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

Porters Value Chain

Firm Infrastructure Human Resource Management Technology Development Procurement

Support Activities

Primary Activities

Inbound Logistics

Outbound

Marketing and Sales

Operations

Logistics

Service

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% Other Asia 8% China 11% North America 26%

U.S. 22.4%

Japan 14% Europe 33%

Source: Calculated from NationMaster.com

Shares of Manufacturing Value Added

Source: World Bank World Development Indicators, 2011

Rise of Maquiladoras Border & interior Mexico

U.S. & Canadian Manufacturing Belt: Accounts For about Two-thirds of Total Manufacturing Employment in The U.S. and Canada

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

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 Output ($1972 in millions)

Forest Products

Aerospace

$20,000
Other Manufacturing

$15,000

Construction

$10,000

Transport, Communications & Utilities Trade

$5,000
FIRE

Services

$0 1967 1972 1982 1987 1997 2002 2007

Structural Trends

Anatomies of Job-Loss: disinvestment Broad Corporate The outfall Spatial

Agency
Corporate responses to global trends Corporate competitive strategies

of restructuring
Plant openings Plant closings In-situ changes

outcomes
Events on the ground

Macroscale causal forces in the global economy

Bluestone & Harrison - Deindustrialization of America: The core of B&Hs 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