In this part . . .
The Earth is more than our home. It’s also the source of our daily bread. Not to mention our daily aluminum can, newspaper, job, gallon of gas, and everything else that sustains us. And at the end of each day, we take out the trash, which gets picked up by a big truck and goes . . . where?
Humans cannot help but interact with Earth’s surface. On it we plant our crops, locate our places of business, and build our settlements and cities. From it we draw a host of resources that we either consume as they are, or transform into a host of products that define the various global economies and standards of living. And at the end of the day, we take out the trash. In doing all of these things, we sometimes modify our earthly environment in ways that pose significant challenges for present and future generations.
In this part, you will learn some of the key concepts and phenomena that concern human use and misuse of planet Earth. Economic geography, resource geography, urban geography, and environmental geography will be the specific topics. All have a central bearing on this Part’s central theme — how humans interact with and impact the only planetary home we are likely to know.
In This Chapter
Finding different ways (and places) to make a living
Choosing the best business location
Navigating transportation systems and networks
Moving to cyberspace or real space?
W hen I was about 10 years old, somebody bought me a geography board game in which you scored points by correctly identifying the key products of different countries. I don’t remember how it was played, but certain facts were seared into my memory. Honduras = bananas. Australia and New Zealand were heavily into sheep, and India produced jute big time. Mind you, I had no idea what jute was, but I knew that it came from India and that was what mattered!
Over the years I have met several people who not only have a head full of similar facts (Argentina = beef, South Africa = diamonds), but also equate knowing them with knowing geography. These folks are not totally misguided. Economic geography, the subject of this chapter, is a major subfield of geography and concerns the location of different means of livelihood. And indeed, for a long time, economic geography was largely concerned with knowing where products came from, and why.
In recent decades, however, economic geography literally has been getting down to business. That is, though still concerned with the distribution of economic activity, economic geography has acquired a focus on optimal business locations and strategies that enhance business success. In so doing, it has come to embody quite strongly the two modes of geographical thinking: analysis of where things are located, and where they should be located.
This chapter addresses both perspectives with emphasis on where things should be located.
Categorizing Economic Activity
Economic activities are all of the ways that people the world over make a living. Obviously, a complete listing plus descriptions would be encyclopedic. To simplify matters, and as a first step toward geographical analysis of livelihoods, geographers commonly characterize economic activities as a four-part scale whose components — primary, secondary, tertiary, and quaternary activities — become progressively more complex and detached from the natural environment.
Primary activities involve harvesting the Earth or extracting raw materials from it. Examples include agriculture, forestry, fishing, and mining (Figure 15-1). In each case, the relationship with the environment is intimate and location-specific — meaning that you can’t grow bananas, catch tuna, or mine coal just anywhere. Instead, you can only extract resources where they occur or, in the case of agriculture, grow particular crops where conditions are right. As a result, location options for many primary activities are limited.
Secondary activities change the form of raw materials in ways that add to their value. Examples include processing and manufacturing. Thus, a cheese maker may transform milk into cheddar, which has a different form and higher price than its raw material. Similarly, an automobile manufacturer might bring together headlights, tires, upholstery, spark plugs, and so forth at an assembly plant and transform them into a vehicle that has a different form and higher cost than the sum of its parts.
As these examples illustrate, the raw material required by a secondary activity could be either a natural substance (milk) or products of previous processing or manufacturing (tires). Those secondary activities that require natural raw materials usually are located close to relevant primary activities in order to minimize transportation costs. In contrast, those secondary activities that require processed or manufactured raw materials are less intimately tied to the natural environment and have more location options.
Tertiary activities provide goods and services. They include retailers and wholesalers, who link producers and consumers; and personal and professional workers, including clerical personnel, financial services, entertainers, lawyers, and doctors. Tertiary activities typically have no direct relationship to environmental items (such as farming and fishing) and therefore have few constraints on possible locations.
Quaternary activities involve research, information processing and dissemination, and organizational administration. “White-collar professional” probably summarizes this category as well as any single term can. Figure 15-2 shows an example of white-collar professionals doing a quaternary economic activity. Typically, these activities are urban-based and completely detached from the natural environment.
Activity distribution around the world
The relative presence of these four categories of economic activity varies geographically around the world. Generally, the economies of the least developed countries tend to have a very high percentage of their workforces engaged in primary activities, and progressively lesser percentages for the others (as shown in Figure 15-3). As national economies become more developed, the workforce tips toward the higher end of the range. And as a result, the most advanced economies tend to have a high percentage of their workforces in the tertiary and quaternary categories, and much smaller figures for the primary and secondary groups.
Also, while these four categories of economic activity involve separate and distinct means of livelihood, they are nevertheless linked, especially in the more advanced societies. Thus, tuna caught by the crew of a trawler (primary activity) may be offloaded at a factory for processing and canning (secondary activity). Wholesalers then purchase large quantities of canned fish and distribute them to local grocery stores for sale (tertiary activity). Over-seeing this buying and selling, as well as attendant marketing, are company executives (quaternary activity).
Putting Economic Systems into Place
In contrast to economic activities, which may be viewed as individual livelihoods, economic system refers to the organization and functional nature of a national economy as a whole. Subsistence economies, which are prevalent in the less developed countries, and commercial economies, which are prevalent in the more developed countries, are the two principal types of economic systems. Technically, a third category, planned economies, is characterized by government control of supply, demand, prices, employment, and distribution. With the collapse of most Communist societies, however, this has ceased to be a significant player on the world stage, at least for the time being.
Subsistence economies are characterized by consumption of goods by the people or groups that produce them. Buying and selling is rather limited, and tertiary and quaternary activities are rare-to-unknown. Traditional societies that rely on manual labor and possess low levels of technological sophistication are typical of this type of economy. Four kinds of subsistence economies are commonly recognized and are discussed in the following sections.
Hunters and gatherers
Hunters and gatherers subsist on wildlife, fish, and/or parts of plants (roots, nuts, or berries) that grow wild. Contrary to a one-liner about a very different kind of work, this is unquestionably the world’s oldest profession. Indeed, eons ago, before the discovery of agriculture, everybody did this. Today hunters and gatherers are few in number and are found mainly in isolated areas of tropical rainforest (Figure 15-4).
Nomadic herders tend domesticated herbivores (including sheep, goats, cattle, and reindeer) that feed on natural foliage during the course of a controlled itinerary (wandering). Steppe (grasslands) and tundra are the traditional realms of these people, sometimes called pastoral nomads. The global population of these folk is rapidly decreasing as farming occupies more land, and as people turn to ranching — the raising of livestock in fixed locales for sale instead of consumption. Also, governments in nomadic lands have engaged in campaigns to settle herders and bring them into the commercial (market) economy.
Shifting cultivation involves farming on cleared plots of forest until soil fertility plays out; after which, a new plot is cleared and the old one abandoned. This agricultural method is described in greater detail in Chapter 10. Millions of people in tropical parts of Latin America, Africa, and Asia engage in this endeavor for their livelihoods. If anything, and unlike the previous categories, their numbers are increasing (probably substantially so) rather than decreasing.
Intensive subsistence agriculture
Intensive subsistence agriculture is characterized by high amounts of labor brought to bear on relatively small land holdings. Cultivation of rice paddies, which require considerable inputs of labor for construction and maintenance, plus precise applications of water at precise times, is perhaps the quintessential example. Well over a billion inhabitants of South and Southeast Asia engage in this type of subsistence activity.
Commercial economies are characterized by production of goods and services for sale to others rather than for consumption by the producers themselves. Products do not enter into the distinction between subsistence and commercial economies and may, in fact, be the same. Rice, for example, is one of the principal foodstuffs that is grown and consumed by subsistence agriculturists. But commercial farmers, who eat little or none of their harvests, but instead sell it to companies whose boxes and bags of rice end up in your grocery store, also grow rice in quantity. As that example suggests, commercial economies may include primary economic activity, like agriculture. By and large, however, it’s secondary, tertiary and quaternary activities (see “Categorizing Economic Activity” earlier in the chapter) that dominate.
In commercial economies, laws of supply and demand determine price and quantity. Competition largely influences decision-making concerning production, distribution, and — most importantly as far as this book is concerned — facilities locations. Indeed, one of the distinguishing features of commercial economies is deciding where an economic activity should be located.
Understanding Location Factors
A location factor is any aspect of an environment that influences a decision regarding the choosing of a site for business or industrial activity. Because competition is an essential characteristic of commercial economies, businesses of all sorts do things to give themselves a competitive advantage. Finding an optimal location for a business is a case in point, as well as an endeavor that has come to typify modern economic geography.
A good example of the importance of location concerns the decision to locate the plant that builds Saturn motor vehicles in Spring Hill, Tennessee, just south of Nashville. Theoretically, the factory could have been built just about anywhere. Indeed, after corporate officials announced their intent to manufacture “a new kind of car” in a brand-new plant somewhere in America, governors from several states lobbied to host the facility. And why not? The factory would create thousands of new jobs and provide a major boost to the economy of wherever it was built.
Saturn officials initially had no specific location in mind. Observers speculated, however, that the company’s desire to build a high-quality product at the lowest possible price meant that several key characteristics would dictate the choice. Specifically, the chosen site would ideally have
A large amount of inexpensive land on which to build
Access to abundant and relatively inexpensive electricity
A low tax environment compared to other prospective locations
Connectivity to railway and interstate highway systems
A central location with respect to the various subcontractors who would supply parts
Centrality with respect to overall population distribution (which also would have a strong and direct correlation with the location of dealer’s showrooms)
An adequate supply of potential employees who would exhibit solid work habits for pay that was somewhat low by industry standards
A number of prospective sites in different states were considered. Most were strong candidates with respect to some of the above criteria, but weak in regard to others. In the end, Spring Hill got the nod because it satisfied all points.
Economic activities vary, of course, and as a result, so do the factors that are most appropriate in deciding where a particular economic activity may best be located. Thus, what is important with respect to deciding where to build cars may be totally different than the location keys to growing mushrooms or merchandising children’s clothing. Also, in the case of some economic activities, a single location factor may be all-important, while in another, a mix of several determinants may need to be considered.
Obviously, a good business location may be the key ingredient to profitability or overall success. Accordingly, nowadays two of the most important functions of economic geography are to help enterprises identify the location factors that are best for their particular business, and to sift through the list of possible locations and choose a favorable site. The following sections offer a discussion of some of the more important location factors.
Proximity to raw material(s)
Proximity to raw materials may be a critical location factor for economic activities that involve manufacturing or processing. Both functions typically require delivery of raw materials from source areas to the place of business. The cost of transporting raw materials to where they are needed may be a major business expense, however. Thus, locating as closely as possible to the source or sources of those materials is a good idea to minimize production costs, as well as producing a cost-competitive final product. Following are three examples:
Cheese: Cheese production consumes large quantities of milk, which is expensive to transport long distances because it can be bulky and requires refrigeration. Therefore, if you want to make it in the cheese business, you’d be wise to locate as close as possible to a bunch of dairy farmers. It comes as no surprise, therefore, that Wisconsin, a major dairy state, also leads the country in cheese production.
Steel: The traditional blast furnace way of making steel requires lots of iron ore and lots of coal, but not in just any amount. Generally, production of 1 ton of steel requires about 1.5 to 2.0 tons of iron ore and 2 to 3 tons of coal. Both ingredients are very bulky and expensive to transport from mine to factory. But because more coal than iron ore is required, an old adage is adhered to that goes, “Steel follows coal” — meaning that steel plants tend to locate closer to coal fields than to iron ore mines in order to hold down transportation costs. Figure 15-5, a map of the traditional American “Manufacturing Belt” in relation to coal and iron, very clearly shows the relationship between steel and coal.
Hogs: If you want to seek your fortune in pork or bacon, then you should locate your hog operation as close to corn country as possible. That is because corn is the principal ingredient in pig feed, which is something you are going to need by the ton. Like many domesticated animals destined for your refrigerator, hogs nowadays are raised in specialized facilities where they are fattened for market. Central to this process is bringing feed (often by the ton) to the pigs rather than setting the animals loose in the countryside to forage. Being near the feed source (corn) holds down transportation costs and contributes to profitability.
Proximity to market(s)
Proximity to the market (the purchasers of products) for a business’s goods or services may be a key location factor for some economic activities. The exact meaning of “market” varies from one enterprise to the next, however. If you’re an ice cream vendor, then your market is people. If you’re a zipper manufacturer, then your market might be companies that manufacture clothing. Here are three examples that illustrate the potential importance of proximity to market:
Pizza: Pizza is a fairly low-cost item. Therefore, anybody who wants to make a profit in this business is going to have to sell a lot of it. An ideal location, therefore, is one that is close to a large number of people who are likely to want to have a fairly fast dining experience and not spend a whole lot of money. That could be a busy downtown area, a shopping mall, a freeway exit, a major highway intersection, or a site next to a college or hospital. (Hold the anchovies, please!)
Boutiques: Boutiques typically specialize in high fashion designer wear intended for the upscale market. Unlike the pizza business, the main location strategy here is to get close to a particular variety of people (affluent folk) rather than lots of people in general. Locating in or near a high-income residential neighborhood or in a shopping district that caters to the well-to-do are good ideas.
Concrete: Cities typically generate high demand for concrete, which is used for all sorts of construction projects. Once concrete is made at the plant and transferred to a concrete mixer, it needs to be delivered and poured at its intended construction site fairly quickly. Also, being a bulky and fairly low-cost item, concrete is not the sort of thing that can be transported profitably for a long distance. Thus, anyone going into the concrete business would be well-advised to locate his or her business within the city or on its edge as opposed to, say, out in the country.
Cost of labor
In the last couple of decades, numerous manufacturing firms in the United States and other developed countries have closed down and relocated to developing countries where people do the same work as, say, American counterparts, but for much less pay and fewer (if any) benefits. As a result, lots of manufactured goods that used to have “Made in the USA” emblazoned on them now say “Made in Malaysia,” or the Philippines, or China or somewhere else. Believe me, if you aren’t aware of this, then you have a major geography lesson waiting for you in your clothes closet. Check out the labels on your clothing and shoes. Chances are good that many, if not a majority, are imports. The two following sections give examples.
My sports jacket
Consider the sports coat I wore to work today. It has two labels inside. One says “100% camel’s hair” and the other says “Made in Costa Rica of USA components.” That means the company that makes the jacket imports camel hair cloth, probably from another company in the Middle East, and then cuts it up into components that will be sewn together to make apparel in different sizes — a “40 Regular” in my case.
But instead of having the sewing done in the USA, the manufacturer ships it off to Central America. There, seamstresses perform their work probably for a third or less of what the company would have to pay an American worker. Afterwards, the jackets are sent back to the U.S. for sale. Even though it costs a bundle to send the bundles back and forth, the money saved by having the sewing done by comparatively inexpensive foreign labor more than makes up for the transportation costs.
Manufacturing is not the only activity that has gone abroad to take advantage of low-cost labor — so has data processing. For example, a well-known American insurance company receives premium payments at a U.S. address, but then ships everything to Ireland for processing. Another company does basically the same thing, but has its data processing done in Ghana, West Africa. Similarly, a well-known American airline has some of its data and time-card processing done in Barbados. In each case, the prime rationale is to save money on labor costs.
Atlantic City as intervening opportunity
An intervening opportunity is a closer source of supply to a point of demand. Clear as mud, right? Okay, suppose you occasionally need to purchase widgets, and the closest store that sells them is 10 miles away. Then one day another store that sells widgets opens up 2 miles away. From your perspective, the second store is an intervening opportunity because it’s a closer source of supply (widgets) to a point of demand (you). And because of that, you decide to discontinue traveling to the first store and become a patron of the second one. Naturally, the proprietors of prospective new stores have a keen interest in locations that offer competitive advantage. And for that reason, entrepreneurs often scope out the competition and then choose a location that represents an intervening opportunity for as many potential customers as possible.
A good real-world example of intervening opportunity concerns the advent of gambling in Atlantic City, New Jersey. Back in the early 1970s, gambling within the United States was legal only in the state of Nevada. Basically, it was a monopoly from which Las Vegas and Reno profited handsomely. But then a plan was hatched by New Jersey state legislators to permit casino gambling in Atlantic City, an old seaside resort that was a bit down in the dumps. The promoters clearly saw that Atlantic City would be an intervening opportunity for millions of Easterners for whom a few hours’ drive to Atlantic City would be preferable to a trip of nearly transcontinental proportions. Indeed, when the casinos finally opened, business boomed. At least for a while.
Gambling was so successful in Atlantic City, that it gave people in other states the idea of doing the same thing. In particular, people on Indian reservations were attracted to the idea because it promised income and because Native Americans did not need the approval of state legislatures and voters to open casinos. (Reservations are technically not state land.) So casinos started popping up on reservations all over America, including the Northeast. And as they waxed, Atlantic City waned because it no longer enjoyed its status as the singular intervening opportunity for eastern gamblers.
Accessibility concerns the ease with which a business can be reached, or with which goods can be transferred from one location to another. A downtown shopping area, for example, may be close to a lot of people, yet not be very accessible because of traffic congestion and lack of parking. Thus, ease of transportation is key to facilitating the accessibility of a particular location. The following sections give some examples of how businesses use accessibility to their benefit.
Nowadays, virtually every airline employs a hub-and-spokes network in which passengers or freight fly from different locations to a central point (hub), where transfer is made to another plane to reach the final destination (spoke). While this inevitably involves more travel time versus a non-stop direct flight between the points of origin and final destination, it also affords accessibility between all points in the route system and income maximization to the carrier.
Federal Express, for example, the company that pioneered the overnight package delivery business, operates a hub in Memphis, Tennessee (Figure 15-6). In the middle of the night, company aircraft from all over America bring their packages to Memphis, where they are swapped between planes that then return to their points of origin in time for morning deliveries. Thus, each night a company airplane departs from, say, New Orleans with packages destined for cities all over the country. But instead of delivering the goods “Santa Claus-style,” going to each city one by one, the aircraft goes to just one place — Memphis, Tennessee.
Aircraft from dozens of other cities do the same thing, dropping off packages destined for New Orleans and elsewhere, and then picking up packages from New Orleans and elsewhere before making the flight back home. Thus, while it may seem a bit weird that a package sent from New Orleans to Phoenix makes the trip via Memphis, the network design promotes accessibility between multiple locations using a minimum of aircraft that fly a minimum number of segments. And that promotes profitability.
In recent years, numerous American manufacturers have engaged in outsourcing — producing components or products abroad for domestic sale — to take advantage of lower-cost foreign labor. This tactic is exemplified by maquiladoras, American-owned manufacturing plants located on the Mexican side of the U.S.-Mexico border. Cross into Ciudad Juarez, Tijuana, Nuevo Laredo, and other Mexican border towns and you are likely to find plants bearing familiar U.S. brand names producing clothing, toys, leather goods, electronic items, auto parts, and other goods destined for sale in the U.S. Their presence is due in large measure to Mexican laws that allow U.S. companies to import components duty-free for assembly in factories located within 20 kilometers (12 miles) of the border. Once completed, materials are sent back across the border for final assembly or distribution to retail outlets. Thus, the arrangement allows U.S. manufacturers to profit by lowering their production costs and Mexico to profit from job creation and (in some cases) technical training. One might characterize this as an unequivocal win-win situation, except that opening a maquiladora is often complemented by closure of a manufacturing facility in the U.S., resulting in people out of work.
The success of a mall rests on its accessibility to a large number of potential shoppers. For that reason, nearly every shopping mall you’ll ever visit is located beside a major multi-lane highway (and perhaps by a busy intersection as well) that accommodates a considerable volume and flow of traffic. Of course, all of those potential shoppers will need to leave their cars somewhere, so the shopping complex is always adjoined by a several-acre parking lot — which in itself is a key component of accessibility. Altogether, a substantial amount of land is required. That argues for a location on the urban fringe, where land in quantity is most likely to be available. In addition, in most American cities the people who have the most disposable income are more likely to live closer to the urban fringe than to downtown. Thus, an additional “fringe benefit” is proximity (which in this case equals accessibility) to the very people that mall operators most want to attract. In the case of major suburban malls, the quintessential location is next to an intersection by a beltway.
As suggested in the discussion of labor costs, a company, such as an American athletic shoe manufacturer, may operate a factory in a foreign country in order to take advantage of low-cost labor. But if the finished shoes are not accessible to the American market — that is, if they cannot then be shipped to the United States cheaply and efficiently — then the whole purpose of manufacturing the product overseas is rendered pointless.
Figure 15-7 illustrates containerization, the shipping of goods in large metallic containers that can be loaded and off-loaded from ships directly onto tractor-trailer trucks for onward transportation to the final destination. This technology has revolutionized maritime trade by
Reducing loading and unloading time of ships from days to hours
Facilitating prompt delivery of goods
Reducing pilferage and breakage that occurred when goods were loaded and unloaded bit by bit from ship’s holds
Special port facilities are required for the loading and unloading of containers. For that athletic shoe manufacturer, therefore, finding a country that offers cheap labor may not be enough. It may also have to have a containerization port facility to make foreign manufacturing sufficiently profitable.
Complementarity is the tendency for companies that produce goods and services for each other to cluster together, thereby maximizing mutual accessibility. New York City’s Theater District, for example, consists of more than just venues for Broadway shows. Companies that act as agents for performers, produce sets, sell lighting and sound equipment, make costumes, coordinate ticket sales, and rent out sound stages and rehearsal studios can also be found on Broadway. You don’t have to travel to New York to witness complementarity, however. It’s a basic principle of economic geography. So if you live in a fair-sized city or town, chances are good you can find one or more examples of associated businesses that have clustered together for mutual benefit. For example, if your town contains a fair-sized hospital, then doctors’ offices, insurance representatives, and medical laboratories are likely to be located close-by.
Cost of land/rent
Companies require land or rental space where they can conduct business. Within any sizeable geographical area, however, the cost of land or rent varies. Locating a business (or part of a business) with respect to this variation may have a significant impact on the company’s bottom line.
Take, for example, a well-known bank that is headquartered in New York City. When you mail them your credit card bill, the letter goes to an address in South Dakota. Another well-known New York City department store receives and processes its credit card payments at an address in the state of Georgia. To some extent, geographic differences in the cost of labor are at work here. But in these cases, another and more important location factor is at play: geographic differences in the cost of land and rent. Simply put, these operations require lots of office space, the price of which is much cheaper in towns in South Dakota and Georgia than in New York City.
I’m going to temper my discussion of this location factor because it appears again in the chapter on urban geography (see Chapter 17). Suffice it to say here that supply and demand largely determines the cost of land/rent; and that intense demand and competitive bidding for land/rent is greater in big cities than in small ones, leading to higher land costs in major urban areas. Indeed, land/rent prices tend to “spike” downtown, and then trail off dramatically with increasing distance from urban cores, as evidenced by Figure 15-8.
Figure 15-8 has major implications for business locations. Activities that locate downtown must be capable of covering operating costs that include high rents. If they cannot, then they are wise to locate at some distance from downtown, where land/rent costs are likely to be much less. Or perhaps even to a town in South Dakota or Georgia.
They say that the only sure things in life are death and taxes. Maybe so. But taxes, at least, can be minimized. That is because tax laws and tax rates vary geographically. Thus, if the tax laws in a particular locale are so high as to seem unfavorable to personal or business finances, then one may consider moving to a more favorable location.
Tax structures differ from one country to the next and, within the United States, from one state to the next (see Figure 15-9). Some states have no income tax, while in those that do, the rate schedule varies. The same is true of corporate income tax and state property tax — some states have them and some don’t.
On the other hand, every state has a sales tax, but rates vary substantially from one state to the next. Also, particular items may be exempt from sales tax in particular locales. In New York City, for example, the standard sales tax is 8.25 percent, but clothing is tax-exempt. The purpose of that is to encourage New Yorkers to shop at home and support local businesses rather than cross the Hudson River to purchase goods in the comparatively low-tax environment of New Jersey.
As the foregoing vignette suggests, “creative taxation” may be used to encourage business activity in particular locales. One fairly popular option is to designate corporate tax-free areas that encourage job creation in particular locales. Called enterprise zones (or empowerment zones), the typical goal is to counter unemployment and stimulate the economy of an area that has fallen on hard times.
To use a hypothetical example, suppose a certain city with an old industrial core has witnessed several plant closings, resulting in derelict real estate and an increase in unemployment. One turn-around possibility is to designate all or part of that area as an enterprise zone and mandate that any company that employs, say, at least 50 people and locates within the area will be exempt from corporate taxes. Theoretically, at least, this is a win-win-win situation. The company gets a tax break that may increase its bottom line, unemployed people get jobs, and some of that income is returned to the government in the form of sales and income taxes.
Applied Geography: “Start spreading the news”
An advertisement once appeared in a business magazine that showed the Manhattan skyline and the headline, “Start spreading the news: Alabama is open for business.” The accompanying text encouraged executives in New York City to consider relocating their businesses to Alabama. Compared to New York City, the ad pointed out, Alabama has much lower taxes, land costs, housing prices, and utility rates. Thus, considerable advantages could be realized by moving one’s business from Manhattan to, say, Mobile, Alabama. It also inferred that workers could be paid less, but still come out ahead. Suppose, for example, a certain employee in New York City receives an annual salary of $50,000. In Alabama you could pay somebody, say, $45,000 (or less) to do the same job. But because of the tax and other differentials mentioned above, the Alabama employee could well end up with more disposable income in his or her pocket than the counterpart in New York City.
Climate is an obvious location factor for various agricultural and leisure pursuits. Thus, citrus fruits are produced in extreme southern (warm) parts of the U.S. because the plants are very sensitive to frost. Wheat, in contrast, is a hardy grass that does not require much moisture. Much of it is grown, therefore, in low-to-modest precipitation environments of the U.S., Canada, and Australia. Regarding leisure, ski resorts obviously call for a certain kind of climate as do most modern beach resorts. Other businesses, however, have climate connections that are a bit more subtle, but no less important. Following are two general examples.
When raw cotton or wool is spun into thread, there is a propensity for the fiber to snap. This likelihood is particularly high in dry climates and comparatively low in humid climates. Thus, climates characterized by moderate-to-high atmospheric humidity are superb for textile manufacturing. Britain and the Southeastern U.S. are in this category. And both places are characterized by textile manufacturing.
A matter of amenity
In the case of quaternary economic activities (and many tertiary ones, too), good personnel are critical to business success. If, therefore, a company can offer employees opportunity to live and work in a region that is generally perceived to have an attractive physical environment, then it may enjoy a competitive business advantage over competing firms. Thus, many high tech com- panies have chosen their locations on the basis of a balmy climate (as much as any other location factor), in the hope of attracting talented employees.
Looking Toward Location Trends of Tomorrow
Every year more and more people gain Internet access and make purchases online. Indeed, several well-known “dot.coms” conduct business only in cyberspace as opposed to the real space of a commercial district or mall. Because these companies are sometimes hailed as a prelude of things to come, and because they have liberated their customers from having to travel to a place of business, some people have suggested that in the future, location factors will not be as important as they are today.
I beg to differ. Many (perhaps most) kinds of business will continue to operate best in the real-world environment of face-to-face contact. And, of course, businesses in cyberspace actually exist someplace in the real world. That is, somewhere they have real, live employees who sit at desks and maintain the Web site, process purchase requests, maintain a warehouse or warehouses, do the actual packaging and mailing of merchandise, and handle returns and refunds. While the Internet may afford companies a certain freedom of location, they will nevertheless end up somewhere on planet Earth. And as always, some locations will prove to be more economically advantageous than others.