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Industry

 

All industries can be thought of as a system of inputs, processes, outputs and feedback. Industry as a system

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System diagram for industrial activity

 

 

  1. Inputs are the things that go into the system. The main three inputs are:

 

 

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Physical inputs. These include sun, soil and water in
primary
industries
and raw materials
such as cotton, metal or oil in
secondary industries.

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Labour – either skilled or unskilled.

 

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Capital. This is the money invested in the business to pay for raw materials, staff, machinery and the buildings used for production and storage.

 

 

  1. Processes are all the things that happen to those inputs to help turn them into outputs. These include:

 

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Production – for example the manufacturing of cars, or the sewing of textiles.


Factory maintenance, which is necessary to keep machines in working order.


Packaging which protects products during transit and presents them in a way that
makes customers want to buy them.

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Transport, which is needed to move products from the factory to the warehouse and then on to the shops.

 

 

  1. Outputs are the finished products, together with profits and wages.
  2. Feedback includes anything that refines or improves the system, such as:

 

 

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Customer feedback. Companies find out what consumers think of their products through market
research.
They may alter or adapt their range according to feedback to sell more products and maximise profits.

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A profit is the money left over after inputs (staff wages, raw materials, machinery and buildings) have been paid for. Profits need to be high enough to make it worthwhile for the company to continue investing in making the product. If profits fall too low, the company will need to change the inputs, process or outputs to improve profit or diversify into other products. If they do not they will go bust!

Classification of industry

Secondary industry

Image From EcoleBooks.comFactory

Secondary industries are those which take the
raw
materials
produced by the primary sector and process them into manufactured
goods and products.

 

Examples of secondary industries include heavy
manufacturing
,
light
manufacturing,
food processing, oil


refining and energy production.

 

Tertiary and quaternary industry

 

The tertiary sector is also called the service sector and involves the selling of services and skills. They can also involve selling goods and products from primary and secondary industries. Examples of tertiary employment include the health service, transportation, education, entertainment, tourism, finance, sales and
retail.

 

The biggest area of expansion in the tertiary sector in the UK has been in financial and business services. According to government statistics, 25 years ago one in ten people worked in this industry, now it is one in five.

 

The quaternary sector consists of those industries providing information services, such as computing, ICT (information and communication technologies), consultancy (offering advice to businesses) and R&D (research, particularly in scientific fields).

 

The quaternary sector is sometimes included with the tertiary sector, as they are both service sectors. The tertiary and quaternary sectors make up the largest part of the UK economy, employing 76% of the workforce.

 

Comparing employment structures

 

The employment structure of a country shows how the labour force is divided between the primary, secondary and tertiary sectors. Different countries have different employment structures. The employment structure of a given country can tell you quite a lot about that country’s economy.

 

In the richest countries, for example, there will usually be more people working in the tertiary/quaternary sector than in the primary and secondary sectors. In the poorest countries, there tend to be more people working in the primary sector than in either the secondary or tertiary sectors.

 

Look at the diagram below. Based on the employment structure, which countries do you think are the richest and poorest?

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In the richest country (USA), most people work in the tertiary sector. In the poorest country (Nepal), most people work in the primary sector. In Brazil, the labour force is more evenly distributed between the three sectors.

 

Note that the quaternary sector has been included in the tertiary sector.

 

Industrial location factors

 

Different industries require different
inputs.
Industries are more likely to locate where these inputs are readily and cheaply available. Factors that influence where an industry locates include:

 

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Power supply


Communications – including transport, telecommunications.


Labour supply – including workers with the right skills.


Access to market – where the goods are sold.


Grants and financial incentives – usually from governments.

Raw materials


Agglomeration and footloose industries

 

These are two ‘special cases’ of industrial location.

 

Agglomeration is when a number of producers in the same or related industries group themselves together. They do this to benefit from local skill pools, economies of scale or the prowess of a locality in a particular field. An example is the large number of financial services companies (eg banks and insurance companies) which are headquartered in the City of London.

 

Footloose industries are those that are less dependent on factors that tie them to a specific geographical location. Unlike manufacturing industries, tertiary or services companies do not have to be near a source of raw materials. As long as they have suitable transport, energy and communications links, they can locate themselves virtually anywhere in the world. Examples of footloose industries are computer software development, telephone sales and call-centres.

 

The Ruhr is a heavily industrialised area of western Germany named after the river that flows through the region. It is the centre of Germany’s manufacturing industry and includes the cities of Essen and Dortmund.

 

Heavy industry in the Ruhr – A case study

 

Background


Heavy industry in Germany

Image From EcoleBooks.com Natural resources such as coal, iron ore and limestone enabled the iron and steel industry to develop in the Ruhr. The chemical and textile industries also grew due to good transport links and available workforce.

Canals and rivers such as the Rhine were used for transport and power.

The area developed industrially in the 1930s and 1940s to supply arms for Germany.

Image From EcoleBooks.com Up until the 1970s the factories and associated services were an important source of employment
for people in the region.

 

 

Problems and Issues

Image From EcoleBooks.com The decline in the Ruhr’s importance as a heavy industrial area has caused job losses in steelworks and coal mines. Many people have left the area, eg cities such as Dortmund, due to economic and associated social problems.The environmental legacy of the heavy industry in the area includes
waste tips from coal mining, air and water pollution.

 

 

Image From EcoleBooks.com Many of the original raw materials are exhausted, there are high labour costs and old, outdated machinery. This has led to cheaper steel being imported from south east Asia where labour costs are lower. This is one of the drawbacks of globalisation for MEDC industry.

Image From EcoleBooks.com Many of the problems and changes in the Ruhr have also been experienced in other industrial
regions in the EU such as South Wales.

 

 

The Ruhr today

Image From EcoleBooks.com There is still a large workforce living in the area that have had to learn new skills as industries have changed.

New industries, eg electronics, are moving in to replace the traditional heavy industries.

Image From EcoleBooks.com Much of the derelict land has been improved to provide a more pleasant living and working
environment.

Image From EcoleBooks.com The Ruhr has good access to much of the EU is once again an attractive location for industry.

 

Footloose industry in the UK – A case study

 

 

Footloose industries are not tied to a particular location. They include high-tech industries and are located near motorway junctions or on the edges of towns and cities in business parks. The products are often electronics and computer components.Examples include Silicon Glen in Scotland and the M4

 

 

 

 

 

corridor. Some of the benefits of locating an industry in the M4 corridor are shown in the diagram.

Image From EcoleBooks.comThe M4
corridor

 

 

Inputs and Outputs

 

 

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The M4 corridor stretches from Heathrow airport in the east to Bath and Bristol in the west.
The corridor is home to companies such as Hewlett Packard and Sony who are involved in research and development (quaternary industry) and have links with universities who provide well-qualified graduates.

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Few raw materials are used and therefore transport costs are low, making the industries
‘footloose’.

 

Advantages

 

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Land on the edge of cities is often cheaper than in the centre. The out of town surroundings and easy access to workers in the suburbs provides an ideal location for building science and business parks.

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Motorway links and railways also provide access for commuters and for transporting components and products.

 

Disadvantages

 

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Workers wanting to live near their place of work increases the demand for housing and puts pressure on green belt land.

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As demand grows, house prices increase. This means that less skilled and lower paid workers are priced out of the market in desirable areas.

 

We now communicate, travel and share each other’s cultures on a world scale.

 

We also trade more than ever before, transporting products around the world in hours or days. The biggest companies are no longer national firms but multinational corporations or transnational corporations (TNCs) with subsidiaries in many countries.


This process is called globalisation.

 

 

 

 

What is globalisation?

 

Globalisation is the process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange.

 

Globalisation has been taking place for hundreds of years, but has speeded up enormously over the last half-century.

 

Factors influencing globalisation include:

 

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Communications. TV, telephony and the internet have allowed information and ideas to travel quickly. UK businesses can have a call centre in India answering calls from UK customers.

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Transport has become cheap and quick. UK people now holiday all over the world. People from other countries can travel to the UK to seek better-paid jobs. Businesses can ship products and raw materials all over the world more easily – making products and services from all over the globe available to UK customers.

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Trade liberalisation. Laws restricting trade and foreign investment have been relaxed. Some
governments even offer grants and tax incentives to persuade foreign companies to invest in their country. The idea that there should be no restrictions on trade between countries is known as free trade.

Although globalisation is probably helping to create more wealth in developing countries – it is not
helping to close the gap between the world’s poorest countries and the world’s richest.

 

Transnational corporations (TNCs)

 

Globalisation has resulted in many businesses setting up or buying operations in other countries. When a foreign company invests in a country, perhaps by building a factory or a shop, this is called inward investment. Companies that operate in several countries are called multinational corporations (MNCs) or transnational corporations (TNCs). The US fast food chain McDonald’s is a large MNC. It has nearly 30,000 restaurants in 119 countries.

 

The majority of TNCs come from
MEDCs
such as the US and UK. Many multinational corporations invest in other MEDCs. The US car company Ford, for example, makes large numbers of cars in the UK. However, TNCs also invest in
LEDCs
for example, the British DIY store B&Q now has stores in China.

 

Factors attracting TNCs to a country may include:

 

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Cheap raw materials.

 

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Cheap labour supply.


Good transport.


Access to markets where the goods are sold.

Friendly government policies.

 

Positive impacts of globalisation

 

Globalisation is having a dramatic effect – for good or ill – on world economies and on people’s lives.

Some of the positive impacts are:

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Inward
investment
by TNCs helps countries by providing new jobs and skills for local people.


TNCs bring wealth and foreign currency to local economies when they buy local resources,
products and services. The extra money created by this investment can be spent on education, health and infrastructure.

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The sharing of ideas, experiences and lifestyles of people and cultures. People can experience
foods and other products not previously available in their countries.

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Globalisation increases awareness of events in far-away parts of the world. For example, the
UK was quickly made aware of the 2004 tsunami tidal wave and sent help rapidly in response.

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Globalisation may help to make people more aware of global issues such as

deforestation
and
global
warming
– and alert them to the need for sustainable
development.

 

Negative impacts of globalisation

 

Critics include groups such as
environmentalists,
anti-poverty campaigners and
trade
unionists.

Some of the negative impacts include:

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Protestors in London

 

Image From EcoleBooks.com Globalisation operates mostly in the interests of the richest countries, which continue to dominate world trade at the expense of developing countries. The role of LEDCs in the world market is mostly to provide the North and West with cheap labour and raw materials.

Image From EcoleBooks.com There are no guarantees that the wealth from inward investment will benefit the local
community. Often, profits are sent back to the MEDC where the TNC is based. Transnational
companies, with their massive
economies of
scale,
may drive local companies out of business. If it becomes cheaper to operate in another country, the TNC might close down the factory and make local people redundant.

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An absence of strictly enforced international laws means that TNCs may operate in LEDCs in a
way that would not be allowed in an MEDC. They may pollute the environment, run risks with safety or impose poor working conditions and low wages on local workers.

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Globalisation is viewed by many as a threat to the world’s cultural diversity. It is feared it might
drown out local economies, traditions and languages and simply re-cast the whole world in the mould of the capitalist North and West. An example of this is that a Hollywood film is far more

 

likely to be successful worldwide than one made in India or China, which also have thriving film industries.

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Industry may begin to thrive in LEDCs at the expense of jobs in manufacturing in the UK and

other MEDCs, especially in textiles.

Anti-globalisation campaigners sometimes try to draw people’s attention to these points by demonstrating against the World Trade Organisation. The World Trade Organisation is an inter- government organisation that promotes the free-flow of trade around the world.

 

Industrial pollution

 

Any large-scale economic activity may have a negative impact on the natural environment. Manufacturing industries in particular can cause air, water and noise pollution.
Industrial pollution can affect the environment in a number of ways:

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Air pollution in Shanghai

 

Image From EcoleBooks.com It may damage the well-being of humans and other species – for example, it can pollute drinking-water supplies or poison plants and animals.

Image From EcoleBooks.com It may interfere with natural processes – for example, it could change local climatic conditions or destroy wildlife habitats.

Image From EcoleBooks.com It may impact on people’s livelihoods – for example, pollution of the sea will hurt people who are involved in fishing and tourism.

Image From EcoleBooks.com Some governments have introduced legislation to try to cut down on avoidable pollution and to encourage industries that are more
sustainable.
These laws need to be enforced by courts.


The Exxon oil spill

 

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A dead seabird

 

 

 

 

A recent example of courts taking action against a company for causing pollution was in

2004 when a

US court ordered the oil company Exxon to pay £2.5bn for an oil spill in 1989.

 

The oil tanker Exxon Valdez ran aground while off course. It spilled 11 million gallons of crude oil contaminating over 1,300 miles of the coast of Alaska. It is estimated that the spill killed as many as

250,000 seabirds, 3,000 sea otters, 300 seals and 22 killer whales.

 

The court wanted Exxon to pay to help compensate those people in Alaska whose livelihoods were hurt the worst. The £2.5bn pay out is the latest ruling in a long-

 

In Zimbabwe we see serious land pollution by bus operator who let oil sip into the ground. For example Munenzva Bus company




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