What is Manufacturing?

1
THE MANUFACTURING INDUSTRY

• What is Manufacturing?
• The process of producing something.

2
YOU WILL LEARN ABOUT THE HEAVY LIGHT
INDUSTRIES FACTORS INFLUENCING THE LOCATION OF
INDUSTRIES CASE STUDY OF KARNATAKA CHANGING
MANUFACTURING INDUSTRIAL DEVELOPMENT OF SINGAPORE
3
MANUFACTURING INDUSTRIES HEAVY INDUSTRY LIGHT
INDUSTRY
4
HEAVY INDUSTRIES

• Use of large amounts of
• raw materials and bulky
• machines
• Goods produced are large
• and bulky
• Tend to occupy vast areas
• of land
• Pollutes the environment
• Eg iron and steel industry

5
LIGHT INDUSTRIES

• Use raw materials that are light and not so
  bulky
• Finished products are light
• Manufacturing processes are cleaner
• (less pollutants released)
• Eg textile industry electronics industry

6

• FACTORS INFLUENCING
• INDUSTRIAL LOCATION
• Raw Materials
• Energy
• Land
• Labor
• Capital
• Market
• Transport
• Economies of Scale
• Government

7
RAW MATERIALS
It is a waste of money to transport bulky raw
materials over long distances as most of them
eventually become waste materials. Improvements
in transport and refrigeration have made it
possible to transport perishable raw materials
over long distances without spoiling. Industries
are now less restricted by the location of such
raw materials.
8
ENERGY
Industries require large reliable supply of power
to ensure continuity in production. With
technological advances in power generation and
the transport of energy, the proximity to energy
sources has declined in importance as a
locational factor.
9
LAND
Relatively flat terrain is often sought after
they reduce building costs. It is also easier to
build on such land. Large land is preferred as
it allows for future expansion. Heavy industries
require large land because of the large scale of
production.
10
LABOUR
Highly-educated and skilled workforce are
attracted by industries which use sophisticated
machines and information technology. These
industries may prefer to locate near universities
or research and development centres. Vast
numbers of unskilled and cheap labour are
important to the large labour-intensive
industries. Usually such industries are located
near the low-income residential areas to attract
labour.
11
CAPITAL
Capital is needed for purchasing land and
machinery, installing facilities and hiring
labour. The availability of banks and other
financial institutions to provide loans is also a
pull factor.
12
MARKET
Industries which produce goods which gain bulk
during the manufacturing process save on
transport costs by locating near the market.
13
TRANSPORT
Areas with efficient transport network attract
more industries. This makes transporting raw
materials and finished products more convenient.
In addition, transport costs are lowered.
14
ECONOMIES OF SCALE
A manufacturing industry can achieve cost savings
by producing goods on a large scale. From
sharing facilities, knowledge, expertise and
manpower resources, small firms can achieve
economies of scale.
15
GOVERNMENT
The government influences the attractiveness of
an industrial location. This can be done by
offering financial incentives and subsidies. The
presence of a supportive and stable government
assures industrialists that their investments are
safe.
16
MANUFACTURING

• Growth of Industry in India
• Karnataka
• The Silicon Valley of India

17
Karnataka

• 8th largest state in India
• located in southwest India
• state capital Bangalore
• a leading producer of electronic goods
• prime industries include Aluminum Steel,
  Electronics, Computers, Engineering (electronic
  mechanical) and Aeronautics

18
(No Transcript)
19
Factors Influencing Growth of Industry in
Karnataka

• government support
• raw materials
• markets
• transport system
• terrain sites
• power supply
• labor
• capital

20
Government

• gives top priority for infrastructural projects
• developed infrastructure such as industrial and
  technology parks
• provides finance, equity participation and raw
  materials
• provides tax incentives and favourable schemes to
  encourage foreign investment
• introduced schemes such as quick clearance for
  electronic companies

21
Raw Materials

• abundant mineral resourcese.g. magnesite,
  manganese and gold, copper and iron ore

22
Markets

• has many markets overseas
• most products are exported
• significant international market within the state
  due to presence of multinational companies such
  as Digital, Siemens, Compaq, IBM, Hewlett Packard
• potentially large domestic market

23
Transport Network
The presence of a good and extensive road, rail,
air and sea transport network makes
transportation of raw materials and finished
goods easier and quicker.
24
Land

• flat terrain easier and cheaper to build
  factories
• large sites with readily available infrastructure
  have been set aside for industrial development

25
Power Supply

• large river system and the use of dams and
  hydroelectric power provide adequate power supply
  to the industries
• good distribution of power network which ensures
  power requirements of the industries are met

26
Labour

• large pool of well-trained labour who expects
  relatively low wages
• educational institutes produce many skilled
  labour yearly
• not affected by major labour problems and has the
  lowest number of working days lost among the
  southern states of India

27
Capital

• strong financial network services
• agencies provide financial help
• headquarters of national and international banks
  are located in Karnataka attracts industry and
  investment

28
Changing Manufacturing

• Changes in Global Manufacturing

29
(No Transcript)
30
What is an NIE?

• a Newly Industrialised Economy
• characterised by
• fast growing industrial employment
• rising share of worlds exports in
• manufactured products
• fast growing real per capita income
• examples Singapore, Hong Kong, Taiwan South
  Korea

31
Reasons forGrowth of NIEs

• Relocation of industries from developed to
  developing countries. WHY?
• NIEs welcome industrialisation. WHY?

32
What is an MNC?

• multinational company
• strong financial backup
• operations split up in many countries
• many branches in developing countries
• headquarter in the developed country
• examples Ford, General Motors, Exxon-Mobil,
  Shell, IBM, General Electric Samsung

33
REASONS WHY MNCs SET UP FACTORIES IN DEVELOPING
COUNTRIES

• Push Factors
• Increase in wage rates
• Decrease in labor pool
• Deterioration of factories built
• Obsolete machines needed to be replaced
• Decrease supply of raw materials

34

• Pull Factors
• Take advantage of the special qualities of each
  place
• Lessen business / production risk
• Low wage rates / cheap labour
• Large pool of available labour
• New factories built
• New machines installed
• Abundant supply of raw materials
• Supportive government
• Newly constructed infrastructure
• Economic incentives

35
Do you think MNCs have a positive or negative
effect on their host countries?
36
Effects of MNCs on Host Countries

• Benefits
• MNCs bring in money for developing industries
  which the host countries cannot do on their own.
• MNCs create jobs ranging from production line
  work to managerial posts. Locals have a
  guaranteed income.
• MNCs introduce new technology which local
  companies can benefit from. The new and advanced
  technology is vital for economic survival in the
  highly competitive market.
• MNCs create opportunities for local companies to
  go into joint ventures with them in the
  production of goods.
• Their presence can increase confidence in the
  countries as investment centres and attract more
  investors.
• The host countries earn money through corporate
  tax and personal income tax.
• Creates opportunities for diversifying the local
  economy.

37

• Problems
• Unemployment is caused when MNCs relocate their
• factories in other countries.
• Job opportunities may decrease when there is
  increased
• mechanization of factory operations.
• Small local firms may wind up their businesses
  when
• they cannot compete with the MNCs for the
  local market.
• Inadequate health and safety measures introduced
  by
• the MNCs can result in health problems among
  workers
• and accidents.
• Locals are usually hired for low-skilled jobs
  and are
• poorly paid.
• Profits go back to the parent company overseas,
  which
• means that there is outflow of money from the
  host
• country.

38
Space-Shrinking Technologies
Developments
Improvements
reduce distance and lower costs
increase speed and shorten time
facilitate distribution of global production
activities
39
(No Transcript)
40
SINGAPORE... Situation in the past
Between the 1960s-1970s, the government decided
to setup industries in Singapore and put an end
to unemployment. All the industries were
labour-intensive industries.
41
What is a Labour-intensive industry?

• An industry which requires a large workforce
  and in which labour cost takes up a large
  proportion of the total cost of production.

42

• The 1980s and the 1990s
• Singapore faced a shortage of labour and the
  industries in Singapore began to convert into
  high value added manufacturing industry.
• The growth of manufacturing sector was 6.6 in
  Singapore.

43
1990S BEYOND

• GREAT COMPETITION CAME FROM THE INDUSTRIALISING
  COUNTRIES.
• THEREFORE SINGAPORE ADOPTED HIGH TECH INDUSTRIES
  AND WANTED A TREND TOWARDS PRODUCING HIGHER
  VALUE-ADDED GOODS.

44
STRATEGIES FOR GROWTH
STRATEGIES TO CHALLENGE COMPETITION

• INDUSTRIAL PLANNING
• The shift from labour-intensive to high-tech
  light industry
• Land use planning
• USE OF INFORMATION TECHNOLOGY (IT)
• A tool for achieving rapid progress and
  increasing productivity, esp. labour shortage
  problem
• Use in banking infrastructure to strengthen
  position as a financial centre for the region

45

• ENCOURAGING RESEARCH AND DEVELOPMENT
• Leads to innovation and greater productivity in
• manufacturing
• Science Parks built near NUS and Singapore
• Polytechnic to link to the businesses and
• research institutions
• IMPROVING SKILLS OF THE WORKFORCE
• Set up more polytechnics, technical institutes
• Skill Development Fund set up to subsidise
• training programmes for workers

46

• REGIONALISATION STRATEGY
• Due to lack of natural resources and
• manpower, we take advantage of the
• increasing opportunities in the region
• Economic co-operations with
• neighbouring countries e.g. Batamindo
• Industrial Park (BIP) with Indonesia