Unit B4: Unit B4:

Economic activity and energy

Review 2

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Key idea 2: The location and growth of particular types Key idea 2: The location and growth of particular types of economic activity are influenced by a range of of economic activity are influenced by a range of factors.factors.• Factors affecting the location and growth of tertiary and

quaternary activities (prosperity, new technology, accessibility, transport, government policy).

• Factors affecting the changing location of manufacturing (TNCs, raw materials, labour, new technology, government policy).

• Reasons for the location of factories or services (fieldwork opportunity). NB those of you who did fieldwork on NB those of you who did fieldwork on location try to make a note of a couple of important location try to make a note of a couple of important points to throw into any answer those of you who did points to throw into any answer those of you who did might like to borrow mine rather skimpy effort on might like to borrow mine rather skimpy effort on

• http://ih-igcse-geography.wikispaces.com/4.11+Fieldwork+for+Economic+Activity

• About Clive’s Mountain bike centre• Case study of the factors affecting the development and

location of one hi-tech industry.• Case study of recent employment changes within an area of a

HIC. (we looked at this last week – South Wales

Week 10Week 10

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Factors affecting the growth of tertiary and Factors affecting the growth of tertiary and quaternary activities quaternary activities

• The 2 of them provide a large range of services Quaternary services include providing expertise to

others – research, design, IT systems, financial advice

• Both sectors grow with economic development (see over) – which in turn generate jobs and money

• With development, more social services are expected, e.g. schools hospital etc.

• Quaternary activities require high level of skills and technology – both of which become available with development.

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More and better jobs

Greater demand for goods and services

Tertiary sector grows

More personal income

More personal spendingGreater

disposable income

Cycle of growth of Cycle of growth of tertiary and tertiary and quaternary quaternary

industryindustry

New inventions give more choice

People want the new hi-tech goods

More D&T - quaternary

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Finally..Finally..

• In HICs, while the demand for services increase, as we have seen, increases the relative importance of tertiary and quaternary industry, as secondary industry moves to MICs where the costs of running a business are much lower – see more later.

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Factors affecting the location of tertiary and Factors affecting the location of tertiary and quaternary activities quaternary activities

• Nearly every new enterprise is found in a particular place for good reasons.

• It is just as true that there are distinct location factors for tertiary and quaternary industry.

• Originally, most service industries were found where they could be reached by the customers – they were accessible – and that was in big centres of population right at the centre – in the CBD. It is still true that many services are still in the CBD of towns and cities, both in HICs and LICs, fir this very reason.

• Recall though, the customers were not just town dwellers, people came from outside too. So this enlarged the sphere of influence -the area from which the service drew its customers – so good transport links were an important issue.What is CBD?

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But a lot of service industries and But a lot of service industries and quaternary industry has moved to quaternary industry has moved to

the rural urban fringe in recent the rural urban fringe in recent years in HICsyears in HICs

What is the rural urban fringe

Why might industry move

there?

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Factors affecting the location of tertiary and Factors affecting the location of tertiary and quaternary activities quaternary activities

•Much more commercial development has taken place on the rural urban fringe where: The land is cheaper It does not have to be cleared before

building can take place There are usually good transport links – ring

roads – both for the workers and customers There is plenty of space for car parks The environment is cleaner and more

pleasant

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What are the out-of-town locations of What are the out-of-town locations of tertiary and quaternary industry tertiary and quaternary industry

called?called?• Superstores and retail parks – large areas with one or more big stores and ample car-parking – often has a sphere of influence larger than the adjacent town

• Industrial estates – areas of light industry and services laid out with its own road network

• Business parks – combined retail, offices and leisure activities

• Science parks – well laid out areas for high tech industry, usually close to a university or research establishment, that provides the ideas.

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Not all service industries are in town – what Not all service industries are in town – what about this one?about this one?

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What might she be doing? – there is more than one

answer

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Factors affecting the changing location of Factors affecting the changing location of manufacturing (TNCs, raw materials, labour, manufacturing (TNCs, raw materials, labour,

new technology, government policy).new technology, government policy).

•The location of secondary industry has always been effected by factors such as materials energy labour markets transport and land ( space and whether it is

flat enough)

•These factors are still influential but some less so and some news ones have become more important

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Factors affecting the changing location of Factors affecting the changing location of manufacturing (TNCs, government policy, manufacturing (TNCs, government policy,

labour). labour). • TNCs,TNCs, some of which have a bigger turnover than the total GDP of a medium-sized country, are the most influential in deciding where new industry should be located. Their prime motivation is to find the cheapest places to work from, so making the most profit from the factory that they can. (Quote Nissan on this)

• GovernmentsGovernments can also influence where factories are located. If they have a low tax regime and can supply cheap educated labour that are controlled by strict labour laws, then these are all + points. If they make sure that the road, port and airport system is good, this helps too. (Quote Malaysia and also EU policy on imports about Nissan)

• So the availability of the right sort of labourlabour is also very important. For mass production of goods that require simple process, large scale cheap labour is very important. (Malaysia) But for higher-tech production, cost is not the main issue, but high skill and access to modern technology is far more important.

• This is why, despite loosing a lot of mass production industry in the UK, we are still 6th most important country for industrial output in the world as have a high skilled workforce and the technology to work on high-tech products.

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Factors affecting the changing location of Factors affecting the changing location of manufacturingmanufacturing

(Transport, markets, communication, energy, raw materials).(Transport, markets, communication, energy, raw materials). • But certain other factors have slipped down the pecking order:• TransportTransport - is fast and efficient to anywhere in the world and so is

not a bonus to any particular place.And in consequence, being close to the marketmarket is rarely an issue with possibly the exception of a product like bread that needs to be freshly made and thus must be close to the market.CommunicationsCommunications (as in telecomms) are good nearly everywhere - even LICs have good mobile phone networks, this too is no longer important.EnergyEnergy, mostly supplied by electricity, is also almost universally available.A nearby source of rawraw materialsmaterials is now rarely an issue, unlike in the early days of the Industrial revolution (quote South Wales)

• But again there is an exception or 2.• Where the raw materials are easily damaged, like soft fruit for

example, then jam and preserve makers do tend to be located near the where the fruit is produced e.g. Wilkins of Tiptree in Essex or Baxter'sa in Perthshire, Scotland.

• A few industries still tend to be near their source of raw materials where the raw materials are very bulky.

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Factors affecting the changing location of Factors affecting the changing location of manufacturing – raw materialsmanufacturing – raw materials

• A few industries still tend to be near their source of raw materials where the raw materials are very bulky e.g. cement (mock exam question)

• Limestone is taken from a quarry is the main ingredient.• Smaller quantities of sand and clay are also needed. • Limestone, sand and clay contain the four essential

elements required to make cement, calcium, silicon, aluminium and iron.

• Boulder-size limestone rocks are fed into a crusher which crushes the boulders into marble-size pieces, mixed with the other ingredients and ground to a powder.

• The mixture is heated in a furnace to cause physical and chemical changes which form into pieces of glassy clinker.

• Once cooled the clinker is cooled and ground into a fine gray powder.

• The cement is then stored in silos (large holding tanks) where it awaits distribution.

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Case study of the factors affecting the Case study of the factors affecting the development and location of one hi-tech development and location of one hi-tech

industry.industry.• Now this has presented me with a bit of a problem!• For that I chose Nissan because• I had assumed that in its previous incarnation this

had meant an science park or a area like the M4 corridor - seeming along with many other schools – only to find students heavily penalised when they were asked For one named high-tech industry, describe its location and

development

• If they gave such as the examples above.• But I note that the textbook has gone for the M4

corridor and also the biotech industry with no particular organisation or location mentioned at all!

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Case study of the factors affecting the Case study of the factors affecting the development and location of one hi-tech development and location of one hi-tech

industry.industry.

•For this reason, I am going to add the M4 corridor to the wiki notes and do a quick skate through now, (page 104-5 in the book)

•as well as go over Nissan,

•as that is not just useful to the development and location but also looking at how recent employment changes have occurred in an HIC.

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What do high tech industries need?What do high tech industries need?• High-tech needs a highly trained workforce,

up to degree level and beyond in many cases.• They need access to research establishments

very often – this is where the new ideas are developed.

• They like to hang together in groups – other firms may become suppliers, customers or collaborators.

• They need good transport – road, rail & air• To attract the high-class workers, they are

often sited in clean, healthy and pleasant environments – lets look at the M4 corridor

• Also governments can help by giving incentives for firms to set up in one country/part of a country than another, where they was increased economic activity.

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Which of the criteria just

mentioned does the M4 corridor

fulfil?

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So the M4 corridorSo the M4 corridor• Near the M4 and on a fast rail link to London with

Eurostar links to the continent and with easy access to Heathrow

• A large highly trained labour force – those who trained/worked in London will be happy to move out to a much pleasanter environment

• Lots of high-tech industry sited in science parks that are close to the motorways on land that is cheaper than in city centres

• Near to Bristol, Reading and Oxford universities• Attractive environment – Cotswolds, Mendips and

Chilterns• Rich market concentrated around London and the

South East.• There also EU and local grants given as an incentive

to encourage some of early start-ups.

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Now this is exactly what happened in Now this is exactly what happened in Sunderland in NE EnglandSunderland in NE England

• This is what it used to be like:

• Coalfields• One of the largest

iron and steel works in the UK

• Shipbuilding • What factors

made this an attractive area for the 2 main secondary industries?

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The UK coal mines were shut in the 1970sThe UK coal mines were shut in the 1970s• Most were nearly worked out• Some were too expensive to mine – there was cheaper coal to

bought in Eastern Europe.• Shipping was no longer important – there had been booms

during both world wars, but shipbuilding in Korea and Japan was much more up-to-date and cheaper. The last ships were built in the 1980s.

• The Jarrow marchers came from a shipyeard community that had 76% unemployment in the depression of the 1930s.

• …..the EU, the government and the local authorities did their best to bring employment.

• They used many of the methods to entice investors:• The financial assistance is in the form of:

job creation grants rates or rent free periods assistance with preparation of the site

Being one of the poorest areas in the UK ….Being one of the poorest areas in the UK ….

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In addition …In addition …

•These industries are attracted by the availability of a large, skilled labour force.

•The attractions of the infrastructure include: two international airports six major ports with a full range of facilities improved road and rail links to London and

Europe reservoirs in the Pennines providing

constant water supply available industrial sites, both brown and

greenfield

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Why is Nissan sited in NE England?Why is Nissan sited in NE England?• Recently new employment has been provided by overseas

companies, as shown on the map below.

• New employment in North East England

These developments have further diversified the types of manufacturing industry (motor, electronics, off-shore supplies), and have provided more opportunity for office and retail work. The region has been particularly successful in attracting call centres, which employ more than 30,000 people.

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Reasons for Growth: (Physical and Reasons for Growth: (Physical and Human)Human)• Availability of GreenfieldGreenfield sites

• Availability of BrownfieldBrownfield sites (previously used industrial area)• These sites provide room for expansion.• Deepwater Ports are available for the IMPORT of raw materials

and for the EXPORT of finished products- in particular to EU countries.

• Good road infrastructure A1 (motorway) access from North/South UK

• Airports for both business travel and movement of products - close proximity to Newcastle and Stockton on Tees Airports

• Large supply of skilled labour available from Newcastle, Stockton on Tees and Middlesborough after the decline of traditional engineering industries.

• Training opportunities available - local colleges and universities• Relatively low wages in comparison to other European

developed nations• Few working constrictions in UK.• Being an assisted government area, local and national

incentives and grants were available.• English language a benefit in EU/world market place• Multiplier effect for new supplier/component companies

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Identifying Industrial Site and Location Identifying Industrial Site and Location Factors from a map Factors from a map

Additional land is available for expansion.

This is the Nissan plant, attracted to the NE by government grants and a strong tradition of engineering in the region.

The A 19 offers a major north-south transport route for the shipping in of components needed to build the cars and the export of the finished product to a European market.

The site is close to the major cities of Newcastle an Sunderland, a handy and skilled workforce.

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Identifying Industrial Location and Site Identifying Industrial Location and Site Factors from aerial photosFactors from aerial photos

The Nissan plant occupies a site of over 2miles2

The room for expansion is clear here

A test track – fancy a drive?

This major transport axis is good for workers and the movement of finished products and components.

The river Wear offers another transport option

The Nissan site was built on a brownfield, close to farming areas

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How the government assisted..How the government assisted..• In February 1984, Nissan and the British Government signed an

agreement to build a car plant in the UK.• As an incentive, the land was offered to Nissan at agricultural

prices; around £1,800 per acre.• The high unemployment caused by closures of mines,

steelworks and shipp building, meant Nissan had a large, eager, manufacturing-skilled workforce to drawn upon.

• NISSAN – A Japanese TNC Wanted a foothold in Europe (access to European market without paying import taxes).

• Located in Washington (Sunderland) because:- Large site for building (an old airfield) that was flat and had room

for expansion. The NE of England has a history of engineering skills from ship

building that could easily be modified and staff trained to build cars the Nissan way.

Nearness of port (Tees) for import and export.

• Globalisation helps companies avoid trade restrictions. eg Nissan gained access to the EU market by locating in Sunderland.

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What were the benefits for the area?What were the benefits for the area?•Look back at either map or photo and

you see a housing estate nearby. This was built in response to Nissan moving in. The whole area was upgraded

•There is also the multiplier effect.

•Any idea what that might mean?

•This effect was enhanced by Just-in-time production methods – something else you might not have heard of?

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A bit of explaining – just in time!A bit of explaining – just in time!• One of the ways to cut costs is not to run a huge stock of parts.

As we have said, these are really car assembly plants, NOT car manufacturing plants, so these need literally thousands of different item to be supplied.

• With a just-in-time approach, components arrive just in time to be installed.

• In this way, the amount of cash tied up in stocks and in work-in progress is kept to a minimum, as is the amount of space devoted to costly warehousing rather than to revenue-generating production.

• At Nissan, every vehicle is monitored automatically throughout each stage of production. A transponder attached to the chassis leg contains all of a vehicle’s production data e.g. its required colour, specification and trim.

• This triggers sensors at various points along the production line thus updating the records. When, for example, the transponder sends a message to the production system at a supplying company to produce a roof in a particular colour and trim, this triggers an order to the relevant supplier and a roof lining of the required specification is produced. Further along the production line the roof lining arrives to meet the vehicle to which it belongs - just in time.

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What has this to do with the multiplier effect?What has this to do with the multiplier effect?• If the supplier is required to make and deliver the

right components in short order, then this would be difficult over a long distance.

• So for example, the roof lining contractor, Grupo Antolin, a Spanish company, with a manufacturing unit in Ramsgate in Kent was given the contract. It was not long before he was looking for a local site to operate from, so once the order was automatically generated, he could supply and deliver with ease.

• This was happened to a number of component producers, increasing further employment opportunities within the Sunderland area.

• This is the multiplier effect. Bring in money and jobs into an area and more jobs and money follow it.

• Not only that but with more people in good jobs, the need for service industries increase, which in their turn bring even more money and jobs.

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Recent news!Recent news!• On the 8th January 2009, Nissan announced

it was to shed 1200 jobs from the factory due to the automotive industry crisis of 2008. As the 3rd night shift was removed, returning the factory to 2 shifts a day.

• However, later that year, 150 workers were taken back on, due to increased production resulting from the scrappage schemes implemented across Europe as a result of the recession.

• These schemes paid people a fee for scrapping older, high polluting cars in favour of buying new ones.

• It turned out to be a welcome boost to the industry.

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Recent developmentsRecent developments• Tuesday, 21 July 2009• Nissan has announced plans to build a plant for the

production of its advanced lithium-ion batteries in Europe, the first significant step towards producing batteries for its Zero Emission Mobility Program in Europe.

• As part of the newly established Low Carbon Economic Area, Government intends to establish a new training centre, specialising in low carbon automotive technologies; a technology park and an open access test track for low carbon vehicles.

• Research takes places at the Centre for Advanced Electrical Drives at Newcastle University and Sunderland University’s Institute for Automotive and Manufacturing Advanced Practise (AMAP) provides design consultancy and state-of-the-art training for both new entrants and experienced engineers.

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Recent developmentsRecent developments• Friday, 18 December 2009 • Regional Development Agency One North East and car

manufacturer Nissan Motor Co., today entered the next phase of their partnership on the development of zero emission mobility in North East England.

• Under the agreement, One North East will install publicly available, ‘future-proof’ charging points by January 1, 2011, and electricity at the charging points will be provided free of charge until March 31, 2012.

• Nissan has agreed to supply Nissan LEAF electric vehicles to the region in early 2011 and to place priority on requests for electric vehicles in the UK from North East England.

• Nissan LEAF is the world’s first affordable electric vehicle. Designed specifically for a lithium-ion battery-powered chassis, the medium-size hatchback comfortably seats five adults and has a range of more than 160km (100 miles) to satisfy real-world consumer requirements.

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Nissan Leaf – Nissan Leaf – first all-electric car by designfirst all-electric car by design

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Key idea 3: Increased economic production Key idea 3: Increased economic production creates a rising demand for energy and/or creates a rising demand for energy and/or energy efficiency.energy efficiency.• The rising demand for energy and the energy

gap.• The concept of ‘precious’ energy and the need

for energy efficiency.• The relative merits of using renewable (eg

wind, solar and nuclear power) versus non-renewable sources of energy (eg fossil fuels).

• Research into energy sources of home country.• Investigating peoples’ views on the use of

renewable and non-renewable energy (fieldwork opportunity).

NEW STUFF weeks 11/12NEW STUFF weeks 11/12