This however seems to be due to fewer jobs rather than more people hence the population of Derby has decreased by 0.53% from 1991 – 2001. This is a good sign because the labour market in Derby will be less competitive and Toyota coming to the region would then be welcomed by the community and the local government meaning benefits when starting up.
However it is not just the overall labour cost that is important Toyota will have to look at the labour cost per unit – hence comparing the productivity of this labour force as well as the overall cost. The productivity is how units each employee produces in a given time.
A major cost for Toyota, because of there need for skilled labour would be training, because of this they will look for locations with an already relatively skilled workforce. 22.39% of people in Derby in employment are employed in the manufacturing sector and 10.61% are process, plant and machine operatives and 11.83% are in skilled trade occupations. This suggests that Derby has roots in manufacturing and also that because manufacturing is the biggest employer in the area there will be a good number of employees already trained in production of some sort.
Land cost is important for location, for this reason a firm needing vast amounts of land for example manufacturing units or wholesalers will locate out of big cities. Also the further away from London the cheaper the land cost. As you can see where the Toyota plant is located far enough away to benefit from reduced wages, land costs, transport etc. but to still have adequate links with transport hubs, airports stations, and ports. In their Derbyshire location Toyota invested £1.15 billion and acquired a 580 acre plot, adequate to reach production levels of 282,215 vehicles. The concept here is economies of scale, Derby offered this amount of land and Toyota have been able to reach production levels high enough to create a low unit cost.
Toyota is a Japanese firm and hence it will be very important to have Japan accessible for personnel reasons. Senior management will need to be able to stay connected with the plant to keep the firm focused. Yes, there are many forms of communication for example telephones, e-mail or video conferencing. However in important decisions two-way communication (feedback) is vital to be able to fully communicate the problem and have the feedback communicated back. Telephone and video conferencing allows this - not to the same extent and hence the importance of accessible airports. It allows the firm to be flexible personnel wise and also reduces barriers of communication.
This is a manufacturing business, although the idea of locating in Britain is generally to be close to the British consumer and Toyota does have 52 overseas manufacturing companies in 26 countries and so it will be a small proportion that will be exported however imports wise the plant must be located near accessible ports to reduce travelling time and hence travelling costs. It is generally a more important factor for imports rather than exports (a bulk reducing industry) seeing as the raw materials to build a car are very heavy however the finished product in comparison is not and so to transport 10 cars across the UK to distribution points is relatively cost effective even by road however to transport the raw material for that amount of cars would be significantly more and therefore the plant must be near to ports to reduce time travelled by road.
This is all very well however if the local infrastructure, (the network of utilities, such as transport links, sewerages, telecommunications systems, health services and educational facilities) is not to an adequate standard then the firm will suffer. There workforce needs to be accessible to the factory and the road structures significant enough to be able to take the added strain of lorry deliveries etc.
In this map we can see the Toyota location (1.) is very near the A38 and a rail line and therefore accessible. The reason education and health services are important because the employees want an acceptable provision of these services, the better the provision the easier it is to recruit because potential employees will be more willing to locate there.
External economies of scale are the benefits gained by a firm as a result of the concentration of an industry in one location. For example the labour skills with the skills necessary for this particular industry, this reduces training costs. Specialist training facilities, so that travel is reduced for training needed. Infrastructure that is directed towards that particular industry for example specialist transport facilities (heavy load lorries for metals needed for car manufacturing). Customer base locally, means you are close to the customers, especially important for design to give the customer what they want (the Yaris was designed specifically for the British consumer for their specifications and was very successful). The reputation of the area also means customer trust however in the Toyota case the brand name is far more valuable.
However this can also be a negative point – external diseconomies of scale. Congestion of lorries can mean pollution hence poorer quality of life and more time consumer travel for example what the London area is suffering from – solved through expensive congestion charging.
Derby attracted Toyota not just because of the statistics showing infrastructure, available land and skills but because of the enthusiasm of the council. There is a lot of information and contact numbers available on their website, which was also advertising grants and general help for businesses this suggests they were willing to accomidate Toyota in return for the jobs and wealth brought to the area, I think this would have been a hugely deciding factor for Toyota to locate to Derbyshire over other UK locations.
