The changing fortune of manufacturing

The great majority of the world's manufacturing production is concentrated in a small number of countries. In fact, over 50% is accounted for by three countries (USA, China and Japan). manufacturing today is highly concentrated, the distribution pattern is a changing one.  If we were to compare the current situation with that of 50 years ago significant global shifts would be apparent.  Since 1970 the HTC's share of world manufacturing declined from 88% to 70%.  Today around 25% of manufacturing production occurs in NICs.  Particularly the so-called emergent economies of China, Brazil, Russia and India.  What is causing this gradual global shift in manufacturing from the HIC's to the MIC's?  The location of manufacturing has always been influenced by factors such as: raw materials, energy, labour, markets, transport and land.  Those factors are still influential but their relative importance has changed and with it the location of today's manufacturing. 


There have been six particularly important developments:

• Transnational Corporations (TNC's) - emergence of huge companies that control much of the world's manufacturing.  These companies are locating their factories in the cheapest and therefore more profitable locations.
• Transport - Now much faster and cheaper, therefore distance, say from raw materials or markets, is no longer as significant as it used to be.
• Communications - Because of the speed and efficiency of modern communications a manufacturing company can keep in immediate touch with factories scattered in different countries.
• Energy - Much modern manufacturing relies on electricity as it's main source of energy.  Due to national grid systems, this form of energy can be made available almost anywhere.
• Governments - Increasingly influencing the distribution of manufacturing.  They are able to tempt industrialists to set up factories within their borders by various incentives, such as exemption from taxes or cheap ready made factory building.
• New Branches of Manufacturing - Manufacturing is no longer just about making heavy good such as steel, ships and chemicals.  Manufacturing today is very much about making a widening range of customer products, such as electrical and electronic goods, clothes and furniture.  Because of the 4 previous developments the location of the production of these kinds of products is described as footloose.  In other words their location is no longer tied by location factors, such as the nearness of raw materials and markets.

The net affect of these developments has been to increase the importance of one location factor, labour.  For many types of manufacturing the costs of labour are critical.  The TNC's in particular are constantly on the look-out for cheap labour as their education levels and skills. It is because of the latter that the UK, despite losing many of its traditional industries, it is still the sixth leading manufacturing nation.