Location of industry
Yvonne Harvey, Contributor

Campers learn to work as a team at the Teen Leadership Training Camp run by New Generation in St. Ann. - Contributed

Hello friends! Our task today involves the location of industries. According to the syllabus, at the end of the lesson candidates should be able to state the factors which determine the location of industries and identify these in specific cases. Before going into the influences on location, however, it would be fitting to look at the term industry.

An industry is made up of a number of firms producing broadly similar item or items that are connected with each other. For the last few weeks, we have been discussing industries of different types. We have looked at cottage and linkage industries.

One of the most important decisions an entrepreneur has to make when setting up an industry is where to locate. To consider location of an industry means to decide on its site. The factors which influence the setting up of an industry can be considered under two broad headings: the economic influences, i.e., those factors which directly affect average costs of production, and the non-economic influences, i.e, those factors which do not directly affect average costs of production.

Economic influences:

1. Nearness to the source of raw materials

This is especially important if the raw materials are heavy or bulky and, therefore, expensive to transport, e.g., bauxite firms are located close to where bauxite is mined in order to save on transportation costs.

Where raw materials have to be imported, closeness to the port where the raw materials enter the country may influence the choice of site.

2. Nearness to market

The finished products may be bulky, heavy, fragile or perishable. In such instances, it might suit the industry to be close to its market or its potential customers as it can be quite costly to transport such goods over long distances. For example, eggs are very fragile and much damage could result from transporting them over many miles. Despite refrigerated transport, fruits and vegetables are highly perishable and should not take a long time to get to the market. Closeness to markets in this case will minimise spoilage.

3. Nearness to the source of power

If the power required is only available in a particular area, then efforts will be made to cut costs by locating close to that source of power. For example, after the Industrial Revolution in England, the main source of power was coal which was heavy and costly to transport. Many industries that relied on coal for power were located near to the coal fields.

This influence on the location of industry has become less important in recent times as many industries rely on electricity, which is readily available and can be transported at affordable costs.

4. Nearness to suitable labour

Labour is reluctant to travel long distances, so industries tend to locate where the labour they require exists. Availability of suitable labour in the area of location is influenced by the degree of social amenities that exist in the area, such as housing and medical facilities. If sufficient, suitable labour is not available in the area of location, it can be very expensive to transport the labour to where the industry is located. Highly technological industries are sited where highly skilled labour is available.

5. Land

Land in cities and towns is expensive to rent or buy. Therefore, the industry has to weigh the importance of being located in these areas with the cost of land. If it is not very important to be in the town or city then the industry can locate further out where the cost of land to rent or buy is cheaper, thus cutting down on average cost of production.

6. Access to transport

Most industries concentrate near to major highways to have easy access to raw materials and markets. In the case of industries that export, closeness to rail, sea and air transport are important factors in low cost of production.

7. Infrastructure

Industries require roads that are in good condition, efficient telephone services, and reliable supplies of electricity and water. Where these are lacking, the result is loss of production and increased costs.

8. Linkage industries

Whether the linkages are backward or forward, an industry may choose to locate near to other industries on which they depend in order to save on transportation costs. For example, suppliers of drilling equipment will locate near oil or gas fields.

Let's now consider some of the non-economic influences.

1. Climatic conditions

This is important to some industries, particularly those involved in agricultural products. The cotton industry for instance is located near to soft water, necessary for washing the cotton. Rice and bananas require heavy rainfall while coffee requires a cool climate, e.g., slopes of the Blue Mountains, in Jamaica.

2. Government influence

Through various incentives, governments can encourage or motivate the location and/or relocation of industries. They may do this to help develop depressed areas with high unemployment. For example, they may offer industries duty-free concessions on raw materials if they are willing to locate their industries in rural rather than urban parts of a country.

3. Nature of activities

If industries are producing items that are environmentally unfriendly, government may place restrictions on where they can be located. Often, industrial estates or special zones are reserved for location of such industries.

4. Industrial inertia

Many industries locate in an area and remain there even though the original reason for siting in that area no longer exists.

5. Political stability

Industries require areas that are politically stable as political warfare can seriously affect the operations of the industry and this will ultimately affect production and cause average costs to rise.

Industries will weigh the factors influencing location against each other in deciding where to set up.

However, despite all these factors, location may depend on accident or tradition.

Your task this week is to take one important industry that has been established in your country and discuss what factors determined its location. Consider economic and non-economic influences.

Bye for now.

Yvonne Harvey teaches at Glenmuir High School.