Wednesday, May 13, 2009

LOCATION OF INDUSTRY & RESIDENTIAL AREAS

AR-309: ARCHITECTURE AND TOWN PLANNING (A&TP-B)
By:
RAVINDAR KUMAR
Assistant Professor
Department of Architecture and Planning
NED University of Engineering and Technology
Karachi
LECTURE NO: 24
TOPIC: LOCATION OF INDUSTRY & RESIDENTIAL AREAS

INTRODUCTION:
The theme of current lecture is location of Industry and residential areas. In order to address this theme it is imperative to answer different questions such as: What are the reasons for the location of a particular business or industry in a specific area? Was it just a snap decision or is there more of a science to the decision? This is the subject of location of industry. Similarly it is also significant to know why people decide about living in a particular housing scheme whereas; different types of residences available at variety of locations within city? The answers of these questions are outlined below.

LOCATION OF INDUSTRIES AND FIRMS[1]:
An industry consists of firms that each have common characteristics in terms of the nature of their economic activity. The chemical industry, for example, is made up of hundreds of firms that have the common characteristic of being involved in either dealing with or manufacturing chemicals. These chemicals might be used for a wide variety of different processes, including agriculture, construction, medicines and a wide range of others - textiles, plastics, and paper, cleaning and so on. Individual firms might choose to set up their business in a variety of locations. In some cases, businesses with common characteristics are very widely spread. Other industries tend to have firms that might be clustered in a particular area. The crucial factor in many cases will be locating where costs of production can be minimised. Planning laws and regulations might mean that it is not always possible to set up in the preferred location. The economist (and later sociologist) Alfred Weber (1868-1958) pioneered the work on location of industry way back in 1910. His theory was based on the principle that a business would seek to locate where costs could be minimised. If there were two locations, a and b, where a represented a location where the cost of setting up was lower than b, then the firm would always go to a. Weber was writing at a time when the industrial revolution resulted in a number of large industries being concentrated in certain parts of the UK - coal, steel, shipbuilding, textiles and so on. Whilst the factors that were relevant to firms in those industries are different for many firms in the 21st Century, some of the basic principles he laid down are still relevant. There are a number of factors that will influence where a business will choose to locate.

NEARNESS TO POWER:
Some firms require either a certain type of power/energy source or particular amounts to be able to operate effectively. This means that one consideration for location is somewhere that has relatively easy access to such sources. This might be particularly relevant for a business that uses large amounts of power in the production process. In simple terms, the location has to be in a position to be able to supply the amount of power that a business might need. Some businesses need large amounts of power to be able to produce - this might be much more than is normally available from a domestic supply and so there has to be that source available if location is to be viable. The chemical industry is an example of production that uses large amounts of power. If we use the example of the chemical industry, the production process involved in this industry requires large amounts of gas and electricity. Providing the amount of electricity needed for such processes is not the same as the amount needed by the average house.

NEARNESS TO MARKET:
Access to a market for the good or service produced is an important component for some firms. The market in this context is referring to the customers who buy the good or service produced. In some cases, this can be the general public at large; others might be far narrower. For example, some businesses sell their output to a small number of other businesses. The importance of access to a market depends on the type of business and what it is involved in. For some businesses, being near to customers is essential. One obvious example is a snack bar or café. To survive, such businesses need to be somewhere where customers will regularly pass by. In the case of our chemical firms, nearness to the market might not be quite as important as might be the case for online retailers such as Amazon, where other means of getting to the market are more important (good distribution and communication networks, for example). The importance of being near to the market might also be dictated by the nature of the product produced. Weber identified the importance of this in his original analysis. Weber noted that the ratio of the weight of raw materials to the finished product might be a factor influencing location. We refer to this as 'bulk reducing' or 'bulk increasing' industries. A bulk reducing industry is one where the finished product is less bulky and easier to transport and distribute than the raw materials. Steel is a good example of this type of industry. Steel is made from a combination of coal, iron ore and fluxes which are processed before being combined in a blast furnace where molten steel is then processed into steel slabs, plate and so on. In such circumstances, the cost of transporting the raw materials may be high compared to that of the finished product. A bulk increasing industry is one where the opposite occurs. In this case, the finished product might be more bulky than the raw materials. A good example here is the furniture industry. Completed items of furniture (not flat-packed obviously) tend to be far more bulky than the raw material used to make it.

NEARNESS TO A SUPPLY OF RAW MATERIALS:
Some firms may rely on a source of raw materials for their business. If these raw materials are nearby, it is pretty much common sense that transport costs can be reduced if the firm is located nearby rather than far away. This might be particularly relevant for bulk reducing firms. In Weber's time, the steel industry tended to be located near to sources of coal (for coking) and supplies of iron ore. If the raw material is not available locally then it may be that a firm chooses to locate near a port, or other point of import, where they can access the raw materials efficiently and at lowest cost. In other cases, the raw material might be less obvious. In certain parts of the UK, there tends to be a relative concentration of certain types of farming. In these cases it may be the quality of the land for arable use that might be important. In other cases it might be that certain types of land and area are more suitable for dairy farming. Even more obvious might be the proximity of many fish-processing plants located near to fishing ports or firms involved in quarrying.

NEARNESS TO A SUPPLY OF LABOUR:
All businesses need labour to operate. In some cases, this labour has to have high levels of skill. Some areas have concentrations of industry in a region and have become known for having a pool of skilled labour available. In such cases, it can save a firm both time and cost locating near to the supply of labour. This can be extended if the local labour supply is relatively cheap. A number of firms in recent years relocating some of their operations to different countries to take advantage of the supplies of skilled and cheap labour that exist: for example, call centres in India and James Dyson's relocation of manufacturing capacity to Malaysia. The Economist Intelligence Unit reported that at the time of the decision by Dyson in 2002, labour costs for a UK worker stood at £9 per hour compared to just £3 in Malaysia. Moreover, UK office rents cost £114 per square metre per year whilst similar rents in Malaysia are priced at just £38 per square metre per year. Certain parts of the country may be associated with certain types of labour. In the City of London, for example, there may be opportunities for firms in the financial industry to access supplies of highly skilled and experienced labour. There are, in addition, a number of specialist business schools in the City that are able to attract good quality teaching and research staff as well as recruiting good quality students. As a result, firms in the locality know that they have access to good quality labour.

PROXIMITY OF OTHER BUSINESSES - EXTERNAL ECONOMIES OF SCALE:
Where industry becomes concentrated in an area, there are generally a number of supporting or ancillary firms set up. In some cases, these firms supply specialised services or products to other firms in the industry. In and around fishing ports, for example, there might be specialist engine services, specialists in marine insurance, firms specialising in processing and distribution and so on. In such cases, any new firm seeking to enter the market might well gain benefits from the fact that the industry is concentrated in that area. In the City, there will be firms that have particular specialisms in different areas of finance, whose expertise can be a major reason for firms locating in the City. These benefits can result in lower average costs (costs per unit). This is called external economies of scale. There might also be other specialist benefits. In our example of the chemical industry, the emergency services are specially trained to deal with potential emergencies that might result from a chemical spill or explosion. In addition, there are specialist firms that deal with the problems of waste and processing of unwanted chemical residues. All of these might be of benefit to a new firm looking to set up in the area.

THE REPUTATION OF AN AREA:
Certain areas of the country have a reputation for particular types of business - this might often be due to its industrial past. Staffordshire is associated with high quality pottery, Nottingham with fine lace, The City for its financial expertise and Sheffield for its steel - just some examples. Any firm linked with those industries setting up in these areas might well be able to trade on the back of the reputation of the area. If a firm that sells cutlery sets up in Sheffield, it may be able to associate its business with the reputation that Sheffield has built up in relation to steel; insurance companies setting up in the City may be able to gain some reputation purely by having a postcode that is linked to the City and so on. The City has a huge reputation for the high quality of its financial services industry. Any firm in the industry setting up in this area will be able to reap the benefits of being associated with this reputation. As the structure of industry in the UK changes in favour of a more service-based economy, the importance of the concentration of industry which was a feature of the old traditional heavy industries that developed after the industrial revolution is declining. Whilst this factor may be seen as being less important it can still be a factor that a firm might consider.

TRANSPORT AND COMMUNICATION SERVICES:
Firms that rely on good communications networks either for information transfer or distribution may well look to locate in areas where such facilities exist. This may include high quality road networks, access to trains, airports, ports and so on. Many new industrial estates have been built in out of town areas and major new trunk roads linking these estates with major road networks make locating in these areas worthwhile for some firms. For other firms, speed of information may be the crucial factor in their business. Many city areas were the first to have access to high speed data networks, broadband, cable and satellite services and so on. For a firm in the City, having high speed data access is essential to the transaction of their business. Data transfer is an important part of many businesses in the knowledge economy. Speed of transfer depends on having the right infrastructure in place - not everywhere in the country has access to super fast data transfer, which may affect decisions on location. In other examples, many hotel chains have located in particular areas often near to motorway exits around major cities or airports. Companies like Travelodge, Holiday Inn, Holiday Inn Express, Ibis and Premier Lodges have all appeared in clusters around these exits. They are hoping to take advantage of business travellers who use these main arterial routes.

INCENTIVES:
As the structure of industry changes, different regions of the country might experience different levels of economic growth. In some regions, the decline of old traditional industries like coal and steel has not been offset by a growth in new industries. Unemployment can be a problem in these areas. The EU might play a role in location in offering various incentives to help promote economic growth and regeneration in poor regions of the EU. As a result, various government and EU grants and incentives might be available to persuade firms to locate in these areas. The availability of low rent premises, faster planning permissions, employment subsidies (a sum of money given for every job created), reduced red tape, grants etc. can make a difference to a firm that decides to locate in that area. One of the problems, however, is that there might not be any other natural reasons for a firm to locate in these areas and when the incentives run out there might not be any reason for the firm to remain in the area.

COMPETITION:
Firms will be aware of the extent of the competition in an area when they are looking to locate their business. If there are several other similar businesses in the locality, it might influence their decision about location. Is this a good location decision or not? Being located near to competition can have its disadvantages but might also have some advantages.

OPPORTUNITIES FOR EXPANSION:
Many businesses might be looking for opportunities to expand in the future. Access to land, and the ease with which the business can expand if necessary, might therefore be something that a business will want to find out before making a location decision, or at least as part of a location decision. In some areas of the country, planning permission may be difficult to get - there may be restrictions on expansion into the countryside, various policies to encourage use of derelict land and so on. Whilst this may be of benefit to society as a whole, it is not necessarily the most cost-effective solution for a business. In some areas of the country, land and rental prices can be significant factors in location decisions.

In the south east of the UK, for example, average land prices for residential use have risen from £275,000 per hectare in 1983 to £2.49 million in 2002; in Inner and Outer London, the rise was even more dramatic with prices rising from £759,000 to £5.49 million per hectare. Compare this to Wales, where the price for a hectare in 1983 was £85,000 and rose to £980,000 by 2002. A recent report by real estate business DTZ noted that the West End of London was the most expensive place in the world to rent office space. They reported that the average cost per workstation area stood at £12,001. Hong Kong came in second at £10,170.

DEVELOPMENT AGENCIES AND INWARD INVESTMENT
UK Regional policy in recent years has changed its emphasis. The UK's membership of the EU has been a part of this. The approach is to have a coordinated policy with the EU to help each region achieve its full economic potential but at the same time to allow decision-making to be devolved to the lowest level, where possible. This means that the regions themselves will take a lead in encouraging economic development and supporting businesses in their region.

PHYSICAL FACTORS[2]:
Raw materials:
The factory needs to be close to these if they are heavy and bulky to transport.
Energy supply: This is needed to work the machines in a factory. Early industries were near to coalfields. Today, electricity allows more freedom.
Natural Routes: River valleys and flat areas were essential in the days before railways and motorways made the movement of materials easier.
Site and Land: Most industries require large accessible areas of cheap, flat land on which to build their factories.

HUMAN AND ECONOMIC FACTORS[3]:
Labour: A large cheap labour force is required for labour-intensive manufacturing industries. High-tech industries have to locate where suitable skilled workers are available.
Market: An accessible place to sell the products is essential for many industries i.e. those that produce bulky, heavy goods that are expensive to transport; those that produce perishable or fragile goods; those that provide services to people. The market is not so important for other industries such as high-tech whose products are light in weight and cheap to transport. Such industries are said to be 'footloose'.
Transport: A good transport network helps reduce costs and make the movement of materials easier.
Cost of land: Greenfield sites in rural areas are usually cheaper than Brownfield sites in the city.
Capital: This is the money that is invested to start the business. The amount of capital will determine the size and location of the factory. Government policies: Industrial development is encourages in some areas and restricted in others.

LOCATION OF RESIDENTIAL AREA[4]:
A residential area is a land use in which housing predominates, as different from industrial and commercial areas. Housing may vary significantly between, and through, residential areas. These include single family housing, multiple family housing such as (apartments, duplexes, townhomes (or similar configurations), condominiums) or mobile homes. Zoning for residential use may permit some services or work opportunities or may totally exclude business and industry. It may permit high density land use or only permit low density uses.
Residential zoning usually includes a smaller FAR (floor to area ratio) than business, commercial or industrial/manufacturing zoning. The area may also be large or small. In certain residential areas, largely rural, quite large tracts of land may exist which have no services whatsoever. Because a large distance must be traveled to access the nearest services, most journeys involve using a motor vehicle or some other form of transport. This need has resulted in Residential land development usually existing or planned infrastructure such as rail and road. The pattern of development is usually set forth in the restrictive covenants contained in the deeds to the properties in the development, but may also result from or be reinforced by zoning. Restrictive covenants are not easily changed as the agreement of all property owners (many of whom may not live in the area) may need to be obtained to effect a change. The area may also be large or small. Residential Differentiation are some of the various zones under which Residential Areas fall i.e. inner city residential, inner mixed zone, established residential, new development, urban-rural fringe, rural residential, sub-regional centers.

Residential development is the dominant land-use within the City, [5] offering residents a high quality and much sought after residential environment and providing some of the finest residential streets. The leafy tree lined streets and the variety of housing type and style create a most appealing environment. The concentration of high quality community services, together with proximity to the centre of city and the good access to public transport, are necessary attraction for people who wish to live there. A more accurate prediction can be made of the types of housing required to satisfy the diverse characteristics of our population when further research in the form of a detailed "Residential Housing Needs Strategy" is undertaken. There has also been a trend for many non-residential uses to locate or “creep” into our residential areas. Some existing non-residential uses (such as schools) are considered integral to the residential area, providing a service to local residents, and sometimes broader population, but their growth has the potential to create traffic and other amenity problems and to displace housing. Concerning the location of new housing it is imperative to maintain and increase housing choice and diversity within existing residential areas. Increase residential development opportunities (including higher density development) in and around commercial centres and other strategic locations. Protect existing housing stock and residential use. Encourage a high standard of residential development. Minimise the impact of institutions and other non-residential uses on their surrounding areas. Minimise the impact of commercial/industrial uses in areas adjoining residential and other sensitive uses. “There are no specific socialist types of land use distribution of new housing, internal organisation of residential blocks, or location of companies. Even the principle goal of socialist city planning to locate new residential areas closed to working areas has been pursued in western planning too.”[6] Thus; the residential areas shall be located in such a way in any city that may fulfill the functions of living working and recreation of a family. Furthermore; there are variety of housing types such as low income middle income and high income housing whereas; the location of each of these housing types subject to the level of affordability of a family to live within close proximity to city center or in the outskirts of the city.
REFERENCES:

4 comments:

  1. Respected Sir,
    Can u please refer a book or website regarding town planning in middle east.

    Regards


    guyz plz visit my blog

    http://communism-vs-islam.blogspot.com/

    ReplyDelete
  2. Dear Hasan Please Read:

    Planning in the Middle East, moving toward the future by Saleh Al-Hathloul; Published by Habitat International Volume 28, Issue 4, December 2004, Pages 641-643 Planning Issues in the Middle East

    http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V9H-4CRY4JR-1&_user=10&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=2d9fcae8fb603d55ae94e82b442b12ed

    and

    Planning Middle Eastern Cities: An Urban Kaleidoscope by Y. Elsheshtawy

    and

    http://www.planetizen.com/middle-east

    ReplyDelete
  3. Dirty, cluttered factories, manufacturing plants, workshops and production facilities are a thing of the past. These days, with a keen focus on lean manufacturing, waste reduction and efficiency, manufacturers and engineering firms place huge importance on keeping their workstations and production lines spotless. Research also shows that production facilities which maintain high levels of cleanliness are more productive and have fewer running costs.
    Best Industrial and Factory Cleaning Services in South Wales

    ReplyDelete