Geography Reference
In-Depth Information
Understanding Location Factors
A
location factor
is any aspect of an environment that influences a decision regarding the
choosing of a site for business or industrial activity. Because competition is an essential char-
acteristicofcommercialeconomies,businessesofallsortsdothingstogivethemselvesacom-
petitive advantage. Finding an optimal location for a business is a case in point, as well as an
endeavor that has come to typify modern economic geography.
A good example of the importance of location concerns the decision to locate the plant that builds
Saturn motor vehicles in Spring Hill, Tennessee, just south of Nashville. Theoretically, the factory
could have been built just about anywhere. Indeed, after corporate officials announced their intent to
manufacture “a new kind of car” in a brand-new plant somewhere in America, governors from sev-
eral states lobbied to host the facility. And why not? The factory would create thousands of new jobs
and provide a major boost to the economy of wherever it was built.
Saturn officials initially had no specific location in mind. Observers speculated, however, that the
company's desire to build a high-quality product at the lowest possible price meant that several key
characteristics would dictate the choice. Specifically, the chosen site would ideally have
A large amount of inexpensive land on which to build
Access to abundant and relatively inexpensive electricity
A low tax environment compared to other prospective locations
Connectivity to railway and interstate highway systems
A central location with respect to the various subcontractors who would supply parts
Centrality with respect to overall population distribution (which also would have a strong
and direct correlation with the location of dealer's showrooms)
An adequate supply of potential employees who would exhibit solid work habits for pay
that was somewhat low by industry standards
A number of prospective sites in different states were considered. Most were strong candidates with
respect to some of the above criteria, but weak in regard to others. In the end, Spring Hill got the nod
because it satisfied all points.
