Topic of the day!!! Automobile industry Automobile industry requires large variety of raw materials from other industrial sources viz. steel, nonferrous metals, window-glass, plastic, rubber, wood, paint, textile, electronic cables, seat cushions etc For continue mass production on the assembly line, you need continuous supply of those spare parts, raw material. Therefore, best location for automobile industry=established industrial region that has tradition of manufacturing such components. Detroit: Car Capital of World Factor impact Transport on the bank of Detroit River, linked to Lake Huron Detroit is connected to Windsor, Canada via tunnel across the river. Detroit cars find market in Canada as well. Great lakes = cheap and easy water transport. Labor In early 19th Century, flour mills developed using running water from river as energy source. later internal combustion engines for boats consequently, many repair shops opened in the region They also started building machines needed for the iron-steel smelters in Pittsburg region. Thus, Destroit has a long tradition of building machines=generations of skilled labour + sparepart industry available Entrepreneurs William Durant (the father of General Motors), initially used to manufacture railway carriages in the same region. Henry Ford, earlier worked in Detroit Automobile Company, later setup his own Ford Automobile here. Raw Material Iron-steel from the Pittsburg Since Detroit has long tradition of machine-building, there are numerous intermediate industries providing raw material for seat-cushions, spray-paint, tyres, electronic circuit and various car accessories to the trinity of Ford, GM and Chrysler. Detroit Bankruptcy This bankruptcy is filled by Detroit Municipality and not by Detroit Automobile industry Detroit Municipality had sold “bonds” to finance their operations (fire dept., police dept. and various municipal works, social services, healthcare, pension expenses) Now they don’t have the ca$h to repay money to bond-holders (need around 18 billion dollars). So, Municipality filled Bankruptcy under Chapter 9 of Bankruptcy Act This Chapter 9 protects financially-distressed municipalities from legal prosecution from their creditors while they negotiate a plan for arranging money / re-writing the loan conditions. Although Automobile industry was a factor in Detroit Bankruptcy. How? era population of Detroit 1950s around 18 lakh present around 7 lakh and among them, barely 280,000 people are of working age. so why ^this growth and decline in population? because in the 50s, Detroit was a booming automobile industry. But later, other States of USA also offered tax benefits to Automobile giants so they started setting up plants elsewhere. Competition from Japanese automobiles + recession => auto-sales declined As a result: automobile and spare part factories of Detroit began to shut down and workers started moving to other cities for jobs= less workers in Detroit=less tax payers. And many of Detroit-folks barely earn ~27,000 dollars per year =you cannot extract a lot of tax out them. Since people left the city, many houses are vacant=less property tax. Thus Detroit Muni. doesn’t have lot of ‘incoming’ money On the other hand, outgoing money is high because of pension-healthcare to old people; unemployment=>crime rate=>more expenditure on police; vacant properties=>more fire-incidents=>more expenditure fire department and so on. Therefore, Detroit Muni. unable to pay back the bond-money and hence the bankruptcy. Toyota-Nagoya region, Japan labor Toyota Motor Company setup plant in Koromo.Koromo =silk industry was on decline= high unemployment= cheap labour force was available. technology innovation by reverse engineering US-technology transport Nearby Nagoya= metropolitan area= ideal for auxiliary corporate services + port for exporting cars to US and other countries of Asia. government policy Koromo’s local government provided cheap land for the factory. And thus, a rural silk growing area turned into a majour industrial district in automobile production. Later, majority of Japanese automobile companies set up plants in the Tokyo-Nagoya regions. (Except Mazda in Hiroshima) Sanand, Ahmedabad: the Nano Factory Raw Material Ahmedabad-Vadodara industrial region has many factories for spareparts, car-accessories, tires, circuit, glasses etc. Nano having small-cheap model, doesn’t require that much iron-steel compared to a Truck or SUV. + located near ports for easy import. Transport Located in Delhi-Mumbai Industrial corridor (DMIC)=>easy transport of spare parts, raw material and finished cars. Mundra port ~180 kms: has container depots for vehicles + ro-ro terminal for loading and unloading vehicles Similarly Kandla Port: just ~250 kms away. Labor Tata said they’d train the local youth for working in the Nano plant. Ahmedabad district large population + urban amnesties=> no need to setup special township for workers and their families. Market A’bad to Mumbai: developed region with lakhs of middle-class families.+proximity to ports=easy car export. Energy Tata working on 4000MW Ultra Mega Power Project in Mundra (~180kms) using imported coal. Land Most of the land belonged to Anand University (and hence to State government). Hence, Land acquisition done without much problem.
Posted on: Fri, 05 Sep 2014 04:24:35 +0000
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