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Unlock This CourseThe factors that influence where industries locate have changed dramatically over the past century. What was once crucial for industrial success - like being near coal mines or rivers - might now be less important than having fast internet or skilled workers. Understanding these changes helps us see why some regions have grown whilst others have declined.
Key Definitions:
Industries were heavily dependent on physical factors like raw materials, energy sources (especially coal) and transport links. Heavy industries clustered around coalfields and ports, creating industrial regions like the Ruhr Valley in Germany and the Black Country in England.
As technology advanced, industries became less tied to physical resources. Labour costs, government policies, market access and quality of life became more important. This led to the rise of industrial estates and science parks.
The most significant change has been the move away from primary and secondary industries towards tertiary and quaternary sectors in developed countries. This shift has completely transformed what matters when choosing industrial locations.
In the 19th and early 20th centuries, heavy industries like steel, coal mining and shipbuilding dominated. These industries needed to be close to their raw materials and energy sources because transport costs were high and technology was limited.
Industries located near iron ore deposits, coal mines, or forests. Moving heavy materials was expensive and difficult.
Coal was the main energy source, so industries clustered around coalfields. Water power also attracted mills to river valleys.
Canals, railways and ports were crucial for moving goods. Industries developed along these transport corridors.
The Ruhr Valley became Europe's largest industrial region because it had coal, iron ore nearby and good transport links via the Rhine River. Steel, chemicals and engineering industries flourished here from the 1850s to 1960s. However, as these traditional factors became less important, the region faced severe decline and had to reinvent itself as a technology and service centre.
From the 1970s onwards, several changes revolutionised industrial location decisions. Improved transport, communication technology and globalisation meant industries could locate almost anywhere in the world.
Several key developments transformed how industries think about location:
Containerisation made shipping cheaper and more efficient. Air freight allowed high-value, low-weight goods to be moved quickly. Motorways connected previously isolated areas.
Satellites, fibre optic cables and the internet meant companies could coordinate global operations instantly. This created truly footloose industries.
Today's industries consider very different factors when choosing where to locate. These modern factors often matter more than traditional physical advantages.
Modern industries, especially in the tertiary and quaternary sectors, prioritise different location factors:
Access to educated, skilled workers is crucial for high-tech industries. Universities and research centres attract knowledge-based industries.
Companies seek locations with lower wages but adequate skills. This has driven manufacturing to developing countries.
Pleasant environments attract skilled workers. Climate, culture and recreational facilities now influence location decisions.
Silicon Valley became the world's leading technology hub not because of natural resources, but due to Stanford University, venture capital, skilled workers and an entrepreneurial culture. The pleasant climate and lifestyle attracted talented people from around the world. This shows how modern location factors can create entirely new industrial regions.
Governments have become much more active in influencing industrial location through policies, incentives and infrastructure development. This represents a major change from the past when location was mainly determined by natural advantages.
Modern governments use various tools to attract industries and influence their location decisions:
Tax breaks, grants and subsidies can make locations more attractive. Enterprise zones offer special deals to encourage investment in specific areas.
Governments build roads, airports and broadband networks to make areas more attractive to businesses. Science parks and business incubators support new industries.
Globalisation has perhaps been the biggest driver of change in location factors. Companies can now split their operations across multiple countries, locating each part where it's most efficient.
Modern companies often have global production networks, with different stages of production in different countries. This has created new patterns of industrial location based on comparative advantages.
Often located in developed countries with skilled workers and good universities, like the USA, Germany, or Japan.
Moved to countries with lower labour costs but adequate infrastructure, like China, Vietnam, or Mexico.
Customer service and data processing often located in countries with English-speaking, educated workers and low costs, like India or Philippines.
The UK car industry shows how location factors have changed. Traditional British car companies like Austin and Morris declined as they couldn't compete globally. However, foreign companies like Nissan, Toyota and Honda built new factories in the UK, attracted by skilled workers, government incentives, EU market access and flexible labour laws. These modern factories use just-in-time production and are located near motorways rather than traditional industrial areas.
Increasingly, environmental considerations are becoming important location factors. Companies face pressure to reduce their carbon footprint and operate sustainably.
Environmental factors are becoming more important in location decisions:
Access to clean energy sources like wind, solar, or hydroelectric power is attracting energy-intensive industries like data centres and aluminium smelting.
Companies are locating closer to markets to reduce transport costs and emissions. This is leading to some re-localisation of production.
Looking ahead, several trends are likely to continue shaping industrial location decisions. Understanding these helps us predict where future industrial development might occur.
New factors are becoming increasingly important for industrial location:
High-speed internet, 5G networks and data centres are crucial for modern industries, especially in the quaternary sector.
Companies are considering climate change risks when choosing locations, avoiding areas prone to flooding, extreme heat, or sea-level rise.
As robots replace human workers, labour costs become less important, potentially bringing some manufacturing back to developed countries.