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GGR100H1 Lecture Notes - Location Theory, Walmart, No Logo

Course Code
Professor Michael Bunce

of 3
Lecture 3 (Oct 4)
Why are my NIKE’s made in China?
Why are manufacturing systems global in scale?
What new patterns of economic activity has this produced?
How has this affected local and regional economies and societies?
Q’S 1 AND 2:
Increased locational flexibility in time and space
From Fordism to Post-fordism, from spatially-fixed to spatially dispersed
assembly line
Global scale spatial separation of manufacturing operations
Global outsourcing of materials and components
Global production and supply chains controlled by TNC’s (Trans-national
Read Crewe’s article on the fashion commodity chain
A good example is Philips, the Dutch-based electronics TNC: check it out at and suppliers/suppliers/
Supply and commodity chains:
the network of facilities and distribution capabilities an enterprise uses to:
"Source" (or "procure") raw materials (chemicals, ores, grains, ...) or components
Transform the materials or assemble the components into products
Deliver the products to customers (indirectly through distributors or stores or
directly to the purchaser)
Factors of the global assembly line
Comparative locational advantages – places, regions and countries that offer
cheap labour and land, lax social and environmental regulations, government incentives,
export production zones attract companies looking to minimize production costs.
Mobility of capital: massive increase in foreign direct investment (FDI)
especially in developing countries and in particular in Asia
New and newer international divisions of labour. This refers to the dividing
up of the labour tasks in different stages of production of a finished item across
different countries.
Read Murray: pp. 104-136.
New technologies in materials and production systems: plastics and computers
Trade de-regulation – what is the future of export production zones (called
maquiladoras in Mexico) under free trade? There will be less need for tariff-free zones
so manufacturing will be freer to locate anywhere.
Global transportation networks – integrated sea-land-air systems, efficiencies
reduce costs.
TNC’s (transnational corporations)- these have been called “stateless
corporations” : the global power of corporate brands. For those iFort For those interested
in reading more about this, Naomi Klein’s book, No Logo , is highly recommended
Decline and even abandonment of old industrial regions - “rust belts” like Detroit and
even of newer regions like Silicon Valley
New industrial spaces and countries (NIC’s):
- export production zones, Maquiladoras
60’s -80’s:South Korea, Taiwan, Singapore, Hong Kong, Mexico
80’s - early 90’s: Malaysia, Thailand, Indonesia, China - “Asian Tigers”
1990’s - present: Brazil, Philippines, India, E. Europe.
Dynamic geographies of manufacturing: the endless search for optimal
This is simple answer to “Why are my NIKE’s made in China?”
Read articles by Crewe article and McKibben’s “Why China is Eating Mexico’s
Where does Wal-Mart fit into all this?
Just check where most of its merchandise is manufactured
But also Wal-Mart is directly linked through manufacturers and suppliers to the
beginning of the chain and through paying its employees minimum wage to the same
exploitation of the surplus value of labour that occurs in factories in the developing
Consequences for localities, places and regions
We will examine this after we’ve studies the global food system and global tourism.
According to classical location theory, the optimal location for a manufacturing a
particular product will be where total costs are kept to the minimum. This involves
trade-offs between transportation and production costs. In the global assembly
line transportation costs have become less significant than other costs especially
labour. They have also been reduced by improved transportation technology and
logistics, e.g. large container ships and by the innovations in materials used in
production which result in lighter components and products.