The Motor Vehicle Industry

The Motor Vehicle Industry

Introduction

The global car industry is made up of many transnational companies that trade throughout the world, often locating head offices in one part of the world and having many manufacturers around the globe. There are many factors that lead to the location of the different manufacturing sites, that all contribute to the overall selling price of the finished product, and the success of the company.

The Motor Vehicle Industry

Typically an LEDC would be the first place to look for when choosing a location to manufacture parts or produce cars, because of well-known factors that are found in LEDC's. These are cheap labour, cheap land and a good availability of workers, and these all help to lower the overall production costs.

Most LEDC's have mainly mechanical or industrial skilled future workers, because of the nature of the work that can be done in those countries. This is a prime location factor, as the company would not have to train up workers and teach them how to use basic machinery, as they would already have the knowledge. For the people to have industrial skills would mean a plentiful workforce, which means the company will never fall short of workers and they will be able to understand how to operate the necessary machinery. As an example, Setubal in Portugal had places for 3000 workers, and the amount of people that had volunteered was around 55,000.

There are downsides though to locating in LEDC's, and these are what mainly push away industry. Being poorer countries they will also have a poor infrastructure, so the road and transport networks will be basic, slow and unreliable. This will mean that it will be harder to move around parts, and will take longer so the amount of cars that can be produced will be lower than could be in an MEDC. Any major or larger roads will go through main towns or cities so there will be congestions here and around the factories.

With many companies now employing the J.I.T (Just In Time) production system, which is that they do not hold major stores of parts, but have smaller deliveries on smaller more continual basis that will cut down storage costs make this not as feasible as the stock reliability will not be there, and due to the harsher road conditions, delicate parts could be damaged.

When looking at considering manufacturing in MEDC's, there all also good and points to look at. Most MEDC's will now have an established infrastructure and so therefore the time for parts to get to the factories from the producer will be quite short, and the deliveries will arrive on a more reliable and definite basis, allowing the just in time system to work as intended. Due to these factors, it will mean that overall production levels will be higher and the company will be more efficient.

The problems faced when locating in MEDC's is that they usually have green belt land which means that the actual size of the factories ...