Industrial Activity: Location Factors and Global Trends
Industrial Activity in a Global World: The Spanish Industry
Factors of Location and Current Distribution
Industry is located in spaces that offer the most advantageous conditions for maximum benefit. Not all factors have equal weight in the location of industry, and their importance varies for each industrial sector and over time.
A. Classic Factors and Trends in Industrial Location
The “classic” factors explain the location of industry in the period between 1855 and 1975:
- Proximity to raw materials and energy sources.
- Broad consumer market, which ensures minimum corporate profitability and favorable economies of scale.
- Abundant and cheap labor or ready to work.
- Efficient transport systems for products.
- Capital or the ability to attract it.
- Areas of support: services, good infrastructure, and facilities.
- Industrial policy favorable to the establishment of factories.
During the period 1855-1975, industries tended to be concentrated in large urban-industrial agglomerations, where they could reap the benefits of agglomeration economies: supply facilities, transportation and obtaining labor, proximity to markets, numerous services and facilities, and easy access to information and innovation. These benefits tend to attract a growing number of industries dependent on or related to existing ones.
B. Current Factors and Trends in Industrial Location
Since the 1980s, changes have been observed in the factors and trends in industrial location, but the major industrial concentrations inherited remain.
The changes of the third industrial revolution have made some classic location factors lose the importance they had in the past, while new factors have gained importance.
- Proximity to natural resources loses importance with cheaper transport of raw materials, the creation of synthetic substitutes for some of them, and the ease of transporting electricity. The importance of proximity to the consumer market also decreases, given the improvement in transport and communications and the expansion of sales areas in the context of globalization.
- The existence of good transportation and communication systems and a large or qualified workforce maintains its relevance.
- Current main location factors include access to information and innovation and the competitive advantages provided by the territory.
Access to Innovation and Information
Access to innovation and information is essential for the competitiveness of existing industries. Therefore, some, especially high-technology industries, tend to be located in so-called “innovative means” characterized by the presence of a highly skilled workforce, research centers, telematic infrastructure, and advanced services.
Territory as a Factor
The area is also gaining more weight as a factor in industrial location when it provides competitive advantages to companies located in it. These include the existence of convertible resources, a large or qualified workforce, an innovative business environment and cooperation, and the support of social partners to businesses.
Marked changes have altered the trends of industrial location: the dissemination of industry to peripheral areas is emphasized, while maintaining the strong appeal of developed urban-industrial areas.
a) Distribution of Industry to Peripheral Areas
Distribution to peripheral areas is far less attractive due to the following factors:
- The problems presented by large industrial concentrations (diseconomies of agglomeration), the saturation and subsequent increases in land, equipment, and infrastructure, increasing labor unrest and the high cost of labor, and environmental deterioration play in favor of lower-cost locations.
- Technological improvements allow industries to locate in the most advantageous locations.
- The development of endogenous industrialization, based on the competitive advantages of each territory, attracts industries that benefit from its advantages to some spaces.
The industry sectors most affected by devolution or relocation are mature industries, undemanding in technology and very consumer-oriented in resources and manpower, which must compete by offering low prices. These tend to move to areas where production costs can be reduced: underdeveloped, backward regions, and even well-communicated rural or urban peripheries. However, it should be noted that sometimes the use of new technology can slow down relocation, promote the reintegration of industries to central areas, or allow the modernization of traditional sectors in situ, preventing their transfer to other areas.
b) Industrial Concentration in Central Spaces
Industrial concentration in central spaces is also maintained, given their strong attractiveness. They tend to settle in areas of new technologies, services, and infrastructure that require an advanced and higher-level market, with buyers for goods with high technological content. Central sites also attract corporate headquarters and business management.
These activities tend to focus on the most advanced countries, the most dynamic regions, and the central cores of metropolitan areas or the most valued in their crowns.
Thus, the current situation is complex because it involves both the strengthening of the attractiveness of industrial sites and an increase in their forces to broadcasters from their peripheries.