Manufacturing

1
Manufacturing Industrial Location Theory
Chapter 10

• Questions Directions for Future Research?
• 4 lectures left!
• Location Theory
• Space-cost curve
• Tariff and NAFTA
• High Technology
• Cycle Theory
• Fordism-Flexible Specialization

2
Alfred Weber, 1909Labour costs - Isodapanes

• Isodapane
• Line of total transport costs
• Determined by summing the value of all isotims at
  a point
• And joining all points of equal total transport
  costs

Caution As some hawk-eyed students have pointed
out, there are a number of errors in this
diagram! As you can see for yourself, the 8
isodapane is really the 9 isodapane. The
isodapanes are wrongly interpolated to the left
of M and to the right of S
3
Derivation of Space Cost Curve
4
Spatial Margins to Profitability

• Contemporary interpretation
• Slopes of curves could be very gradual
• Noneconomic factors may prompt nonoptimum
  location within margins
• Firms may not have data to determine the optimum
  and are content with any location within margins
  of profitability
• Satisficing behaviour

5
Manufacturing Regional Patternsand Issues
Chapter 11

• Tariff on manufactured imports
• Import substitution
• Protect infant industries
• Foster industrialization and create industrial
  jobs
• Linkages with other Canadian manufacturers
• 3rd Plank of the National Policy of 1869

6
Implications of the Tariff for Canadian
Manufacturing

• Industrialization benefits for southern Ontario
  and Quebec, rapid urban industrial growth
• Deindustrialization of Maritimes 1870s and 1880s
• Higher costs due to tariff and low Canadian
  productivity were a small price to pay for
  Ontario Quebec
• The seeds of
• Western alienation
• Sir John A.
• Conservatives!

7
Implications of the Tariff for Canadian
Manufacturing

• Foreign ownership
• Tariff factories
• Branch plant economy
• Technological dependency
• High costs, low productivity
• Not competitive on world markets
• No mandate to export
• Main links to U.S. not Canada!
• By 1980s, NTBs more significant

8
Free Trade Agreements

• CUSFTA 1 Jan 1989
• NAFTA 1 Jan 1994
• Foreign location no longer a condition of market
  entry
• Rationalization/specialization
• Canada maintains positive balance of trade
• Dispute resolution mechanism

9
Its Not Really Free Trade

• U.S. government procurement
• Canadas cultural industries
• Dispute resolution softwood lumber, durum wheat,
  beef are conspicuous failings
• Loss of sovereignty ?

10
Canadas International Trade Balance, 2001(
000,000)
Source Statistics Canada 2003, Cansim II Table
228
11
Costs and Benefits of Free Trade

• Giant sucking sound" of jobs and investment
  heading south irony!
• Growth in trade and investment, inbound and
  outbound. See DFAIT
• Growth in dependence
• Canadas low dollar has been vital to strong
  trade performance under NAFTA
• Impact is regionalized

12
High Technology

• New
• Semi-conductors, software engineering
  biotechnology, new materials
• Complementary role of services
• Outsourcing
• Metropolitan advantage remains

13
Cycle Theory

• Regions (Chap 11)
• Products (Chap 10)
• Biological development metaphors
• Youth
• Maturity
• Old age

14
From Fordism to Post-Fordism Flexible
Specialization

• Fordism
• Mass production economies of scale
• Assembly line
• Specialized
• Post-Fordism
• Economies of scope
• Constellations of small firms
• Networks
• Flexible specialization
• Rapid switching among products
• Multi-purpose machines and workers
• New industrial districts