Weber's Least Cost Theory
By Austin Schaaf and Gabriel Wood
Alfred Weber's Theory Of The Location Of Industries
Published in 1909, the Least Cost Theory was developed for the location of secondary industries. It explains why economic activity is patterned in the way it is, and it displays different points for inter-related activities. Such as manufacturing plants, mines, and markets.
The Site of industry is partially chosen by the cost of moving raw materials to a manufacturing plant, for said materials to be able to create finished products. Transportation costs also are effected by the form: land, air, or sea that the product travels.
Labor cost is taken into high consideration because it does not only effect the quality of the product, but also the transportation costs. That is why inexpensive labor is sought out most often; it allows for a better transportation system to be put in place.
Clustering of different industries in one city or area that allow the businesses to share and support on another.
Bulk-Gaining and Bulk-Reducing Industries
An industry in which the final product weighs more or comprises a greater volume than the inputs.
- Canned food factories generally determine their locations by the accessibility to the market. Cans, bottles, and ingredients are brought to the factory, and emerge packaged for consumers. Weight is gained especially with products that have a significant amount of water added. Also cars are much more difficult to ship out of factories than the parts coming into the factory are, so automobiles assembly plants are generally located near large metropolitan areas.
- The majority of orange juice factories are placed near agricultural centers. This allows for easy access to the raw materials used to make the products within the factories. Though the natural product and the finished product are very different. The reason for that is not simply because juice requires more fruit than one orange can supply, but it is because the preservatives and other artificial ingredients add weight to the final product. This cost is not drastically effected because it is only a slight increase, yet it is a noticeable one. Seeing as different vehicles are used for both, and again not just because they are juices. The final needs specialized transportation, while the raw materials can be carried via anything.
An industry in which the final product weighs less or comprises a lower volume than the inputs.
- Book: North America copper industries usually locates their factories close to materials because raw materials are heavier and bulkier than the finished products. The U.S. steel industry has placed factories around iron and coal deposits and has repositioned its locations as sources have changed. More recently with more iron ore coming from Canada and Venezuela steel industries have moved to the East and West coasts away from previous plants in the Midwest.
- Original: World wide Milling Industries tend to locate themselves near large forests for easy access to their raw materials. The chopped and treated wood is them sent to different types of industries, one of those being the paper industry. When the wood is first collected it weighs far more than the finished paper. This assists in transportation costs; because it takes specialized vehicles to transport trees making the pricing soar. While for the finished product the companies are able to save a large sum of money because it takes little to no specifically designed transportation methods.