Factors affecting Industrial Location

 The location of industry at a particular place is the result of a number of decisions taken at various levels. There are certain geographical factors which facilitate this decision making. There are other factors which fall outside the subject matter of geography. The validity or importance of a factor also changes with time and space.

Industries maximise profits by reducing costs. Therefore, industries should be located at points where the production costs are minimum. Some of the factors influencing industrial locations are as under:

1.Access to Market

The existence of a market for manufactured goods is the most important factor in the location of industries. ‘Market’ means people who have a demand for these goods and also have the purchasing power (ability to purchase) to be able to purchase from the sellers at a place. Many industries are located near large urban centres because the concentration of population in those areas ensures readily available market. Remote areas inhabited by a few people offer small markets.
The developed regions of Europe, North America, Japan and Australia provide large global markets as the purchasing power of the people is very high. The densely populated regions of South and South-east Asia also provide large markets. Some industries, such as aircraft manufacturing, have a global market. The arms industry also has global markets.

2.Access to Raw Material

Raw material used by industries should be cheap and easy to transport. Raw materials are the basic requirements for manufacturing industry. Some raw materials lose weight during processing but others do not. Industries based on cheap, bulky and weight-losing material (ores) are located close to the sources of raw material such as steel, sugar, and cement industries. Perishability is a vital factor for the industry to be located closer to the source of the raw material. Agro-processing and dairy products are processed close to the sources of farm produce or milk supply respectively.
Many industries do not require much of raw materials and these can be located anywhere independent of raw material sources such as garment and electronic industries. There are some industries which are not wedded to any particular raw material. Such industries are known as foot-loose industries.

With the expansion and development of means of transportation the role of raw materials in location of industries has almost lost its significance. The establishment of iron and steel industry in Japan and cotton textile industry in Liverpool prove the fact that the multi-nationals and countries with sufficient capital can manipulate the means of transportation in their favour and obtain raw materials.

3.Access to Labour Supply

Labour supply is an important factor in the location of industries. Two aspects of labour are important for the location of industry. First, the availability of cheap labour in large numbers and second, the level of their skills. For labour intensive industries, cheap labour should be available. Skilled labour is costly but their efficiency and skill compensate for the higher wages. Some industries are located at a particular place due to the availability of skilled labour like electronic industry in Japan, glass industry in Ferozabad (Uttar Pradesh) and utensil industry in Jagadhari and Moradabad.

Labour is more mobile than other factors of production. It can be moved from villages to towns, from towns to metropolis, from one industry or place to another or even from one country to the other country. This mobility is namely ascribed to differential wage rates in different situations.

4.Access to Sources of Energy

In the earlier phase of the industrial revolution, the industries were generally located near the source of energy as they have fixed locations. Now, large scale generation of hydroelectric power and ability to transmit at high voltage to far off places and proper distribution over larger areas through grid system have made it possible to take the energy to any location. Thus the dependence of industries for their location on energy resources has considerably reduced. However, some energy intensive industries such as aluminium industry are still located near the energy sources.

5.Access to Transportation and Communication Facilities

Speedy and efficient transport facilities to carry raw materials to the factory and to move finished goods to the market are essential for the development of industries. The cost of transport plays an important role in the location of industrial units. Modern industry is inseparably tied to transportation systems. Improvements in transportation led to integrated economic development and regional specialisation of manufacturing.

The means of transportation help in the development of industry. At the same time, after the location of industries at a place, the means of transportation also develop very fast. The concentration of large industries in the Great Lakes region has been caused by cheap means of water transportation provided by the lakes. Almost all large industrial towns in Japan are ports. The cheap water transport has facilitated the development and concentration of Jute mills in the Hoogly valley in India and large industrial towns in the Rhine valley of Europe.

6.Government Policy

Sometimes Government adopt ‘regional policies’ to promote ‘balanced’ economic development and hence set up industries in particular areas.

7.Access to Agglomeration Economies/Links between Industries

Many industries benefit from nearness to a leader-industry and other industries. These benefits are termed as agglomeration economies. Savings are derived from the linkages which exist between different industries.

8.Other miscellaneous factors

Some other factors are crucial for the location of certain industries, for example, the cotton mills were established earlier in the hinterland of Bombay because coastal location provided high humidity in the air. It prevented the yarn from breaking. Now it is possible to maintain the required amount of humidity in the mills with technological intervention. It is therefore, possible to establish spinning mills away from the coast.

Water is an important factor in industrial location. It is required in large quantities in cotton textile industry for bleaching and in Iron and steel industry for cooling. It is possible, now, to carry water from one place to the other through pipelines. In certain situations the demand of water is so large that it cannot be met through transportation of water and such establishments are taken to the sources of water such as nuclear reactors.

The location of some industries is decided by institutional factors like historical, social and political decisions. Location of industries in backward regions in order to reduce economic disparity and shifting of industries to the interior parts of a country due to strategic reasons during war are examples of institutional decisions in the location of industries.

So, the location of modem industries is not guided by a single factor due to its complex nature. All aspects have to be considered and analysed before deciding location of industries.

By: ABHISHEK KUMAR GARG