Every phone, car and tin of beans is the product of a factory that had to be built somewhere. Choosing that somewhere is one of the most important decisions a business makes — and geography explains it. Like a farm, a factory is a system, and its location is a balancing act.
Industry as a system
Manufacturing (secondary industry) takes inputs, applies processes and produces outputs. Industries are grouped as primary (extracting raw materials, e.g. mining), secondary (manufacturing), tertiary (services) and quaternary (research and hi-tech).
Factors affecting industrial location
- Raw materials — heavy or perishable materials pull industry close to the source (e.g. steel near iron ore and coal).
- Power/energy — a reliable, cheap supply of electricity.
- Labour — enough workers with the right skills, at the right cost.
- Transport — roads, ports, rail and airports to bring in materials and ship out goods.
- Market — being near customers cuts delivery cost, important for bulky finished goods.
- Others: capital, government policy, land, and (for hi-tech) a pleasant environment and universities.
| Factor | Pulls industry towards |
|---|---|
| Bulky raw materials | The material source (e.g. mine) |
| Skilled labour | Cities and universities |
| Heavy finished goods | The market |
| Good transport | Ports, motorway junctions |
Case study — Silicon Valley, California (a high-tech area)
Silicon Valley, near San Francisco, is the world's leading high-tech (quaternary) cluster, home to firms such as Apple, Google and Intel. Its location factors are very different from heavy industry:
- Skilled labour from Stanford University and other universities nearby.
- Capital from wealthy investors (venture capital).
- Good transport — airports and motorways to reach global markets.
- Pleasant environment and warm climate attract talented workers.
- Agglomeration — firms cluster together to share ideas and suppliers.
How industry changes as a country develops
The Clark–Fisher model shows the shift: poor countries rely on primary industry (farming, mining); as they develop, secondary (manufacturing) grows; in rich countries, tertiary and quaternary (services and hi-tech) dominate while manufacturing declines — a process called deindustrialisation.
Steel-making needs very large amounts of heavy, bulky raw materials (1) that are expensive to transport (1). Locating near the source cuts transport costs (1), so the finished steel can be produced more cheaply and competitively (1).