacturing

• Fundamental nature of manufacturing

processes
• Major manufacturing regions in the world
• Deindustrialization in the developed world
and the rise of manufacturing in the
developing world
• Sector specific dynamics
• The rise of flexible production systems,
business process outsourcing & downsizing
• (The product life cycle model is not in this
chapter again)
 The Nature of Manufacturing
• Elements of the manufacturing process:
(a) product design, (b) assembling inputs,
(c) transforming the inputs, (d) marketing
the product
• Location decision – Weber model again
• Value added in each stage of production
 Porter’s Value Chain

Firm Infrastructure
Human Resource Management
Support
Activities Technology Development
Procurement

Primary Inbound Outbound Marketing

Operations Service
Activities Logistics Logistics and Sales

Upstream value activities Downstream value activities

Concentration of World Manufacturing
80% of Global Output in Three Regions

How current are these data?

Current role of China?
Global Distribution Manufacturing
Value Added
Rest of World
8% North
America
Other Asia 26%
8%
U.S. – 22.4%
China
11%

Japan
14%

Europe
33%

Source: Calculated from NationMaster.com

Shares of Manufacturing Value Added

Source: World Bank World Development Indicators, 2011

 U.S. & Canadian
Manufacturing
Belt: Accounts
For about
Two-thirds of
Total
Manufacturing
Employment in
The U.S. and
Rise of Canada
Maquiladoras –
Border & interior
Mexico

A good
Overview
Of specialized
Versus market
Oriented
manufacturing
 Specialization in the Regional
Distribution of Manufacturing
• Some cartograms – where area is
proportional to employment (using the
BEA Economic Area classifications)
• The first map shows the actual geometry
of the BEA Economic Areas
• The following maps depict industries
distributed broadly across the U.S., and
industries that are highly concentrated
• These are old maps, but for many lines of
manufacturing the data are probably
relevant
BEA Economic Areas – As of 1985
 Other Manufacturing Regions
• Europe – Figure 7.5, Japan - Figure 7.9
• Globalization of manufacturing –
movement of capacity from U.S. &
Canada, Europe, and Japan to less
developed countries
• “The new international division of labor”
• “Anatomies of Job Loss”
U.S. Manufacturing Employment
Trend

xx

2012
2013
 Change in U.S. Mfg.
Employment 1960-2000

Post-2000 Trends?
 Deindustrialization in
industrialized countries

The Share of Mfg. may have fallen, but real mfg.

output is probably up in all these countries – see next slide for WA state
Real Output by Industry WA State
$35,000

Natural Resources

$30,000
Food Products

$25,000 Forest Products

Output ($1972 in millions)

Aerospace

$20,000

Other Manufacturing

$15,000 Construction

Transport,
Communications &
$10,000 Utilities

Trade

$5,000
FIRE

Services
$0
1967 1972 1982 1987 1997 2002 2007
 Anatomies of Job-Loss:
Broad disinvestment
Corporate The “outfall” Spatial
Structural
Agency of restructuring outcomes
Trends
Macroscale Corporate responses Plant openings
Plant closings Events
causal forces to global trends on the
in the global Corporate competitive In-situ changes
ground
economy strategies

Bluestone & Harrison - Deindustrialization of America:

“The core of B&H’s argument followed a restructuring approach
with the need to restore the drive to accumulate, producing,
through spatially distributed effects, a major reworking of the
role of U.S. cities and regions in the geographic distribution
of production.”
 Impacts on Manufacturing Jobs in
U.S., Europe and Japan
• Job losses in manufacturing in all of these
regions
• Replacement has primarily been in
services
• Occupations created in the services are
frequently very different than occupations
lost in manufacturing, leading to high
unemployment rates and income
deterioration
 Assets of Centers of Control
versus Peripheral Regions
Centers of Control
• Key role in circulation;
realizing wealth
• Focal point for investment,
profits, interest
• Focus on forms of capital:
FIRE
• Occupational dominance
by professionals
• “Virtuous” multiplier
relationships driven by
above points
• Support networks of a
large cadre of service
workers in lower
occupational categories
Peripheral Regions
• Key role in creating value
through labor pools &
resource endowment
• Compete with centers for
capital
• Capital transfers to core;
possible scarcity in periphery
No direct transference
• Multipliers chancy: impacts
only if investment comes to
them
• Employment fortunes
conditioned by “waves of
investment” and restructuring
Current Spatial Outcomes in the
U.S.
• Old centers are having their power erode
• New centers are rising, based on redistribution
– Charlotte NC - banking
or the rise of “new industrial spaces”
- Orlando-Melbourne (retirement)
- Las Vegas (entertainment)
- Seattle & Atlanta - technology based
manufacturing & information services
• The rural renaissance - retirement, footloose
entrepreneurs, recreation, rich people, niche mfg.,
IT, commuter air and courier services