A) Location depends on the type of industry.
Weight Gain Industry:
An industry that makes products which get heavier in the manufacturing process. A good example are cars. All the individual parts that go to make a car (tyres, windscreens, mirrors, etc.) don’t weigh very much, but the finished product does way a lot. Because of this weight gain industries tend to locate near the market place (their customers).
Weight Loss Industry:
An industry that loses weight in the manufacturing process. A good example is steel which uses huge amounts of iron ore and coke to make it. In the process of making the steel there is a lot of waste products making the finished product lighter. Because of this weight loss industries tend to locate near to the raw material they need because transporting the finished product is cheaper.
Just-in-time Manufacturing (JIT):
Industries that order the supply of parts (components) as and when they need them. By doing this you can save on storage costs, but it does mean that you have to have excellent communication and relations with your suppliers.
Just-in-case Manufacturing (JIC):
Industries that stockpile a supply of parts (components) just in case they are needed in the production process. This increases storage costs, but ensures that they never run out of parts to manufacture.
Normally tertiary or Quaternary industries that are not tied to raw materials and therefore don’t have such strict location requirements. Because of this they might look for more human factors like skilled labour, good housing and recreational facilities or access to capital.
Products that go rotten very quickly e.g. bread, milk, cakes, fruit and vegetables. Although quicker transportation and improved refrigeration allow perishable products to be transported all over the world for customers to receive truly fresh products, these industries have to locate near their market (customers).
- Each type of industry has different requirements from its location. The table below outlines the different factors that are considered when locating an industry. Consider how important the different factors are for each type of industry listed above. For each type of industry above, state which of the factors are most important
Factors Affecting Industrial Location.
Human and Economic
Skilled Labour: In some industries especially Quaternary it is important that there is an availability of skilled labour.
Cheap Labour: In other industries like clothes production an availability of cheap labour is very important. This why many clothes factories locate in LEDCs.
Housing: To attract any workers it is important to have suitable housing nearby. For Quaternary industries this might be good quality housing for secondary industries this might be high density cheaper housing.
Good Schools and Hospitals: Again to attract workers and especially their families, it is important to have good nearby schools and hospitals.
Nearby Universities: For Quaternary industries that carry out a lot research and development they need to be located near universities that have skilled workers and available laboratories.
Market An accessible place to sell the products is essential for many industries:
those that produce bulky, heavy goods that are expensive to transport
those that produce perishable or fragile goods
those that provide services to people
The market is not so important for other industries such as high-tech whose products are light in weight and cheap to transport. Such industries are said to be ‘footloose’.
Transport A good transport network helps reduce costs and make the movement of materials easier.
Supply Network: Most industries have a large supply network. To ensure the smooth production of products it helps being close to suppliers.
Transport Links: It is important to be close to good roads and rail links so that industries can receive supplies and distribute products.
Good Communications: It is now very important for industries to have good communications so that they can contact suppliers and customers.
Reliable Electricity and Water Supply: For all industries a constant electricity supply is essential because industries can’t afford breaks in production.
Cost of land Greenfield sites in rural areas are usually cheaper than brownfield sites in the city.
Capital This is the money that is invested to start the business. The amount of capital will determine the size and location of the factory.
Government policies Industrial development is encourages in some areas and restricted in others. Industries that locate in depressed (‘Development’) areas may receive financial incentives from the government and assistance from the EU in the form of low rent and rates.
Nice Environment: For tertiary and Quaternary industries who are trying to attract skilled workers it is useful to be near a nice environment to make working their more attractive.
Climate: For some industries a good climate can be very important. For example you would not locate a solar panel research and development company in a place where the sun never shines.
Natural routes River valleys and flat areas were essential in the days before railways and motorways made the movement of materials easier.
In an increasingly globalised world, products are now sold worldwide. Therefore it is important to be close to natural transport routes e.g. rivers and the coast.
Raw materials The factory needs to be close to these if they are heavy and bulky to transport.
Energy supply This is needed to work the machines in a factory. Early industries were near to coalfields. Today, electricity allows more freedom.
Renewable Energy Sources: It is becoming increasingly important for companies to demonstrate their sustainability. Therefore it will become increasingly important to have access to renewable energy sources (wind and sun).
2) Use the information from this geographyalltheway page to complete the worksheet below.
B) Case Study: Novartis and the Pharmaceutical Industry in Basel.
We will be using Novartis as a case study for industrial location, a high tech industry (Quaternary industry) and as a case study of a Transnational Corporation.
|The Gehry building is one of many buildings on Novatis’ Basel Campus.|
1) Novartis are a transnational corporation. What does this mean?
2) Write a couple of paragraphs describing who Novartis are and what they do. Why is it hard to put Novartis into a single industrial type?
3) Use the, “Novartis at a Glance,” document below to create a map showing Novartis’ Research and Development sites around the world.
4) Write a detailed description of the location of the Novartis Campus. Work down from a Global to Local scale when you write the description. Give place specific reference such as naming transport links etc.
5) Look back at the factors affecting Industrial Location above. Which are the most important for Novartis and why?
4) Explain why Novartis are located in Basel using as many of the factors mentioned in the table above. Once again you should add place specific reference wherever possible. How do the Swiss government and Basel Stadt council encourage companies like Novartis to locate in Basel.
Novartis (NVS) is one of the largest pharmaceutical companies by revenue. Its headquarters are in Basel, Switzerland. The company specializes in research, development, manufacturing, and marketing of a broad range of healthcare products. The company deals in both prescription drugs as well as over-the-counter drugs.
The company manufactures innovative medicines, eye care products, cost-saving generic pharmaceuticals, preventive vaccines, and over-the-counter products.
Novartis has over 220 subsidiaries and ~133,400 employees in operation throughout the world.
Novartis products are sold in over 180 countries, reaching over 1 billion people worldwide.
The company has 24 manufacturing sites across the globe in the pharmaceuticals division.
Revenues for the pharmaceuticals division have fallen from $31.8 billion in 2014 to $30.4 billion in 2015. The sales figures fell due to currency impacts.
This is an excellent summary of Industrial Location with a number of case studies from the UK, the USA and the developing world.
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