Industrial location factors

Different industries require different inputs. Industries are more likely to locate where these inputs are readily and cheaply available. Factors that influence where an industry locates include:

  • power supply
  • communications - including transport, telecommunications
  • labour supply - including workers with the right skills
  • access to market - where the goods are sold
  • grants and financial incentives - usually from governments
  • raw materials

Agglomeration and footloose industries

These are two 'special cases' of industrial location.

Agglomeration is when a number of producers in the same or related industries group themselves together. They do this to benefit from local skill pools, economies of scale or the prowess of a locality in a particular field. An example is the large number of financial services companies (eg banks and insurance companies) which are headquartered in the City of London.

Footloose industries are those that are less dependent on factors that tie them to a specific geographical location. Unlike manufacturing industries, tertiary or services, companies do not have to be near a source of raw materials. As long as they have suitable transport, energy and communications links, they can locate themselves virtually anywhere in the world. Examples of footloose industries are computer software development, telephone sales and call centres.

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