Importance of Site Factors: Land and Capital
Labor is extremely important in the manufacturing world and therefore, the most important site factor. Land and capital are other factors an industry must be aware of in order to be successful as well.
Land: Land is needed when deciding to build a factory and several decisions need to be made on where to build. In cities, many factories had to build vertically instead of horizontally due to lack of space. In a vertical factory, efficiency is lost through processes that must occur and move through the various levels. A horizontal factory needs only to move materials from one side to the other. Therefore, a shift from urban space to rural space is necessary.
Rural factories tend to be located in industrial parks, or areas zoned for industry near suburban centers, and these tend to be located next to transportation pathways, either by railroad or by highway for truck transport. Another benefit from the city is that transportation is not hampered by city congestion or traffic issues as much as a rural route or highway.
Climate and environmental factors can play a part in the purchase of land. Whether the climate is mild, if the land is at a lower or higher elevation, or how close it is to population centers may determine where a factory is built. Early in history, factories were built next to rivers or on the coast for water supply. Sometimes they were next to easy access to timber for fuel burning. Once coal became dominant, they moved next to coal fields. Nowadays, with a greater need for access to electricity, factories may have to build near hydroelectric, nuclear, or oil sites.
Capital: "Money makes the world go round." This adage applies to industry as well. Needing start-up funds for their enterprise, many industries and companies need to procure loans from various institutions, usually banks. LDCs will borrow money, either through the World Bank or other banks from MDCs. And just as a bank looks to figure out if an individual will pay back the loan on a risky start-up, banks do the same for LDCs or companies in LDCs.
Land: Land is needed when deciding to build a factory and several decisions need to be made on where to build. In cities, many factories had to build vertically instead of horizontally due to lack of space. In a vertical factory, efficiency is lost through processes that must occur and move through the various levels. A horizontal factory needs only to move materials from one side to the other. Therefore, a shift from urban space to rural space is necessary.
Rural factories tend to be located in industrial parks, or areas zoned for industry near suburban centers, and these tend to be located next to transportation pathways, either by railroad or by highway for truck transport. Another benefit from the city is that transportation is not hampered by city congestion or traffic issues as much as a rural route or highway.
Climate and environmental factors can play a part in the purchase of land. Whether the climate is mild, if the land is at a lower or higher elevation, or how close it is to population centers may determine where a factory is built. Early in history, factories were built next to rivers or on the coast for water supply. Sometimes they were next to easy access to timber for fuel burning. Once coal became dominant, they moved next to coal fields. Nowadays, with a greater need for access to electricity, factories may have to build near hydroelectric, nuclear, or oil sites.
Capital: "Money makes the world go round." This adage applies to industry as well. Needing start-up funds for their enterprise, many industries and companies need to procure loans from various institutions, usually banks. LDCs will borrow money, either through the World Bank or other banks from MDCs. And just as a bank looks to figure out if an individual will pay back the loan on a risky start-up, banks do the same for LDCs or companies in LDCs.
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