Value of Industrial Location Models

What is an industrial location model?

A model is a mathematical representation that is used to show why patterns have occurred, or to predict how things will occur in the future. A location model shows why certain things have located in certain spaces and aims to show where they will locate in the future. An industrial location model therefore aims to show why industry has located in the area it has, and where it will locate in the future. The term industry includes primary, secondary, tertiary and quaternary sectors.

All sides of industry can be incorporated in these models, this includes tertiary and primary as well as secondary employment, although most models are designed with manufacturing specifically in mind.

There are many types of industrial location model. Weber designed a model that showed where secondary manufacturing industry would locate based on the weight of raw materials used and the weight of the final product. Smith (1971) built an alternative to Weber's model, which is more updated and takes into account new types of transport and industries other than secondary.

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There are also models such as the behavioural matrix which attempt to show what type of companies are more likely to choose the optimum location for their business.

Describe and explain the value of industrial location models

A model of industrial location put forward by Alfred Weber in 1909 assumes that industrialists choose a least-cost location for the development of new industry. The theory is based on a number of assumptions. Weber assumes that there is a flat relief, uniform transport, culture, climate, labour costs, political and economic system, and that markets are of fixed size and location.

It is also assumed that transport costs are proportional to the weight of the goods and the distance covered by the goods, and that perfect competition exists. One of the main assumptions is that raw materials are either ubiquitous or localised. Ubiquitous raw materials are found everywhere and are evenly distributed, and therefore would affect industrial location e.g. water and clay.

Localised raw materials are not evenly distributed. Weber suggested that raw materials and markets would attract the location of an industry due to transport costs. Industries with a high material index would be pulled towards the raw material. Industries with a low material index would be pulled towards the market. The material index is calculated by dividing the total weight of raw materials by the total weight of the finished product. A material index of much greater than 1 indicates that there is a loss of weight during the manufacturing process; for example butter making. The factory should therefore locate near to the raw material.

A material index of less than 1, where weight is gained during manufacturing, would locate near to the market. An index of less than 1 could be achieved by an industry using largely ubiquitous materials, like water, as in the brewing industry. Once a least-cost location has been established through the material index, Weber considers the effect of labour costs in deflecting industry away from the least cost location. Isodapanes are constructed to determine the area within which an industry can locate without losing money. The critical isodapane is the greatest distance an industry can locate from the least-cost location without losing money.

If a source of cheap labour lies within an isodapane below the critical isodapane, it would be more profitable to choose the site with low labour costs rather than the least transport costs location. Weber also takes into account agglomeration of industries, the model suggests that some factories locate within critical isodapanes of other factories, to share resources labour and transport costs. Weber's model doesn't relate well to modern conditions. This is because it doesn't take into account many recent developments such as reduced costs of transport and government intervention. Weber assumes a lot of things that in reality wouldn't be found e.g. perfect knowledge of the market, and physical geography is ignored. Weber also ignores changes in costs and sources of raw materials over time.

Overall Weber's model is largely applicable to heavy industries only.

In 1971 David Smith provided an alternative to Weber's model of industrial location. Smith suggested that as profits could be made anywhere where the total income is greater than total costs, then although there is a point of maximum profit, there would be a larger area where production is possible and profit is still made. Smith suggested that industries rarely located at the least-cost location, but more often at a sub optimum and practical location.

He suggested that this was due to imperfect knowledge about production and market demand, imperfect decision makers, who can be influenced by other factors, or may not act 'rationally', or a government policy, which may tempt industry to locate in areas of high unemployment or development areas. Smith's model takes into account all types of transport although a circular margin of profitability is rarely produced in real life. Where Weber's model can only be used for secondary manufacturing Smith's model can easily be modified to include all types of industry. However Smith's model is based entirely on money and other factors such as employees needs are not taken into account.

The UK iron and steel production is a good example of industrial location compared to Weber and Smith's models. Before the 1600's, iron making was found near to outcrops of ore, where there were plenty of trees, e.g. Forest of Dean, because transport was poor and they were unable to move raw materials large distances. This fits Weber's model because iron making would have a material index of greater than one, due to iron ore being much greater in weight than the iron produced as the finished product.

However Weber's model says that a resource such as trees will be ubiquitous, which is not the case here. After 1700 coke began to be used to smelt iron more efficiently. The new furnaces were located near coalmines, where coal would have been the heaviest raw material to transport e.g. Sheffield and South Wales. This fits Weber's model. Today the coalmines have run out, but the industry hasn't relocated because good transport systems mean that ores and coal can be transported in from abroad. This complies with Smith's model because profit has been made in a sub optimum location. Other reasons for the iron and steel industry remaining in the same areas are large amounts of labour and agglomeration, which are covered in Weber's model.