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Bulk Reducing vs. Bulk Gaining Industries Bulk Reducing vs. Bulk Gaining Industries

Bulk Reducing vs. Bulk Gaining Industries - PowerPoint Presentation

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Bulk Reducing vs. Bulk Gaining Industries - PPT Presentation

Chapter 11Key Issue 2 Why are situation and site factors important Proximity to inputs Manufacturers try to locate their factories as close as possible to both buyers and seller Every factory uses inputs ID: 591049

steel bulk inputs industry bulk steel industry inputs close production materials copper important factory factors site product located products reducing labor raw

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Slide1
Slide2

Bulk Reducing vs. Bulk Gaining IndustriesChapter 11-Key Issue #2Why are situation and site factors important?Slide3

Proximity to inputsManufacturers try to locate their factories as close as possible to both buyers and seller

Every factory uses inputs

Inputs= materials, energy, machinery and supporting servicesSlide4

Pg. 388“The optimal plant location is as

close as possible to inputs

if the

cost of transporting raw materials

to the factory is

greater

than the

cost of transporting the products to consumers

.”Slide5

Proximity to marketsManufacturers try to locate their factories as close as possible to both buyers and seller (repeat)Slide6

Pg. 388“The optimal plant location is as

close as possible to

customer

if the

cost of transporting raw materials

to the factory is

l

ess than

the

cost of transporting the products to consumers

.”Slide7

Mineral ResourcesMinerals are important inputs for many industries because they have an abundance of industrial uses

Non-metallic minerals

90% that humans use

Building stones, gemstones

Minerals used in fertilizers

Nitrogen, phosphorus, calcium, sulfur

Metallic minerals

Valuable for fashioning machinery, vehicles, and essential elements of contemporary society

Malleable and ductile

Good conductors of heat and energy

Ferrous alloys

Chromium, manganese, nickel, titanium, and tungsten

Non-ferrous alloys

Aluminum. Copper, lead, lithium, magnesium, zinc, and precious metalsSlide8

Inquire and Think!!!“So What?”Reflect on your notes so far and discuss with students around you, what have we learned so far that is important or worth further inquiry?Slide9
Slide10

Bulk-Reducing IndustryDefinition=An industry in which the inputs (materials, etc.) weighs more than the final product

(raw materials weigh more than the final product)

Needs to be located near its source of inputs to minimize transportation costsSlide11
Slide12

Copper IndustryMining: the ore extracted is mostly wasteConcentration:

transforms the heavy, bulky copper ore into a much lighter material of high value

Smelting:

input for the smelters, who remove more impurities (bulk-reducing example)Slide13

Bulk-Gaining IndustryDefinition= Industry that makes something that gains volume or weight during production

(finished product weighs more than the raw materials)

Needs to be located near where the product is sold to minimize transportation costs

More expensive to transportSlide14
Slide15

Bulk Reducing Examples (do not write)Copper

Steel

Finished copper bar weighs less than the copper ore used to make the product

Several steps in the copper process that are bulk reducing

Most foundries also need to be located close to energy sources (part of inputs)

Steel is an alloy of iron, manufactured by removing the impurities

Two inputs for steel are iron ore and coal, weighs more than the final product

U.S. steel production location has changed b/c of changing inputs

Today, more concerned with being close to marketsSlide16

Bulk Gaining ExamplesFabricated Metals

Beverage Production

Factory brings together metals (like steel) as inputs and transforms them into a more complex product

Located near markets because products are much bigger

Largest market for fabricated metal and machinery is motor vehicles

¾’s of vehicles sold in the U.S. are assembled in the U.S.

http://www.msnbc.msn.com/id/3032619/#42140012

Empty cans or bottles given to producer and filled with beverage- thus adding bulk/weight

Water- heavy to transport, #1 ingredient in beverageSlide17

Single-market ManufacturerSpecialized manufacturers with only 1-2 customers

Close proximity to customers

Producer of parts for motor vehicles

Ship directly to the carmaker’s plantsSlide18

Perishable ProductsMust be located near their market

Bread and milk

Example: Newspapers, why is this “perishable”?Slide19

Motor Vehicle Production and SalesImportant to produce vehicles near market (why?)

Regional distribution of production is extremely close to that for sales

However, carmakers operate assembly plants in all 3 major industrial regionsSlide20

Changing Situation Factors: SteelIn the past, steel production was a good example of a bulk-reducing industry that located near its inputs

t

he increasing importance of proximity to markets has contributed to the growth of steel mini-mills Slide21

Changing Distribution of World Steel ProductionBetween 1980 and 2013, the share of world steel production declined to 27% in developed countries (down from 81% in 1980)

Between 1980 and 2013, the share of world steel rose to 73% in developing countries (up from 19% in 1980)Slide22

Truck, Train, Ship or Plane?Trucks – short distance deliveryRail – used for 1+ days, longer to load, no daily rests

Ships – very long distances, slower than land based

Air – very expensive…used for speedy delivery, small, high-value packagesSlide23

Break-of-Bulk PointsMixed modes of delivery are often used

Break-of-bulk point: a location where transfer among transportation modes is possible

Containerization

Costs rise each time inputs or products are transferred from one mode to anotherSlide24

Just-in-Time DeliveryShipment of parts and materials arrive at the factory moments before they are needed

Suppliers must locate very close to they factories they supply

Advantages:

Reduces inventory costs

Allows for reduction of factory size

Example: computer manufacturers

Disruptions:

Natural hazards

Traffic

Labor unrestSlide25

Stop here Slide26

Site Factors in IndustryFor some firms, site factors are more important than situation factors in locating a factory

The three most important site factors are labor, capital, and landSlide27

LaborMost important site factor on a global scale

Variation of labor costs around the world is large

½ billion workers are engaged in industry worldwide

China has 1/4

th

India 1/5

th

All developed countries combined: 1/5

th

Labor-intensive industry

An industry in which wages and other compensation paid to employees constitutes a high percentage of expensesSlide28

CapitalThe funds needed to establish new factories or expand existing ones