Industrial Location: Other Locational Factors
External Factors:
- infrastructure upgrades,
- buildings, to lure a company
- Suppliers
- Workforce
Some of the biggest costs for businesses are:
A company can find a way to cut costs through geography
Types of jobs that have been outsourced are mostly in industries that need a large number of workers, including:
Impact on the US:
- Subsidies: In and effort to lure a company to its area, a government may pay all or part of a company’s:
- infrastructure upgrades,
- buildings, to lure a company
- Taxes
- Agglomeration Industries: Companies choose to locate near their competitors in order to share:
- Suppliers
- Workforce
Some of the biggest costs for businesses are:
- Raw Materials
- Production Costs (Wages, Power, Infrastructure, etc)
- Transportation
A company can find a way to cut costs through geography
- Raw materials are the materials used to create a product (wood, metal, etc) companies can cut their costs by finding the optimum location between the materials and the market (where the good is sold).
- Production costs can be cut by finding the location that offers the lowest production costs, like close access to electricity, close access to roads, ports, train tracks, etc, or low wages.
- Companies that produce the same type of product often pick locations near each other - this way companies can cut costs by sharing the labor force, suppliers, and infrastructure. This process is known as agglomeration. Examples include: Auto industry (Detroit), Computer industry (Silicon Valley), Movie industry (Hollywood)
- Companies can get lower wages by finding areas with lower costs of wages – many times the companies will ship jobs overseas to find lower wage costs. This processes is known as outsourcing.
Types of jobs that have been outsourced are mostly in industries that need a large number of workers, including:
- Manufacturing
- Call Centers
Impact on the US:
- Loss of Manufacturing sector jobs
- Decreased opportunities for blue collar workers
- Savings in wage costs can offset the rise in other costs.