Ch 3.2 What are the factors affecting the location of the manufacturing industry?

Question 1

What location factors matter?

Answer 1

When choosing where to carry out a manufacturing activity, industrialists have to consider various location factors. They usually choose low-cost locations to maximise profit.
Profit= Revenue - Production costs.

Question 2

What are the major location factors?

Answer 2

1. Access to business partners.
2. Access to management.
3. Capital.
4. Government policy.
5. Historical factors.
6. Land.
7. Labour supply.
8. Market.
9. Power Resources.
10. Raw materials.
11. Transport and telecommunications.
12. Technology and information.

Question 3

Explain on government policy.

Answer 3

Governments may introduce policies to encourage or discourage industrial development in one place. Other industrial location factors such as labour, land and capital may also be affected by government policies,

Question 4

Examples of government policy.

Answer 4

Regulate the supply of land e.g. control land rent.
Tighten pollution control e.g. noise pollution ordinance, sewage treatment ordinance.
Set up high-tech industrial area e.g. Science Park and Cyberport in HK.
Provide tax incentives/ concessions e.g. Tax Holiday, CEPA
Provide subsidies/ funding e.g. Innovation and Technology Fund, Creative Smart Initiative.
Provide low interest loans.
Develop basic infrastructure e.g. highways, high speed railway, the third runway of the International Airport.
Provide professional training institutes.
Provide basic universal education.
Importing labour. e.g. Quality Migrant Admission Scheme, Labour importation scheme on Construction and Transport Sector.
Protect intellectual property and branding system.

Question 5

What are the kinds of capital?

Answer 5

1. Financial capital.
2. Venture capital.
3. Fixed and physical capital.

Question 6

Where is venture capital mainly used in?

Answer 6

1. Mainly provided by professionals and outside investors.
2. Used in R&D.
3. Obtained in large cities.
4. High growth potential.

Question 7

What types of land does heavy industry need?

Answer 7

Gentle, extensive flat land with cheap land rent.
Large space is needed for the installation of heavy machines, production and expansion.

Question 8

What types of land does high tech industry need?

Answer 8

Suburban industrial parks
High quality of life attracts quality labour.
Mild climate.
Provided basic amenities.
Clear environments.
Low crime rates.
Recreational opportunities.
Proximity to Universities in order to gain access to R&D like the Science Park in HK.

Question 9

What advantages does industry located near the coast (esp heavy industries) have?

Answer 9

1. Good transportation/accessibility.
2. For import raw materials and export finished products.
3. Need water for cooling like aluminium smelting industry.
4. Densely populated areas provide abundant cheap labour.
5. For future expansion through reclamation.

Question 10

What are raw material oriented industries?

Answer 10

Industries that require large amounts of bulky and heavy raw materials so they are located near to raw materials.

Question 11

With technological improvement, how can raw materials be used more efficiently?

Answer 11

1. Advancements in production technologies -> use fewer raw materials or to use substitutes like with the use of new furnaces, scrap iron can replace iron ore.
2. Transportation development like bulk carriers -> lower transport cost.
3. Improved transmission technologies -> keep perishable raw materials fresh.

Question 12

What are the types of labour supply that are important?

Answer 12

1. Labour cost.
2. Quantity labour.
3. Quality labour.

Question 13

How to reduce the location importance of labour?

Answer 13

With technological improvement, automation in production is more popular which reduces the location importance of labour.

Question 14

How it is counted as a quality labour?

Answer 14

1. Skilled workers.
2. High education level.
3. High salary.
4. Carry out research and development job.
5. High geographical mobility. -> can work overseas.

Question 15

What are the types of industries which produce heavy, perishable and fragile goods tend to be located near their market?

Answer 15

Market-oriented, weight gain.

Question 16

What is agglomeration economies?

Answer 16

1. Enjoy skilled and quality labour which save training cost.
2. Market reputation which may have a better position in negotiating with government to influence local policies.

Question 17

What is access to business partners?

Answer 17

Close contact and relationship with suppliers and customers can gather and exchange information.

Question 18

Explain on transport and telecommunications.

Answer 18

1. Road, sea, air transport network increase accessibility for the flow of raw materials, finished products and people. It helps to reduce cost and attract quality labour.
2. Infrastructure for telecommunication like satellites and computer network enables an efficient exchange of information between headquarters and manufacturing firm. This allows multi point production.

Question 19

Explain on access to management.

Answer 19

A good management team can cut productions costs and maximize profits by making wise decisions and formulating strategies to expand its market. It needs to be close to tertiary institutions and close to headquarters.

Question 20

Explain on technology and innovation.

Answer 20

Technological advancements have affected the relative importance of other location factors such as labour, raw materials and power resources. It is important for high tech industry of R&D intensive industries.

Question 21

Explain on historical factors.

Answer 21

1. Urban development in the past.
2. Colonial history.
3. Industry relocation.