Theory of a good location to build industrial plant
Was the early twentieth century when the German Alfred Weber developed a theory that is still alive, at least in its basic lines. Weber studied industrial location isotropic space with resources located at a point and a market in another. Under these conditions the key factor to decide the industrial location is the distance between the production facility, resources and market. It is considered that the resources and the market and are given in the space, so you have to build the plant. The ideal place is one in which the recorded transport is minimal.
The theory examines four key factors:
1. – The distance to natural resources
2. – The distance to market,
3. – The cost of labor and
4. – agglomeration economies, i.e., the savings is due to be installed where there are other industries and share services.
The last two factors may depend on political decisions. Does not include energy sources, but may be considered a resource.
Between raw materials are two types: the ubiquitous resource, which can be found anywhere, and localized resources, which are only found in one spot. Will be the last ones to determine the location of the factory.
First model
In a first model Weber believes that production costs are the same everywhere, so the product price can only vary depending on transport costs. The plant will be installed where transport rates are minimal. For him to consider the amount of resource that is lost in the process, special care for transportation and adding value.
Weber will represent his theory in a triangle in which two vertices correspond to resources and a market. To determine the importance of the resource that is lost in the process Weber produces an index of materials. This index is to divide the weight of resources used by the weight of the finished product. The higher the ratio the closer you have to locate the plant resources. The lower closer to the market.
Second model
Weber In a second model considers the importance of the cost of labor and economies of agglomeration. When these factors are not uniform savings obtained by installing the plant where they are cheaper may offset the increased cost of transport.
In this model the Weber triangle is surrounded by concentric circles representing the cost of transport in an area, each circle is called isodapán. If we place a point where the cost savings of labor and agglomeration economies is greater than the increase in transport costs, the plant will be located at that point. The boundary between cost increases and savings isodapán is called critical.