Secondary Sector
The secondary sector of the economy is involved in the production of finished goods. All manufacturing, processing and construction activities lie in this sector. Some of the activities in this sector are metal working, automobile manufacturing, textile, production, ship building, etc. Most economies in their process of development go through the middle phase, where the secondary sector becomes the largest sector of the economy in terms of production and employment with the reduction in importance of the primary sector. However, India is an exception, where we have directly moved to services sector development without first improving the manufacturing capabilities.
Manufacturing refers to production of goods from raw material. The literal meaning of manufacturing is to “make by hand”, however, this term today includes the manufacturing by machines also.
The key features of modern large scale manufacturing include specialization of skills and methods of production, mechanization, technological innovation, organizational structure, uneven geographical distribution whereby most concentrations of manufacturing units is in few places.
Factors affecting Industrial Locations
The major concentrations of modern manufacturing have flourished in a few numbers of places and cover less than 10% of global geographical area. Since the objectives of firms are to maximize the profits, the industry locations tend to be chosen in such a way that production costs are minimized. The factors that influence the industrial location are as follows:
Access to Market
The existence of a market for manufactured goods is the most important factor in the location of industries. ‘Market’ means people who have a demand for these goods and also have the purchasing power (ability to purchase) to be able to purchase from the sellers at a place. Remote areas inhabited by a few people offer small markets. The developed regions of Europe, North America, Japan and Australia provide large global markets as the purchasing power of the people is very high. The densely populated regions of South and South-east Asia also provide large markets. Some industries, such as aircraft manufacturing, have a global market. The arms industry also has global markets.
Access to Raw Material
Raw material used by industries should be cheap and easy to transport. Industries based on cheap, bulky and weight-losing material (ores) are located close to the sources of raw material such as steel, sugar, and cement industries. Perishability is a vital factor for the industry to be located closer to the source of the raw material. Agro-processing and dairy products are processed close to the sources of farm produce or milk supply respectively.
Access to Labour Supply
Labour supply is an important factor in the location of industries. Some types of manufacturing still require skilled labour. Increasing mechanisation, automation and flexibility of industrial processes have reduced
the dependence of industry upon the labours.
Access to Sources of Energy
Industries which use more power are located close to the source of the energy supply such as the aluminium industry. Earlier coal was the main source of energy, today hydroelectricity and petroleum are also important sources of energy for many industries.
Access to Transportation and Communication Facilities
Speedy and efficient transport facilities to carry raw materials to the factory and to move finished goods to the market are essential for the development of industries. The cost of transport plays an important role in the location of industrial units. Western Europe and eastern North America have a highly developed transport system which has always induced the concentration of industries in these areas. Modern industry is inseparably tied to transportation systems. Improvements in transportation led to integrated economic development and regional specialisation of manufacturing. Communication is also an important need for industries for the exchange and management of information.
Government Policy
Governments adopt ‘regional policies’ to promote ‘balanced’ economic development and hence set up industries in particular areas.
Access to Agglomeration Economies/ Links between Industries
Many industries benefit from nearness to a leader-industry and other industries. These benefits are termed as agglomeration economies. Savings are derived from the linkages which exist between different industries.
Footloose Industries
Footloose industries are those industries which nearly remain indifferent with locational aspects of plant. Their products are having very high value addition and smaller in size and so transportation cost is only a small fraction of total cost. These industries usually requires a very small production space, are usually less polluting and but requires highly skilled workers. Examples are: watch, camera, diamond cutting, precision electronics, etc. Kindly note that Material Index in footloose industries is 1.0.
Classification of Manufacturing Industries
Manufacturing industries are classified on the basis of their size, inputs/raw materials, output/products and ownership.
Industries based on Size
The amount of capital invested, number of workers employed and volume of production determine the size of industry. Accordingly, industries may be classified into household or cottage, small-scale and large-scale.
Household Industries or Cottage Manufacturing
It is the smallest manufacturing unit. The artisans use local raw materials and simple tools to produce everyday goods in their homes with the help of their family members or part-time labour. Finished products may be for consumption in the same household or, for sale in local (village) markets, or, for barter. Capital and transportation do not wield much influence as this type of manufacturing has low commercial significance and most of the tools are devised locally.
Some common everyday products produced in this sector of manufacturing include foodstuffs, fabrics, mats, containers, tools, furniture, shoes, and figurines from wood lot and forest, shoes, thongs and other articles from leather; pottery and bricks from clays and stones. Goldsmiths make jewellery of gold, silver and bronze. Some artefacts and crafts are made out of bamboo, wood obtained locally from the forests.
Small Scale Manufacturing
Small scale manufacturing is distinguished from household industries by its production techniques and place of manufacture (a workshop outside the home/cottage of the producer). This type of manufacturing uses local raw material, simple power-driven machines and semi-skilled labour. It provides employment and raises local purchasing power. Therefore, countries like India, China, Indonesia and Brazil, etc. have developed labour-intensive small scale manufacturing in order to provide employment to their population.
Large Scale Manufacturing
Large scale manufacturing involves a large market, various raw materials, enormous energy, specialised workers, advanced technology, assembly-line mass production and large capital. This kind of manufacturing developed in the last 200 years, in the United Kingdom, north-eastern U.S.A. and Europe. Now it has diffused to almost all over the world. On the basis of the system of large scale manufacturing, the world’s major industrial regions may be grouped under two broad types viz.
- Traditional large-scale industrial regions which are thickly clustered in a few more developed countries.
- High-technology large scale industrial regions which have diffused to less developed countries.
Industries based on Inputs/Raw Materials
On the basis of the raw materials used, the industries are classified as: (a) agro-based; (b) mineral based; (c) chemical based; (d) forest based: and (e) animal based.
Agro based Industries
Agro processing involves the processing of raw materials from the field and the farm into finished products for rural and urban markets. Major agro-processing industries are food processing, sugar, pickles, fruits juices, beverages (tea, coffee and cocoa), spices and oils fats and textiles (cotton, jute, silk), rubber, etc.
Agri-business is commercial farming on an industrial scale often financed by business whose main interests lie outside agriculture, for example, large corporations in tea plantation business. Agri-business farms are mechanised, large in size, highly structured, reliant on chemicals, and may be described as ‘agro-factories’.
Mineral based Industries
These industries use minerals as a raw material. Some industries use ferrous metallic minerals which contain ferrous (iron), such as iron and steel industries but some use non-ferrous metallic minerals, such as aluminium, copper and jewellery industries. Many industries use non-metallic minerals such as cement and pottery industries.
Chemical based Industries
Such industries use natural chemical minerals, e.g. mineral-oil (petroleum) is used in petrochemical industry. Salts, sulphur and potash industries also use natural minerals. Chemical industries are also based on raw materials obtained from wood and coal. Synthetic fibre, plastic, etc. are other examples of chemical based industries.
Forest based Raw Material using Industries
The forests provide many major and minor products which are used as raw material. Timber for furniture industry, wood, bamboo and grass for paper industry, lac for lac industries come from forests.
Animal based Industries
Leather for leather industry and wool for woollen textiles are obtained from animals. Besides, ivory is also obtained from elephant’s tusks.
Industries Based On Ownership
- Public Sector Industries are owned and managed by governments. In India, there were a number of Public Sector Undertakings (PSUs). Socialist countries have many state owned industries. Mixed economies have both Public and Private sector enterprises.
- Private Sector Industries are owned by individual investors. These are managed by private organisations. In capitalist countries, industries are generally owned privately.
- Joint Sector Industries are managed by joint stock companies or sometimes the private and public sectors together establish and manage the industries.
