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

Porter’s Value Chain

Firm InfrastructureHuman Resource Management

Technology Development

Procurement

SupportActivities

InboundLogistics

PrimaryActivities Operations

OutboundLogistics

Marketingand Sales

Service

Upstream value activities Downstream value activities

Concentration of World Manufacturing80% of Global Output in Three Regions

How current are these data?Current role of China?

Global Distribution Manufacturing Value Added

North America

26%

Europe33%

Japan14%

China11%

Other Asia8%

Rest of World8%

Source: Calculated from NationMaster.com

U.S. – 22.4%

Shares of Manufacturing Value Added

Source: World Bank World Development Indicators, 2011

U.S. & CanadianManufacturingBelt: AccountsFor aboutTwo-thirds of Total ManufacturingEmployment inThe U.S. andCanadaRise of

Maquiladoras –Border & interiorMexico

A goodOverview Of specializedVersus marketOriented 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

x

2012

2013

x

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

Anatomies of Job-Loss: disinvestmentBroad

StructuralTrends

CorporateAgency

The “outfall”of restructuring

Spatialoutcomes

Macroscalecausal forcesin the global

economy

Corporate responsesto global trends

Corporate competitivestrategies

Plant openingsPlant closings

In-situ changes

Events on the ground

Bluestone & Harrison - Deindustrialization of America:“The core of B&H’s argument followed a restructuring approachwith the need to restore the drive to accumulate, producing, through spatially distributed effects, a major reworking of therole of U.S. cities and regions in the geographic distributionof 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

• Multipliers chancy: impacts only if investment comes to them

• Employment fortunes conditioned by “waves of investment” and restructuring

No direct transference

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