Changing Industrial Location: Why Do Factories Move?

Hey everyone! Ever wonder why the clothes you buy might say "Made in Vietnam", your phone "Assembled in China", and the company's main office is in the USA? It's not random! Factories and businesses move for very specific reasons. This chapter is all about understanding why industries choose certain locations, how and why these locations change over time, and the huge impact this has on people, cities, and the environment. It's a super relevant topic that explains a lot about the global economy we live in. Don't worry if it sounds complex, we'll break it all down step-by-step!


Part 1: The Basics - Choosing a Spot for a Factory

Think about opening a bubble tea shop. Where would you put it? Near a school? In a busy MTR station? You'd think about where your customers are (market), how much the rent costs (land), and if you can find staff (labour). Factories do the same thing, just on a much bigger scale! These reasons are called location factors.

Key Location Factors to Remember

Here are the main ingredients that companies consider. A good way to remember them is the mnemonic: T.R.I.M.P.L.E. G.L. (it sounds a bit silly, but it works!)

  • Transport: How easy is it to get materials in and finished products out? Being near ports, railways, or highways is a huge plus.
  • Raw Materials: Especially for heavy industries, being close to the source of raw materials (like iron ore or coal) saves a lot on transport costs.
  • Industrial Inertia: We'll cover this later, but it's the tendency for an industry to stay in its original location even when the reasons for being there are gone.
  • Market: Where are the customers? Selling heavy or fragile goods? It's better to be close to the people who will buy them.
  • Power: Does the factory need a massive amount of electricity? Locating near a power source is crucial.
  • Labour: Is there a supply of workers? Are they skilled or unskilled? What are the wage costs?
  • Economies of Agglomeration: A fancy term for companies in the same industry clustering together to share services, workers, and ideas. Think of a street with lots of computer shops.
  • Government Policy: Governments can offer tax breaks, subsidies, or build infrastructure to attract industries to a certain area.
  • Land: Is land available and affordable? Is there enough space to build and maybe expand later?
Quick Review Box

Location Factors are the reasons why an industry is located in a particular place. The importance of each factor is different for different industries and has changed over time with technology!


Part 2: The Hong Kong Story - From "Made in Hong Kong" to the Pearl River Delta (PRD)

Where We Started (1950s-1970s)

Back in the day, Hong Kong was a manufacturing giant! Our parents and grandparents might remember a time when factories in areas like Kwun Tong and Tsuen Wan were pumping out textiles, electronics, and plastic flowers for the world.

Why Hong Kong?
- A huge supply of cheap labour (many migrants).
- An excellent natural port for transport.
- Government policy that encouraged business.

The Big Move: Industrial Relocation to the PRD

Starting in the 1980s, things began to change. Hong Kong factories started moving north into the Zhujiang (Pearl River) Delta Region, to cities like Shenzhen, Dongguan, and Guangzhou.

This move is a classic example of industrial relocation - the process of moving a factory or business from one location to another.

Why did they move?

  • PUSH Factors (reasons to leave Hong Kong):
    - Rising land costs.
    - Rising labour costs (wages went up).

  • PULL Factors (reasons to go to the PRD):
    - Much cheaper land and labour.
    - China's "Open Door" government policy which welcomed investment.
    - A massive, eager workforce.
Key Takeaway

The relocation of Hong Kong's manufacturing to the PRD was driven by economic factors. Hong Kong shifted its focus to service industries (like finance and tourism) while the PRD became the "world's factory".


Part 3: Case Study 1 - Iron and Steel Industry in China

This is a great example of a traditional, "heavy" industry. It needs bulky raw materials (iron ore, coal) and massive amounts of power. Its location has changed a lot over the years, showing how location factors can change in importance.

Stage 1: The Traditional Location

Originally, steel plants were built close to the raw materials. For example, the Anshan steel plant was built in the northeast of China, which is rich in coal and iron ore. This saved a lot on transport costs.

Stage 2: The Changing Location

Over time, the location priorities shifted due to technology and government plans:

  1. Shift to the Coast: With better technology, China could import higher quality iron ore by sea. Coastal locations like Shanghai's Baosteel plant became ideal because they had deep-water ports (great for transport) and were close to the big coastal cities (the market).
  2. Shift to the Interior: For strategic reasons, the government also pushed for some steel plants to be built in the interior of China to help develop those regions. This shows the powerful influence of government policy.
  3. Tendency to be near large cities: Now, many new plants are located near major cities to be close to the market for steel (e.g., for construction and car manufacturing).
What is Industrial Inertia?

So, if a location is no longer perfect, why don't all old factories just move? This is industrial inertia. It's the tendency for an industry to remain in its original location, even when the original locating advantages are gone.

Think of it like this: Your family has lived in the same flat for 30 years. Even if a new, better flat is available across town, moving is a huge hassle! You have friends, you know the area, and the cost of moving is high.
It's the same for a factory:
- The cost of moving is enormous.
- It already has established transport links and a skilled workforce.
- The factory has already invested billions in the existing site.

Key Takeaway

The Iron and Steel industry shows a shift in dominant location factors: from raw materials to transport, market, and government policy. Industrial inertia explains why some old plants stay put despite changes.


Part 4: Case Study 2 - The US Information Technology (IT) Industry

Now let's look at a modern, "light" or "footloose" industry. Companies like Apple, Google, and Microsoft don't produce heavy, bulky goods. Their value is in ideas, software, and design. Their location factors are completely different from the steel industry!

What matters most to the IT industry?
  • Labour Quality (Human Capital): This is the #1 factor. They need highly educated, skilled, and creative workers (engineers, designers, programmers). They locate where they can find this talent, often near top universities.
  • Research and Development (R&D): Being near universities and other research institutions is key for innovation and staying ahead of the competition.
  • Agglomeration Economies: This is HUGE for the IT world. The most famous example is Silicon Valley in California. All the big tech companies, small start-ups, and venture capital firms are clustered there. This creates a powerful ecosystem where:
    - It's easy to find skilled workers.
    - Companies can share ideas and services.
    - A culture of innovation is created.

Notice what's NOT important? Raw materials, power, and transport of finished goods are much less of a concern. You can email software anywhere in the world instantly!

Key Takeaway

For modern industries like IT, the key location factors are about people and ideas (skilled labour, R&D) and the benefits of clustering (agglomeration economies), not physical materials.


Part 5: Going Global - Globalisation and a New Way of Production

Technology and globalisation have completely changed the game. Globalisation is the process by which the world is becoming increasingly interconnected through trade and cultural exchange.

Multi-point and Transnational Production

This means that different stages of making a single product happen in different places all over the world. A company might operate as a transnational corporation (TNC) across many countries.

Let's use the iPhone as a perfect example:
- Headquarters & Design (R&D): Located in Cupertino, California, USA. (Needs highly skilled designers).
- Component Manufacturing: Parts are made in various countries, like Japan, South Korea, and Taiwan (countries with specific technological strengths).
- Final Assembly (Factory): Mostly done in China. (Needs a large supply of less-skilled, cheaper labour).

This system allows companies to take advantage of the specific strengths of each location (e.g., cheap labour here, skilled engineers there). This is a direct result of globalisation and advances in technology (communication and transport).

Key Takeaway

Globalisation allows TNCs to split their production process across the globe (multi-point production). This separates the location of high-skill headquarters and R&D from the location of lower-skill manufacturing factories.


Part 6: The Ripple Effect - Impacts of Industrial Change

When industries move, it creates huge waves that affect everyone. These are the socio-economic and environmental impacts.

Impacts on the "Old" Industrial Areas (e.g., USA, Hong Kong)
  • Economic: Unemployment for factory workers as jobs move away. This can lead to the decline of entire regions, sometimes called "rust belts".
  • Social: Workers may need to be retrained for new jobs in the service sector. This can be difficult and stressful.
Impacts on the "New" Industrial Areas (e.g., PRD, Vietnam)
  • Economic: Huge economic growth, creation of millions of jobs, and inflow of new technology and skills. It can lift many people out of poverty.
  • Social: Changes in employment structure (more factory jobs). Can lead to rapid urbanisation and strain on social services.
  • Environmental: Increased air and water pollution from factories, and pressure on natural resources.
What Can Be Done to Help? (Alleviating the Problems)

Governments and societies try to manage the negative impacts:

  • Retraining of labour: Providing education and training for displaced workers to help them find jobs in new industries (e.g., teaching factory workers in HK to work in logistics or IT).
  • Improved social security system: Providing unemployment benefits and support for those who have lost their jobs.
  • Development of other industries: Encouraging the growth of new sectors, like Hong Kong's focus on finance, tourism, and professional services.

However, these measures can be expensive and take a long time to be effective. It's a major challenge for many countries.

Final Key Takeaway

Changes in industrial location create both winners and losers. They bring economic opportunities to new regions but can cause unemployment and social problems in older ones. Managing these impacts through measures like retraining and social security is crucial but challenging.