INDUSTRIES AND INDUSTRIALISATION

An Industry refers to a group of firms which produce broadly similar goods or offer broadly similar services.

Industrialisation is the process and deliberate policy of the government to create many industries in a country. It
involves the production and increasing use of machines and power tools as well as use of improved technology in
production.

Types of industries: There are four classes of industries or activities of man – Primary industry, the secondary
industry, the tertiary industry, and quaternary industry or activity.

Given that we have already seen the definition and examples of these basic types of industries or economic
activities, and have started studying the first type (Primary industry) in which we have studied agriculture,
Forestry, Fishing and Mining; we will continue with the second type of industry which is called the Secondary
industry also known as the processing or manufacturing industry.

SECONDARY INDUSTRIES (processing and manufacturing industries):

These are industries involve with the transformation of primary material or raw material in to a semi-finished and
finished goods. There are two types of secondary industries: the processing industries and the manufacturing
industries.

(i) Processing industries are involved in making items that are not meant for direct consumption. i.e. they produce
semi-finished goods. Semi finished goods are goods in a partly altered state e.g. wood pulp, steel etc and can be
used as raw material for the production of other goods. E.g. iron and steel can be used to produce spoons, knives
and other metallic kitchen utensils etc, wood pulp can be used to produce papers.

(ii) Manufacturing industries

Manufacturing industries are industries that use machines, tools and labour to convert or transform raw materials
obtained from the primary industries in to finished articles or goods etc meant for direct consumption. E.g.
automobile, aircraft manufacturer, food processing industries, light chemical and chemical industries

The Industrial System:

The industry functions as a system. It depends on inputs that go in to the factory, processes that take place in the
factory, and output that comes out from the factory.

Inputs include: raw materials, power or energy, labour, machinery, land, building

Processes are the activities involved in changing the raw materials in to finished products e.g. for a food processing
industry the processes include: canning, baking, drying, bottling etc while for a textile industry, the processes
include: spinning, weaving, bleaching, dyeing etc

Outputs include finished products sold to consumers. From the above inputs and processes output includes bread,
butter, milk, cloth, carpets. Semi-finished output include steel plates, rods etc

The factors influencing the location of industries.

Location of an industry refers to the sitting of an industry in a given location. This location is determined or
influenced by a combination of physical and human factors.

Physical factors:
1) Raw materials: Industries tend to be located near the source of raw materials especially if the raw materials are
heavy and bulky. This is to reduce the cost of transportation.
2) Energy or power supply: Industries may choose energy sites depending on the type of energy resource. E.g.
industries that use large amounts of coal tend to locate around coalfields, because it is bulky, heavy and expensive
to transport, but electricity allows for more freedom.
3) Site and Land: Most industries require large accessible areas of cheap, flat land on which to build factories.
4) Water: Many industries also choose sites with easy water access to provide water for use in the industrial
process.
Human and economic factors:
5) Labour: Industries tend to be located in areas around which they can easily have a large cheap labour force
which is both skilled and unskilled.
6) Market: Industries that produce bulky, heavy goods, perishable or fragile goods, etc choose to locate around the
market. Thus densely populated areas are suitable sites for location of some industries.
7) Capital: Industries tend to locate around major financial institutions where they can easily get capital to run the
machineries, buy raw materials and hire labour.
8) Transport greatly influenced the location of early industries. Sites with good and transport network connectivity
are preferred areas for locating industries.
9) Government influence: Government may take action to encourage or discourage industrial development in
some areas. This may be to achieve balance development. This may done by using incentives and disincentives.

The Alfred Weber’s Theory of Least Cost Location

Alfred Weber formulated a theory of industrial location in which an industry is located where it can minimize its
cost of production and therefore maximize profits. Such a location where the producer or industrialist can
minimize production cost and maximize profits is known as the least cost location. To Weber, three costs are
considered to determine the least cost location: transport cost, Labour cost and agglomeration economies.

For the Transport Cost; Weber suggested that the site chosen must have the lowest possible cost, for moving raw
materials in to the factory and finished products to the market. Weber developed a material index and used
simplified location triangles to determine the best location for an industry in order to minimize transport cost. The
Material index= total weight of raw material/total weight of finished goods. With this calculation of material index,
Weber suggested three positions for locating an industry. Either very close to the source of raw material, close to the
market or anywhere else. This will depend on the value of the Material Index (MI).
If the MI=1, it is a footloose industry and can locate anywhere. E.g. textile industry where a 5kg RM produces 5kg
finished goods. The MI=1. In this, it is assumed that the transport cost for transporting the RM and Finished goods
is the same, and as such the firm can locate anywhere.

But if the MI>1, then it is a weight loosing industry. E.g. iron and steel industry. Where a 6kg iron ore produces
2kg of steel. In this case, the MI=3 which is more than 1. Consequently, the weight is lost in the course of
production. The total weight of RM is higher than that of finished goods because raw material contains waste.
Therefore, the least cost location will be closer to the source of raw materials. So as to avoid the extra cost brought
about by its weight.

On the other hand, if the MI<1, it is a weight gaining industry e.g. Brewery industry where 1kg of RM produces
5kg of finished goods; the MI=0.2; This means that weight is gained during production. The total weight of finished
products is higher than that of RM. The least cost location will be to site the industry towards the market, so as to
avoid high cost of transporting finished goods.

Conclusion: Weber used the MI to determine whether an industry is raw material oriented or market oriented.
Besides the influence of transport cost, Weber also considered Labour cost and agglomeration.

In terms of Labour, Weber considers that areas of cheap labour would offset the increase in transport cost incurred
by moving away from the least cost location.
Lastly, in terms of agglomeration economies, i.e. the advantages resulting from the clustering or concentration of
enterprises. Weber considers that, such locations are favourable for location because of the benefits enjoyed by
firms, such as shared services, facilities, shared labour force.

From the following views of Weber, we can distinguish three classes of industries in relations to industrial location:
- weight gaining, weight loosing and footloose industries.

-Weight gaining industries are industries that gain weight in the course of production. The weight of raw materials
is less than that of finished products. E.g. brewery industry

-Weight loosing industries are those industries that lose weight during the production process. This means that the
weight of the final goods is less than the weight of the raw materials. E.g. iron and steel

-Footloose industries are industries that are not tied to a particular location. The weight of raw materials is the
same or almost the same as that of the finished products. The industry can locate anywhere. E.g. textile
manufacturing.

Industrial inertia

Industrial inertia refers to the tendency of firms or particular groups of industries to remain in an existing location
after the original factors for their location have weakened or disappeared. These locations were more favourable in
the past than now.

Reluctance to relocate: the refusal of a company to leave its original location even when the reasons that made the
location suitable or advantageous have disappeared

The tendency for industry, once established, to remain in its existing location rather than to move with changing
economic circumstances. Industrial inertia arises from the fact that many industries will build up local advantages
over time as external economies, such as skilled labour and ancillary activities. These can be lost if a firm
moves away from an area that may have a traditional concentration on the activity in question. Industrial inertia also
arises from more general economies associated with agglomeration and from the relative immobility of fixed
capital in the form of plant and machinery

TYPES OF MANUFACTURING INDUSTRIES

There are two main groups or classes of manufacturing industries: heavy industries and light industries

Heavy industries: These are industries whose raw materials and final products are heavy. E.g. iron and steel, ship
building, car assembly, aircraft manufacturing, petrochemicals

Light industries: These are industries whose raw materials and final products are light and easy to transport. E.g.
are foods processing industries, textile manufacturing, news paper publishing industries.1

ASSIGNMENT

1
Leave this as an assignment to be done in notebooks.

1)In a tabular format, classify the following under light and heavy industries: Food
processing, shipbuilding, textile manufacturing, car assembly, iron and steel, petrochemical
manufacturing, news paper publishing, light electrical engineering, metallurgical industry,
aircraft manufacturing or aerospace industry, Hi-tech industry
2)Define each of the above classes of industries
3) State the distinguishing characteristics between Light and Heavy industries