Unit 5 Industry

The industrial Revolutions

• The first industrial revolution:• Dates: Mid-18th Century till mid-19th

• Changes:• Artisanal production changed for industrial production

• Manual labour was replaced for steam-powered machines.

• Workshops were converted into factories.

• Transformed the labour market.

• Consolidations of the capitalist system.

• Source of energy: Coal

• Main industries: Textile and steel.

• Industrial countries: Great Britain.

• The 2nd industrial revolution:• Dates: Around 1870 till the beginning of 20th century.

• Source of energy: Oil and electricity.

• Main industries: Transport, chemical and energy production.

• Industrial countries: USA, Germany, G.B, Japan, France.

• Changes:• Diversification of industry production

• Expansion of industrialization around the world.

• Creation of a market economy = consumer society.

• Industry become the main economic activity.

• Social changes: Rising of a wealthy bourgeoisie vs. working class.

• Environmental and social costs.

• Case of study: Fordism.• At the start of 20th Century

• Industrial production method.

• Introduced the assembly line in factories

• Mass production process for a mass consumption market.

The third industrial revolution

• Dates: since mid 20th Century till today.

• Sources of energy: Oil, electricity, nuclear, renewable...

• Main industries: Large diversification, technology lead the market.

• Industrial countries: The old industrial powers lead the market and relocate their factories to developing countries.

Characteristics of the third industrial revolution

• Automation: Less manual labour, and more specialised workers. Technology and robotics are essential.

• Intense competition: Companies struggle to win more customers. Advertising, rapid distribution and capacity for innovation are basic.

• Information technology (IT): Used to facilitated communication and transport.

• Globalisation: Production, distribution and sales are made all over the world.

Modern production: Post-Fordism:

• More flexible production: • Contracts: Temporary contracts instead of

permanents.

• Global production: The production of a single product may be divides between many countries.

• Mass adapted production: depends on demand, trends and advertising.

Location and relocation of industry

• Traditional factors:• Proximity to energy sources: During the first industrial revolution. Example:

Vizcaya, Asturias.

• Cities: Preferred location. • Good supply of manual labour

• Greater consumer demand

• Transport and distribution facilities

Bilbao 1977

• Modern location factors:• The most convenient: the place that allows the company reduce cost and increase

profits.

• Traditional locations: Good infrastructure, specialisation, technical services nearby.

• Industries that requires unskilled workers: Located in countries where labour is cheap (Clothing manufacturers)

• Industries of technology and research: Need specialised workers, close to universities and technology parks, usually in large Western cities. (Silicon Valley)

Integration of industrial companies• Integration of companies: To increase profits, reduce expenses in transport,

costs…• Two types of integration:

• Horizontal: Companies from the same sector unite to focus their activities on one stage of the production.

• Vertical: Companies from the same sector unite to carry out different stages in the production.

Relocation, decentralisation, offshoring

• Decentralisation: Dispersed production of goods, looking for better prices in raw materials, labour o services.

• Offshoring: relocation of business or production to other countries that offer tax benefits, cheap labour, less restrictive pollution laws…

• Traditional industrial powers (USA, Western Europe) have relocated to Asia, Eastern Europe or South America their production. Nevertheless the companies’ headquaters are in the West.

Industrial activity in Spain• Industry is concentrated in three main areas:

• Ebro valley

• Mediterranean coast

• Areas around Madrid

Challenges for Spanish Industry• Lower productivity than the EU: Can be

improve with more investments in innovation.

• Low level of investment in R&D+i: Only 1,4% of Spanish industries have a high level of technological intensity.

• Strong dependence of foreign patents

• Solutions:• It is essential to devote a higher percentage

of GDP on R&D+I• Improving general education and technical

training

Current state of industry

• Good growth until 2007

• Fell more than 30% due to the crisis of 2008

• Industrial activity is loosing importance in overall economy activity.