Footloose industries are ones which do not have to be located anywhere in particular. These industries will be attracted to areas where labour is cheap.
Some industries have to locate their premises well away from heavily populated areas – for example, nuclear power stations, munitions factories and some chemical plants.
A business must consider five utilities:
Aluminium smelting for example, uses vast quantities of cheap hydro-electric power. Industries such as food preparation and paper production use large quantities of water. Food-processing creates waste, and the cost of disposing of this waste is a key locational factor.
Access to motorways, ports and airports has become an increasingly important locational factor in recent years. These services and other vital communication links make up what is called the infrastructure of a region. A good infrastructure can attract businesses to move to an area. Many towns have expanded as a result of good communications. For example, the M4 corridor between London and South Wales has been very successful in attracting industry to Wales.
Locating in area which contains similar businesses, suppliers and markets may be a considerable advantage. The quality of local schools, housing, leisure and recreational facilities can also help maintain the quality of staff and keep them happy and motivated. However, businesses would avoid sites close to their competitors.
Unemployment rates vary considerably between regions. The government tries to reduce these differences by rewarding firms which set up in areas of hardship. However, such government incentives can make problems worse in neighbouring areas. In some cases the new industries created have not been very labour intensive.
Businesses try to find low-cost locations which include factories or shops with low rent, financial help from the government or the EU and low taxation levels.
A good location will have plenty of customers nearby and be in an area where people have enough money to buy the firms’ products.
Asda is a public limited company owned by an American firm, Wal-mart. Asda formed by five Yorkshire farmers. Asda was then taken over by Wal-mart because more capital was needed to expand and survive.
Jaguar is a public limited company owned by Ford. It was taken over because Jaguar was going in a loss and was struggling to survive. Ford the American firm, also own Aston Martin, Mazda and Land Rover.
All shareholders have limited liability which means that no single person is liable for the company’s debts. Companies have the protection of limited liability. The owners of the company do not put at risk their personal possessions such as houses. If a company fails, shareholders lose only the money that has been invested. Shareholders and the company are legally separate: shareholders are not responsible for all the debts of the company.
Although the original owners (the board of directors) keep control, managers are often appointed to the business on a day-to-day basis. Only two people are needed to form a Public limited company. The capital is raised through stock exchange, where shares are sold and bought.
In order to register a company, two documents must be signed: the memorandum of Association and the Articles of Association as well as a number of other legal documents. These documents then have to be approved by the Registrar of the company. The Registrar issues a certificate of Incorporation as evidence that the company is registered.
The public limited company then issues a prospectus. This is an advertisement or invitation to the public to buy shares. The issuing of shares then takes place, and the Registrar of the company issues a certificate of Trading. Business can then start, and share process will be quoted on the stock exchange.
- Advantages of a public limited company
Forming a public limited company gives several advantages:
- The owners of the business (shareholders) benefit from limited liability. Reducing risk to shareholders makes it easier for the company to raise capital.
- Public limited companies can sell their shares on the stock exchange and this allows them to raise capital to develop new products and purchase new buildings and expand. Asda are manufacturing more of their own brand products and they may be getting their money from the stock exchange, where shareholders buy shares from Asda.
- Public limited companies benefit form continuity. If a shareholder dies, the shares are sold to someone else and the business carries on. For example, if a director of shareholders of Asda dies, another one is directed and the shares of the previous one are sold in the stock exchange.
- Public limited companies can borrow loans from banks easily because of their company status. For example, Jaguar can borrow money easily for banks to expand.
- Disadvantages of a public limited company
- Public limited companies have to fulfil a number of legal formalities. For example, they are required to publish an annual report containing financial information about the business. Competitors are able to study this information.
- Public limited companies have their business affairs discussed in the newspapers and on television. It is easy for them to attract bad publicity.
- It is much more expensive to start a public limited company than to set up a sole trader. The company has to go through a process of signing documents, registering and much more. This can be expensive especially if the business has to hire a solicitor and an accountant.
Asda is located in Small Heath, Birmingham. This can be shown clearly on the map. The factors affecting the choice of location for Asda are:
- Competitors. Asda have located their store away from their competitors. This is important because if they were close to the competitors, some of their customers would go to the rival store and become the competitor’s customers.
- Transport links. Transport is one of the most important factors that Asda took into consideration when locating the business. Asda is located near bus routes so that customers can have a easy way to go and shop at Asda. Asda have also chosen a location near to roads so that the delivery lorries can easily deliver the goods at Asda.
- Availability of space. Asda have located their store at a location with a lot of space so that they could build car parks which helps customers shop comfortably at Asda.
However there are also some disadvantages of the location that Asda have chosen so build their store at.
- The roads are too busy which disappoints customers who have to travel by car or by bus because the traffic is slow moving and the customers may have important matters and don’t want to be delayed. Some customers may also be put off by the noise and exhaust fumes caused by the congested roads and traffic. An example of this when Asda had to close down one of their car parks because there were complaints by drivers using the road that there was too much congestion and traffic jams. The busy roads also mean that deliveries to Asda are not on time, which results in less availability of goods to the consumers who will end up buying fewer goods.
Jaguar has four companies in the U.K. This is shown on the map.
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Browns lane, Coventry. This is the company’s headquarters in the U.K. and it is the main assembly plant. It has an area of 88 Acres of manufacturing space, which is an equivalent to 1 million square feet. The final assembly of the XK and XJ series is carried out in this plant. It has approximately 2250 employees. The plant was built in 1941 and has been a Jaguar plant since 1951.
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Castle Bromwich, Birmingham. This is the body assembly and paint, assembly plant. It has an area of 93 Acres of manufacturing space, which is an equivalent to 1.4 million square feet. This is where the body and white assembly and paint of all Jaguar products is carried out. There is also trimming and final assembly of the S-type. The plant also produces more than 55000 S-type per year. The plant has approximately 2500 employees. The plant was built in 1938 and has been a Jaguar plant since 1980.
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Whitely, Coventry. This plant is where the fully integrated Design, Research and Development centre for all current and future Jaguar products is carried out. . It has an area of 155 Acres of engineering space including the surrounding Jaguar owned green field, which is an equivalent to 0.5 million square feet. The plant has approximately 2000 employees. The plant was built in 1938 and has been a Jaguar plant since 1980.
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Halewood. Liverpool. This plant is still under development. It has an area of 300 acres of manufacturing space. The plant was built in 1963 and has been a Jaguar plant since 2000/2001.
The factors affecting the choice of location for Jaguar for the Birmingham plant are:
- Transport links. Jaguar has chosen a location with good transport links so that they can transport their goods easily to ports and transport raw materials quickly and easily. This is very important since most of Jaguar’s sales are exports. This is shown on the pie chart. This means that Jaguar must have good transport links to export the goods. The major highways that the Jaguar plant is located near are the M40, M50, M54, M42 and the M6. I have highlighted these highways on the, map to show them clearly.
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Suppliers. Jaguar has also chosen the location because there are many small local engineering firms in the area. This makes it easier to transport raw materials to the plant and saves time.
- Labour supply. Jaguar has located the plant near an area where skilled labour is easily available. Birmingham and Coventry are traditional manufacturing areas, so there is a large pool of workers with the right skills available.
- Safety. Jaguar has located their plant away form residential areas. This is important because if the if the residents are annoyed by noise pollution, or air pollution by the Jaguar plant, Jaguar would have move to another location or lose their reputation.
The disadvantages of the location are:
- Congestion. The motor highways are congested most of the time and have traffic jams often. This slows down transport of exports and raw materials.
- Lack of space. The location of the Jaguar has little space. If the plant needed to be expanded, it would not be possible because of the amount of space. The workers also have problems parking their cars, as the car park is too small.
- Long way to ports. Most of Jaguar’s sales are exports and it is of utmost importance that they have a reliable way of transporting their to the ports. But the plant is in the middle of the country and it is difficult to reach the ports because of the long distance.
