Changing Employment Structures » Where Industries Locate and Why

Why does an industry end up where it does?

Businesses do not choose a location at random. They look for the place where they can make the most profit, usually by keeping costs low and sales high. Geographers call the things that affect this choice location factors. The four types of industry (primary, secondary, tertiary and quaternary) were covered in an earlier lesson, so here we ask a new question: where do they locate, and why?

Key terms:

• Location factor: something that influences where an industry is built.
• Footloose industry: an industry that is not tied to one place by raw materials or energy, so it can locate almost anywhere.
• Science park: a group of high-tech and research businesses on one site, usually close to a university.
• Special economic zone (SEZ): an area where the government gives businesses special deals, such as low taxes, to attract investment.
• Containerisation: moving goods in standard-size steel boxes (shipping containers) that can be lifted between ships, trains and lorries.

The main location factors

Factor	What it means	Industries that care most
Land	Cost of the site, how flat it is and how much space there is	Large factories, warehouses, out-of-town retail
Labour	Cost of workers and whether they have the right skills	Factories (cost), research and finance (skills)
Raw materials	Whether the materials are nearby	Primary and heavy secondary industry
Energy	A cheap, reliable supply of power	Metal smelting, heavy manufacturing
Transport	Roads, railways, ports and airports to move goods and workers	Manufacturing, trade, warehousing
Markets	Nearness to customers	Shops, services, bulky or fragile products
Political policies	Grants, tax breaks and special economic zones	Industries that can easily move
Technology and communications	Fast internet, phones and computers link places	Services and quaternary industry

Land, labour, raw materials and energy

Transport, markets and politics

Transport. Industries need to bring materials in and send goods out. Sites near motorways, railways, ports and airports have lower transport costs and so attract factories and warehouses.

Markets. A market is where the product is sold. Bakeries, shops and hairdressers need customers close by, so they locate where people live and work. Products that are heavy, bulky or fragile are often made near their market because they are costly or risky to move.

Political policies. Governments can pull industry to an area with grants (money to help set up), tax breaks (paying less tax) and special economic zones. Shenzhen in China became a special economic zone in 1980. Its tax breaks and other incentives attracted foreign factories and it grew from a small town into a large city.

Technology, communications and containerisation

These three factors have changed where industry can go.

• Technology: automation and new machines mean factories need fewer workers, so cheap labour matters less for some industries. Better refrigeration lets food travel further.
• Communications: the internet, mobile phones and video calls let firms run offices, call centres and design teams far from their customers or head office.
• Containerisation: from 1956, goods were packed into standard steel containers. Cranes lift them straight between ship, train and lorry, so loading is quick and cheap and goods are less likely to be damaged or stolen. Shipping became much cheaper, so a firm can make a product on one continent and sell it on another. Ports with deep water and big cranes grew quickly, and global trade expanded.

Factors differ for each type of industry

Type	Most important factors	Example
Primary	Raw materials. The resource is only in some places, so the industry must go there.	A coal mine on a coalfield; a farm on fertile land
Secondary	Transport, land, labour cost, energy and markets	A car factory near a port and motorway
Tertiary	Markets and labour. Shops need customers; services need staff.	A supermarket in a busy town
Quaternary	Skilled labour, communications, universities and a pleasant environment (skilled staff like to live in attractive places)	A research company on a science park

Footloose industries and science parks

A footloose industry is free to choose its location because its raw materials are light or cheap to move and transport costs are small. Software, call centres and some electronics are examples. They can set up almost anywhere with skilled workers, good communications and a helpful government, so they often go where incentives are best.

Science parks are home to quaternary firms. They locate beside universities to share ideas, find skilled graduates and work on research together. Cambridge Science Park in the UK, opened in 1970 by Trinity College, is a well-known example.

How the importance of factors has changed over time

• In the past, industry had to be near coal and raw materials because moving them was slow and costly. Heavy industry clustered on coalfields and near ports.
• Now, electricity grids, roads and containers make raw materials easy to move, so many industries are less tied to them.
• Labour: some factories move to places where labour is cheaper, while quaternary industry follows skilled workers.
• Government policy matters more as countries compete for investment.

Exam-style question

Fig. 1.1 shows made-up information about three industries in Country X.

Industry	Type	Location	Main reason given by the firm
Copper mine	Primary	Remote mountains	Copper ore is found there
Car factory	Secondary	Beside a port and motorway	Cheap transport and flat land
Software company	Quaternary	Next to a university	Skilled graduates

Fig. 1.1

(a) Define the term footloose industry. [2 marks]

(b) Explain why the copper mine is in a remote area. [2 marks]

(c) Explain why the car factory chose a site beside a port. [3 marks]

(d) To what extent is skilled labour the most important location factor for industry? [6 marks]