Chapter 11 Manufacturing: Regional Patterns and Problems

• Introduction

• The Importance of Manufacturing

• Regional Patterns and Processes

• Manufacturing Regions of the U.S.

• Regional Industrial Development Problems

• U.S. Patterns of Manufacturing

• World Manufacturing Patterns

• The Globalization of Production

The Importance of Manufacturing

• The shift to services: ? Does this mean manufacturing is no longer a key sector in regional economies?

• The rise of high-tech

• Role of R&D and High-Tech in regional growth

• Manufacturing’s rich regional linkages

Changing Composition of Employment in the U.S.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1899

1909

1919

1929

1939

1947

1958

1967

1972

1977

1982

1987

1989

1995

2001

Other

Mfg.

Construction

Mining

Farm

Mfg. Output in Constant $

0

2000

4000

6000

8000

10000

1990

1995

1996

1997

1998

1999

2000

2001

$ B

illi

on

So, while employment may have declined, real output continues to rise

Aerospace

Other Technology Based Industries

-

50,000

100,000

150,000

200,000

250,000

300,000

1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000

Employment Trend - Technology Based Industries-Washington State 1974-2000

Engineering,Commercial Research,

and Consulting Services18.4%

Software and OtherComputer Services

21.0%

Federal and UniversityResearch

3.8%

Services2.7%

Bio-Technology/Bio-Medical

Manufacturing2.8%

Chemical Productionand Petroleum Refining

2.0%

Specialized Instrumentsand Devices

2.9%

Computers andElectronics

8.3%

Aerospace32.6%

Manufacturing54.1%

Services45.9%

Total Employment:285,835

Motor Vehiclesand Machinery

5.5%

Relationship Between Regional Growth Rates and Intensity of

R&D

GROWEMLQ

1.41.31.21.11.0.9.8.7

TO

TR

DL

Q

2.5

2.0

1.5

1.0

.5

0.0

Correlation: -.282, sig. .045

WA

Index of Employment Growth 1990-2000

Ind

ex o

f R

&D

Eff

ort

Job Multipliers by Industry

0 1 2 3 4 5 6

Aerospace

Computers & Electronics

Motor vehicles & Machinery

Specialized Instruments

Chemicals & Petroleum

Softw are & Computer Services

Arch., Eng., R& D., Consulting

Biotech manufacturing

University & Federal Research

All High Tech

Regional Patterns and Processes

• Regional Cycle Theory – industrial districts– Youth, maturity, and old age– Youth: experimentation & rapid growth;

market expansion, capital rushes in, competitive advantage

– Maturity: the dominance of the district, development of branch plants, movement of expertise to other regions

– Old age: cost advantages lost, new regions become cost-competitive, aging capital, eroding managerial capabilities & labor

Regional Patterns & Processes, Cont.

• Manufacturing within the urban system– Large cities as magnets for manufacturing– Not mentioned: they are also centers of

markets for market-oriented categories of industry (milk processing, bread baking, newspaper printing, ready-mix concrete)

• Diffusion of Manufacturing– Driven by technological innovations, in market

oriented industry, in resource-oriented industry

Manufacturing Regions of the United States

• Figure 11.1: The American Manufacturing Belt (Rustbelt)– Bos-Wash: Megalopolis anchored by New York– Montreal-Toronto-Buffalo-Rochester– Pittsburg – Cleveland – Detroit– Chicago – Gary - Milwaukee– Minneapolis – St. Louis

• Rise of the Sunbelt: Figure 11.2

Rise of Manufacturing Outside the Rustbelt

• Fueled by:– Multinationals entering U.S. markets (e.g.

Japanese automobile manufacturers– Advent of flexible production systems– Demise of Fordist production systems in some

sectors– Development of just-in-time production

systems

Manufaturers' Ratio of Inventories to Shipments

0

0.5

1

1.5

2

2.5

1965 1970 1975 1980 1985 1990 1995 2000

Evidence of long-term reductions in capital tied up in inventoriesdue to better logistics in the product delivery system

The End of Fordism? The Flexibility Debate

• Are we not only entering a new long-wave, where IT is the driving force, but also a new long-wave in which the basic structure of productive relations is in massive shift?

• The Fordist paradigm - implicit in the oligoplistic model - but also linked to consumption and the regulation of society/consumption

A new regime of accumulation?

(1) The emergence of clusters of small firms, including co-ops

(2) Flexibility related to new machines

(3) Labor’s new position

- functional flexibility (multiskilling)

- numeric flexibility

- financial flexibility

- more part-time, flex time, telecommuting

(4) Changes in market place conditions

- mass markets break down

- rise of niche (craft) markets

Fordism Post-FordismLow technological innovation Accelerated innovationFixed product lines, long runs High variety of product, short runsMass marketing Market diversification & nichingSteep hierarchy, vertical chains of command Flat hierarchy, more lateral communicationMechanistic organization Organismic organizationVertical and horizontal integration Autonomous profit centers; networkCentral planning Systems; internal markets within firm;

outsourcingbureaucracy Professionalism, entrepreneurialismMass unions, centralized wage-bargaining Localized bargaining, core and periphery;

workforce divided; no corporatismUnified class formations, dualistic politicalsystems

Pluralistic class formations; multi-partysystems

Institutionalized class compromises Fragmented political marketsStandardized forms of welfare Consumer choice in welfarePrescribed courses in education Credit transfer, modularity, self-guided

instruction, independent studyStandardized assessment (O level) Teacher-based assessment (GCSE) or self-

assessmentClass parties, nationwide Social Movements; multi-parties; regional

diversification

Emergence of Flexible Specialization

• Fragmentation of the Fordist firm - vertical disintegration (shedding non-central functions; outsourcing) and Market fragmentation (niche)• Adoption of new technologies, especially those dependent upon computers and telecommunications (CAD/CAM/FMS)• Labor force adjustments

– functional flexibility (multiskilling)– numeric flexibility (adjusting quantities by task)– financial flexibility (wage rate adjustment)– more part time, short-term, temporary work

Flexible specialization & new industrial spaces

• Piore & Sabel - The Second Industrial Divide - craft-based districts in Italy, Germany, Denmark• Clusters of high tech industry - Silicon Valley; Route 128; Austin• Wooden boats in Pt. Townsend WA; Log

homes in Bitterroot Valley MT• The movie industry

Debates over aspects of the flexibility thesis

Flexible Specialization and Regional Industrial

Agglomerations: The Case of the U.S. Motion Picture Industry

by Michael Storper & Susan Christopherson• Historically, an oligopoly of

– theaters– studio production facilities– actors/production specialists– spatially clustered in Southern California

• Vertical disintegration: 1950’s - 1970’s, with consequences in the 1980’s

Productions by Organization Type

0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%

1960 1965 1970 1975 1980

Independent

Major

Mini-major

151 190 207 243 222 Number ofproductionsper year

The Proliferation of Establishments

1966 1974 1981Production Companies 563 709 1473Rental Studios 13 24 67Properties 66 33 184Editing 4 31 113Lighting 2 16 23Recording/Sound 20 33 187Film Processing 43 76 55Film effects 10 27 42Market Research 3 5 24Artist representatives/talent agencies 242 359 344Total 966 1313 2512

Establishments in the Entertainment Industry 1968-

1997

1968 1974 1981Motion pictures except TV 666 1279 1023Motion picture & tape for TV 490 978 1420Services allied to motion picture production NA 716 1077Total 1156 2973 3520

1997

8916634315259

1997 data from U.S. County Business Patterns; in the 1987revision of the SIC code motion pictures was combined intoa single industry

The Decreasing Size Per Establishment

1969 1974 1981 1997Motion Pictures 23.2 11.2 25Television 21.2 20.8 24.1 7.4Allied Services NA 21.3 16.9 10.7

CombinedMotion Picturesand TV

California’s domination of the industry - measured by jobs

Jobs 1968 1974 1981 1997California-pictures 15449 20329 40433 31791New York-pictures 6687 4596 8625 8169Others-pictures 3713 9753 10779 25578

California-allied services NA 9663 12205 125935New York-allied services NA 3110 3135 7897Others-allied services NA 2501 2829 41089

Structural Trends• Retention of core activities: TV & Major

films & channels of distribution• Forced divestiture of theater chains• Development of generic specialists

subcontracting with specific producers for a given film & narrow scope; linked to major studios; many part-time workers; “project orientation,” FLEXIBILITY

• Product diversification: TV, Video, Film• Establishments clustered in California,

while filming locations have dispersed

Manufacturing Regions of the United States, continued

• Location of Corporate Headquarters (Figure 11.4 – Borchert)

• Government Influence on Regional Manufacturing Patterns– Rise of the “Gunbelt”– Regional Development Programs to Alleviate

Poverty (ARDC; EDA– State government programs– Current fad: cluster studies