THE LOCATION OF INDUSTRY IN THE NEWCASTLE REGION
BY
HAMDI AMIN SOLIMAN B.Ec.
SUBMITTED IN FULFILLMENT OF THE REQUIREMENTS OF THE DEGREE OF MASTER OF SCIENCE IN APPLIED GEOGRAPHY
The University of New South Wales
June 1973 I certify that the material contained herein has not been presented for a higher degree to any other Un i v er s i t y or I n st i tut i on •
H.A. Soliman ;::, ~;.___ June 1973 CONTENTS
ACKNOWLEDGEMENT iv
ABSTRACT V LIST OF TABLES vi LIST OF FIGURES viii LIST OF APPENDICES ix
1 INTRODUCTION 2 LITERATURE REVIEW 7 3 INDUSTRIAL STRUCTURE, DISTRIBUTION AND GROWTH 22
4 SURVEY OF LOCATION FACTORS 79 5 INPUT-OUTPUT PATTERNS OF MANUFACTURING 108 6 ANALYSIS OF INTERRELATIONSHIPS AMONG LOCATION VARIABLES 1 34 7 SUMMARY AND CONCLUSIONS 1 63
REFERENCES 1 71
BIBLIOGRAPHY 1 77 APPENDICES 1 81 ACKNOWLEDGEMENTS
Most of this research was prepared while I was seconded from the N.S.W. Department of Decentralisation and Development to the Hunter Valley Research Foundation as a Post-Graduate Research Scholar. am grateful to the staff of the Foundation, specially Professor C.C. Renwick, for their support and encouragement. I am also indebted to the · Foundation for facilities provided in carrying out the location survey conducted during 1969.
I am very grateful for the interest and encouragement of the School of Geography, the University of N.S.W., particularly to Mr. D.J. Webb for his valuable criticism and careful supervision on all aspects of this research. For assistance in the computer processing of much of the statistical data used in this study, I am indebted to Dr. D. Jeffrey and Mr. J.R. Geissman.
The Study would not have been possible without the co-operation of manufacturing firms in Newcastle I am most thankful to those company executives who gave time to be interviewed and provided the valuable information upon which this study is based.
Miss I. Hakki deserves a special mention for her efforts in typing the final manuscript. ABSTRACT
-This study sheds light on the Newcastle Region as an area containing the Newcastle Urban Complex as its major concentration of manufacturing activities. Generally the study aims at evaluating and investigating the relative importance of the various regional factors influencing the location pattern of manufacturing activities in the Newcastle Region. The basic emphasis is on the locational decisions of the manufacturing firms in the region. The themes of investigation ranges through many aspects of the manufacturing geography of the region which have interrelated with one another. The study examines the structure, distribution and growth of manufacturing in the region. An attempt is made to evaluate the relative importance of the various regional factors influeincing the location pattern of manufacturing activities within the region. An analysis is then made of the locational significance of linkages developed arrong the region's industries on one hand, and between the region's industries and industries outside the region on the other. Finally, a factor analysis technique is applied to develop a simple framework of factors whose interplay can adequately represent the interaction of the wide range of the various location factors with many variables related to the location process. LIST OF TABLES
1 Industry in Newcastle, 1967/68 25 2 Industrial employment in the Newcastle Region compared with N.S.W. and Australia, 1967/68 26 3 Industrial employment in the Newcastle Region compared with other industrial areas in N.S.W., 1967/68, 28 4 The composition of workforce in the Newcastle Region, N.S.W. and Australia 29 5 The composition of workforce in the Newcastle Region (actual number of employees) 31 6 Size of firms in the Newcastle Region 36 7 Distribution of manufacturing activities within the Newcastle Region, 1967/68 40 8 Multiple magnitude and intensity ratings for the Newcastle Region 42 9 Distribution of manufacturing within the Newcastle Region 45 1 0 Distribution of industry in the Newcastle Urban Complex 50 1 1 Firms employing over 300 persons in the Newcastle Urban Complex 54 1 2 Index of industrial specialisation for the Newcastle Urba0 Complex 56 1 3 Coefficient of localisation for the Newcastle Urban Complex 63 14 Number and cost of factories built in Newcastle and suburbs, 1954/1968 66 1 5 Manufacturing employment, value of production and salaries paid, 1954/1968 69 1 6 Industrial output in Newcastle and N.S.W., 1964/68 70 1 7 Industrial output in the Local Government Areas of the Newcastle Region 74 1 8 Employment size categories and dates of establi shment for the 75 firms responded to the location survey 82 1 9 Employment in the 75 firms responded to the location survey 85 20 Regional location factors, weighted averages for 42 firms established after 1945 90 21 Regional location factors, weighted averages for 33 firms established before 1945 91 22 Regional location factors, weighted averages by industry groups 94 23 The importance of market factors by industry groups 101 24 The importance of material factors by industry groups 104 25 The importance of material factors compared to other factors before and after 1945 105 26 Estimated proportion of crude materials to a·11 materials used by industrial firms, weighted average by No. of employees 110 27 Port of Newcastle: ranked selected imports, 1969/70 111 28 Origin of material inputs for industry in Newcastle 114 29 Types of markets for industry in Newcastle 124 30 Port of Newcastle: ranked selected exports, 1969/70 125 31 Overseas exports of iron and steel products through the Port of Newcastle 128 32 Industry outflow in Newcastle 130 33 The unrotated factor matrix 142 34 Varimax rotated factor matrix 144 35 The canrnunalities of varimax rotated matrix (h2 X 100) 145 36 Factor score matrix for the 75 firms 155 LIST OF FIGURES
Map of the Newcastle Region 23 2 Map of magnitude and intensity ratings in the Newcastle Region 43 3 Map of industrial employment in the Newcastle Urban Complex 52 4 Map of index of specialisation in the Newcastle Urban Complex 60
5 (A) Factor axes ( I & I I) i den ti fi ed with 1oadings of varimax rotation 147
5(B) Factor axes (II & 111) identified with loadings of varimax roatation 148
5(C) Factor axes (I & Ill) identified with loadings of varimax rotation 149
6 (A) Firms profiles for factor 1 57
6(B) Firms profiles for factor I I 1 58
6 (C) Firms profi 1es for factor I I I 1 59 LIST OF APPENDICES
1 Classification scheme of industrial suburbs in the Newcastle Urban Complex 1 82
2 Introductory letter for the location survey 184 3 Location of industry survey 1 85 4 Site location factors, weighted averages by industry groups 189 5 Relocation factors, weighted avarages by industry groups 191 6 Correlation matrix for the 29 variables 192 CHAPTER ONE
INTRODUCTION
Better understanding of the forces underlying the emergence of a particular industrial location pattern is essential, not only in developing public policies but also in assisting industrial firms in their location and expansion decisions.
The literature on industrial location factors applicable to areas and regions in the United States and Britain has increased considerably in recent years. In Australia, this subject has not received sufficient attention ex~ept for few attempts such as that by Logan in Sydney (1964), McKnight (1967) and Smailes (1967) in South Australia, and the recent study by the Institute of Urban Studies in Sydney (1970). All these contributions have concentrated on analysing the intra metropolitan aspects of the location decision based on variables operating inside metropolitan areas, except for Linge's study of the location of manufacturing in Australia (196i) which analysed the location choice of general regions. No other attempts have been made in Australia towards understanding the location process from the regional point of view. The question of the merits of the various regions or cities within Australia 2 always comes first in the location decision, though it has been virtually ignored in the Australian literature. Logan (1963) has made a passing reference on these two aspects of the location decision in Australia and indicated that "In Australia most manufacturing firms are forced to make at least two kinds of location decisions, one involving the merits of the six capital cities, and the other based on variables operating inside the metropolitan areas". But then he made it cl ear that he wi 11 only be concerned with the behaviour of the individual manufacturing firm within the metropolitan area of Sydney.
The Newcastle Region is the second major concentration of manufacturing activities in N.S.W. Yet no attempt has been made to investigate the industrial location pattern of the region either on the intra-metropolitan or the regional levels.
Generally, this study aims at evaluating and investigating the relative importance of the various regional factors influencing the location pattern of manufacturing activities in the Newcastle Region. The basic emphasis is on the locational decisions of the manufacturing firms in the region.
Following this introductory chapter, a review of the relevant geographic literature in the field of industrial location analysis is attempted. Subsequently, an analysis of the following aspects of secondary industry in the region will be made: its importance within the region and in relation to the state and national economies, its importance to other economic j sectors within the region, its size categories and its main characteristics. The spatial distribution of secondary industry in the region is then analysed by using some traditional methods for measuring the localisation of industry such as the 11 index of industrial specialisation11 and the 11 coefficient of localisation 11 • The characteristics of manufacturing growth are then accomplished by analysing the major changes in the structure of secondary industry in the region, the growth of industrial production and the workforce.
Following the analysis of these aspects of the manufacturing sector of the regional economy, an investigation of the industrial location factors is attempted. The attractions of the region for specific industry groups are examined in terms of industrialists' attitudes. In order to obtain the necessary information, it was essential to conduct a location survey with the management of a ~ample of industrial firms in the Newcastle Region during 1969. In this survey firms were asked to indicate the three most important location factors considered when selecting the Newcastle Region as a favourable location (regional factors) and then asked to identify the most important location factors when selecting a particular site within the region (site factors). Analysing the results of the location survey would indicate the apparent reasons for the development and expansion of the variety of industry groups in the region.
An analysis is then made of the locational significance of the various linkages developed among the region's industries on one hand, and between the region's industries and industries outside the region on the other.
Then a factor analysis technique is used to develop a simple framework of factors whose interplay can adequately represent the interaction of the wide range of the locational determinants of the region's industries. The factors identified by this analysis were considered as a simple but accurate explanation of the forces underlying the emergence of the industrial location pattern of the region.
A following concluding chapter summarises the basic results of the investigation and their implications on the future pattern of manufacturing growth in the region. A comparison is also made between the results obtained and those obtained from previous research in this field. Also, suggested future lines of research in the Newcastle Region are outlined.
The results of this investigation could be of considerable assistance to the State Government in formulating its industrial policy, to Local Government Authorities in planning for industrial promotional prograrrmes, to town planners in predicting future patterns of growth, and to industrial firms as a useful guide for their location and expansion decisions. SOURCES OF DATA
Most of the statistical data upon which this study is based are derived from three main primary and secondary sources:
a) Published sources containing statistical and other information, mainly the publications by the Commonwealth Bureau of Census and Statistics. The problems of the geographical comparability of data have been overcane and explained at relevant places in the text. For instance, concerning employment, the only difference between the data published in the N. S. W. Stat i st i ca 1 Regi ster of "Factories" and those published in the Census is that, the first represents the average during the period of operation, which is the aggregate of the average number employed in each establishment during its period of operation; while the Census figures are based the actual number of persons employed during the whole year.
b) Another important source of information is the Directory of Manufacturers published by the Hunter Valley Research Foundation during 1968. This Directory is the most comprehensive listing of manufacturing activities of a particular region in Australia. It includes 367 firms in the Newcastle Region, representing about 94 per cent of total industrial workforce. These firms represent only 26 per cent of the total number of "factories" shown by the Statistician. However, these firms could be considered as representing most 6
of the region's manufacturing establishments. Thus, if we take into consideration that the Foundation's survey excluded all firms specialising in repair work, power stations, and all manufacturing butchers, it is likely that these 'factories' account for most of the difference between the 367 firms listed in the Directory and the official statistics.
c) The third source is a questionnaire survey applied to a sample of manufacturing firms in the Newcastle Region. The questionnaire (see Appendix 3) is basically designed to obtain information about production and distribution patterns, locational forces, and number of employees. This survey was conducted during 1969 with executives of 75 firms in the Newcastle Region. The sample covered eight industry groups, and presented about 84 per cent of total industrial workforce in the region. The sample was selected originally from the Newcastle and Hunter Region Directory of Manufacturers (1968), after excluding firms employing less than 10 persons. CHAPTER TWO
LITERATURE REVIEW
This chapter aims at presenting a short review of the major relevant theoretical and empirical contributions in the field of industry location.
THEORETICAL CONTRIBUTIONS
Industrial location theory, with its least cost (Weber 1927) and market area (Losch 1954) approaches, assumes that the entrepreneur attempts to locate at the site that can minimise cost and maximise revenue. The theory has been developed with reference to location at the micro-level and has concentrated on the decision of the individual firm. This decision must then be the starting point in any attempt to explain or predict location patterns.
Weber (1927) stressed that entrepreneurs will locate industries at the point of least cost in response to three general location factors - transport costs, labour costs and agglomeration economies. In developing hi 1s theoretical ideas he examined the role of transport costs in determining the location of factories. Substantial agglomeration or deglomeration economies and labour cost savings could encourage firms to deviate from the point of minimum transport costs in order to attain an optimal location. Generally, Weber 1s theory considered transport costs as a fundamental force in the location of manufacturing, _but his theoretical argument is based on an unrealistic framework of perfect competition and given market conditions. This led him to analyse only cost factors and to maintain that the least cost location is also a maximum profit location.
Hoover's (1937, 1948) contribution to the theory of plant location was broader than Weber 1s. Like Weber, Hoover viewed transport orientation as something that could be analysed separately. He did not integrate other causal factors into his theory as fully as he might have done. Despite his reference to market areas he was much more concerned with cost factors. His analysis of demand factors was confined to showing what market area a given location would serve, with the effect of the volume of demand on location not being considered.
Losch (1954) produced the first general location theory with demand as its major spatial variable. In his theory,the entrepreneur's motive for location is to control the largest segment of the market area at prices that yield him the greatest profit. He divided the market so that optimum size plants in each industry serve hexagonal sub-areas of equal size and that the plants of different industries serve sub-areas of different size. 9
Greenhut (1956) produced the first major attempt to integrate both cost and demand factors into location theory. Of particular value, is Greenhut's discussion of the location factors. He listed these as transportation costs, processing costs, the demand variable and what he described as 'cost reducing' and 'revenue increasing' factors. Transportation cost is regarded as a major determinant of plant locations and should be distinguished and not confused with other factors. The larger the number of firms the greater the force of dispersal increases, since small firms seeking a relatively small market area wi 11 move to a distant point of the market more readily than a large firm>which may want a location from where it can serve a major part of the market. He referred to cost reducing factors as certain gains that arise essentially from agglomeratim and deglomeratim economies. Revenue increasing factors cover similar considerations that affect sales. ~lso distinguished,are personal cost reducing and revenue increasing factors, which refer to advantages gained from personal contacts between individuals. He also referred to purely personal considerations that may influence the choice of location. Generally, Greenhut was more concerned with the demand factor. In a recent paper ( 1964) he indicated that the empirical inquiry into industrial location is still preoccupied with the cost approach. When the demand factor is included, it is generally in the context of the transport cost involved in supplying a given market, as in the Weberian model·. 1 0
He took issue with this and urged that more attention must be given to the demand factor. Greenhut (1960) made a very useful distinction between the market and transport cost factors by indicating that it is valuable to differentiate between a market location which is due to the size of market advantage and one which is due to transport cost advantage.
lsard (1956) attempted to fuse location theory with other branches of economic theory using the well known principle of substitution. His analysis of the locational equilibrium of the firm under transport orientation illustrates how the substitution approach is applied. Generally, he integrated the Weberian transport orientation with production theory by using the concept of transport inputs in a substitution framework. Using the same framework he introduced labour orientation into his general theory. He considered market and supply areas by modifying Losch's system to comprise increasingly large hexagons as distance from an urban agglomeration increases or population densities decreases.
One of the main reasons why geographers have been reluctant to generalise or theorise about industrial location is the apparently fortuitous nature of many real world locational decisions. Traditional industrial location theory, because it is developed within a normative framework, does not necessarily permit the formulation of hypotheses or models I I
called for by real world situations. Smith (1966) stated that "If a geographer seeks a theoretical basis for his examination of the real world, he will only achieve it by adapting or reformulating existing location theory for his own particular purposes, p.9711 • The perfectly informed, rational and optimising 'economic man' assumed in traditional location theory, does not exist in practice. Instead, man acts with imperfect knowledge, and often in pursuit of particularly non-material ends. Finding the optimum location for one firm at one point in time is often of little help in explaining the areal distribution of a.whole industry which may be the end product of a long process of evolution and containing firms of different size, technology and managerial skill. Generally, locational models based on maximising concepts have been criticised on the basis of three main views.
Firstly, in recenE, years a behavioural approach to location that stresses the sub-optimal nature of man's decision., has been gaining ground. The most thorough statement to date being by Pred (1967 and 1969) who suggested how behavioural science concepts might augment or replace shortcomings in the explanatory powers of classic economic location theory. Man is seen as possessing both limited knowledge and limited power to use it. Pred formulated a 'behavioural matrix' 1 2
as an interpretative device to assist in the understanding of real world deviations from location patterns produced by deterministic models based on the assumption of economic man. Pred (1967) concedes that, the behavioural matrix interpretation of location decisions is "only a verbal formulation of the fairly obviou~, p. 121". But it is a useful way of conceptualising the effect of imperfection in the ability of the entrepreneur and the information available to him. As an operational model that could be used in the explanation of a specific location pattern, its real value is very restricted because even if numerical scales could be attached to the matrix for the positioning of a set of real world firms, their actual location could still not be predicted exactly.
The behavioural approach is becoming increasingly popular in human geography, and this is now influencing research in industrial location analysis. Interest is growing in studying the way in which business decisions are actually made and in how this affects the choice of plant location. This trend is exemplified by work of scholars like Krumme (1969), Stafford (1969), Wood (1969) and Taylor (1970).
Secondly, evidence suggests that few private industrialists undertake comparative cost or profit analysis. This view is emphasised by Luttrell 's study (1962) of factory 1 3
location and industrial movement in England and McLaughlin and Robock's study (1949) in the United States. It is also found in many empirical studies which attempt to evaluate the location choices of firms, that non-economic factors played an important role. In a study of factors influencing the location of industry in Florida by Greenhut and Colberg (1962), personal reasons were divided into those with pecuniary gains and those without. It is only the latter that represents non-economic factors. The personal factors with non-pecuniary gains were only predominant in very few cases. Tiebout (1957) indicated that in the long run society will locate firms in best locations, so that a maximum profit pattern may rise, even though private firms may select randomly. The economic system simply adopts those firms which have chosen correctly and rejects those in unfavourable locations. Webber (1969) claimed that Tiebout's argument applies most strongly to industries with man¥-small firms.
Finally, the maximisation concepts are criticised for being normative, whereas more accurate prediction can be made by stochastic models. Stochastic models are more powerful than normative ones, because they include the effect of unknown variables through replacing them by random ones. Morrill (1963) indicated that stochastic models can be used 1:fii:-,:Jocation analysis to include the basic uncertainties l'-1"
in the pattern of human behaviour where personal considerations and other unknown effects can be injected as random variables.
Webber (1969) suggested that a dynamic location theory with a predictive value must be formulated. The essence of such a theory is in the definition of the concept of maximum profits. IIWhen information is imperfect the maximum profit is one for which (i) the probability of bankruptcy is low, (ii) profits are large, (iii) profits are relatively safe and (iv) the costs of obtaining and processing information are taken into account. With such a definition used within the context of probability models, location theory may become a more powerful predictive tool".
RELEVANT EMPIRICAL CONTRIBUTIONS
Methodology in economic geography has advanced considerably during the last two decades, particularly in empirical fields of research. Basically, much of the research in economic geography has been prompted by the need for substantive examples to demonstrate the applicability of theories or methods.
Investigations into the field of industrial location analysis have produced a number of works of varying theoretical and substantive value. Hunker and Wright (1963) surveyed 545 Ohio industrial companies to determine the importance of the 1 5
-various location factors influencing the location pattern. They concluded that in addition to the traditional location factors of market, labour and transportation, such new factors as building and sites, corrrnunity and institutional forces, and residence of plant owner were of increasing importance. Hoover and Vernon (1959), in their study of the New York Area, presented a general discussion of trends in intra-metropolitan location and the importance of a variety of location factors, especially agglomeration economies. A similar study reported by Lowry (1963) for the Pittsburgh Region, evaluated the region's potential for economic growth based on its location advantage. Some less extensive studies provided useful descriptive locational analysis. Examples are the studies of McMillion
(1961) for Baltimore, and Chapman and Wells (1959) for Atlanta.
The aim of most of these investigations has been the appreciation of the advantages of a particular industrial environment that have permitted industrial growth. In each of these studies a manufacturing survey was conducted in an attempt to determine why firms chose a particular location. These surveys and their accompanying analyses have been based on the premise that the businessman chooses a location that wil 1 enable him to operate at the most profitable level of output. l b
Greenhut and Colberg (1962), however, indicated that modern organisation theory emphasises that satisfactory rather than optimum solutions are a common goal of businesses and that this stems from the consideration of non-pecuniary factors as well as the results of a search for an optimum cost-revenue location. Further limitations on the utility of the profit maximisation criterion for evaluating locational decisions are indicated by Needleman (1964) who suggested that in general British firms "do not seem to be looking for the best site but for a site that is satisfactory". Furthermore, he asserted that locational decisions "seem rarely to be based on detailed calculations of the costs of operating; in fact these decisions appear often unsystematic, if not casual ••• 11 • Mueller and Morgan (1962) in their study _of the location decision of manufacturers in Michigan emphasised the more traditional factors of market, transportation and labour. Nevertheless, they argued that as costs and market adv~ntages change over time, the firms may prefer stability of location than maximisation of profits. Many empirical studies of industry location have discovered that non-economic factors played an important role. In a study of location decisions by 100 manufacturing firms in New England, Ellis (1949) showed the importance of personal factors in location. He claimed that an important variable was the background of the entrepreneurs and that most firms did not even consider location at sites other than the ones 1 7 chosen. The empirical work of Griffin (1956) in New York has pointed out factors such as the desire for power, prestige, independence, and social approval as well as the profit motive. In a study of plant locations in Michigan, Kotona and Morgan (1952) discovered that personal reasons were the most important factors underlying locational decisions. Katona (1951) has emphasized the significance of personal attitudes toward areas and institutions, as distinct from purely economic motives in affecting entrepreneurial decision making.
A recent study in England by Britton (1967) examined the location, structure and growth of manufacturing in the Bristol Region. One of the most pertinent contributions of this study was the use of multiple regression analysis in the derivation of interaction models in the examination of Bristol's marketing relations.
The approach followed in this study is mostly in line with many previous attempts in the field of industrial location analysis. In particular with that of Greenhut and Colberg in Florida (1962), Hunker and Wright in Ohio (1963), and most recently Britton in Bristol (1967).
MANUFACTURING GEOGRAPHY IN AUSTRALIA
Many researchers have attempted to contribute to the field of Manufacturing Geography in Australia. Working in Sydney, Logan (1963) presented a valuable theoretical and 1~ empirical discussion of the behaviour of manufacturing firms in large urban areas. The data used by logan in this study positively suggested that the behaviour of firms is related strongly to transfer costs. In Sydney this has produced a spatial pattern of manufacturing firms closely oriented to the central area and conforming generally to the pattern of industrial land values. Logan (1964) also attempted to isolate the independent variables which would allow the prediction of the growth or decline of employrrent within the L.G.A. 1s of Sydney. Moreover, Logan (1964) analysed the location factors affecting a group of firms in the Bankstown Area (12 miles from the city core), many of which had relocated from the central area of the city. He suggested that the intra urban location of manufacturing can be understood in terms of a combined Weberian-Von Thunen model. Because accessability is important and space is so limited, some firms are forced to locate away from the best site. In addition Logan (1966) interpreted the pattern of concentration within Australian capital cities as having much relevance to a simple Weberian model. A firm looking for a least cost position and wanting to exploit the largest market could not overlook a city location unless it was tied to some physical resource. The most recent work in Sydney is a study conducted by the N.S.W. Division of the Institute of Urban Studies (1970). The survey carried out for this study revealed that the_ locational 1 9 determinants operating in the Sydney Region were, in order of priority: availability of land, proximity to labour, land prices and nearness to markets.
The costs and problems of transporting raw materials and finished products is the key which explained much about the location of manufacturing in Australia. Wilkes (1956) gave an insight into some of the main difficulties faced by various forms of transport in Australia. Among other papers on this subject are the studies of Hirst (1956) on interstate road transport, Hytten (1947) on the problems of Australian transport development and Haddon (1947) on transport costs and decentalisation. A short note by Reeves (1951) analysed transport costs and the location of manufacturing in Victoria and illustrated by taking the case of bed-sheet manufacture the marketing advantages~to be gained by a capital city location. Reeves has shown that under certain conditions, even if a manufacturer does not sell any products in the capital city, it.is still the point at which transport costs will be minimised.
Linge (1962) analysed the spatial arrangement of manufacturing in Australia. He defined the institutional factors of location in Australia as population distribution, variations between transport arrangements and state legislation. He examined the influence of market and material factors and how they have affected the location of particular industries in Australia. Then he analysed the effect of otber location factors LU such as labour, climate, historical considerations and site influences. His main concern was the location decisions relating to the choice of general regions. He cited some examples where site factors affect the interregional location of a firm.
Among the attempts made towards the understanding of the location patterns of manufacturing activities in Australia, Smailes in Adelaide (1967) analysed the intra-metropolitan movement of manufacturing firms. One of his major conclusions is that there is a considerable degree of mobility among Adelaide's manufacturing firms. The dominant movement is overwhelmingly one of diffusion. McKnight (1967) conducted a location survey in Adelaide to investigate the most important reasons for location of manufacturing firms in South Australia. He discovered that in South Australia personal reasons were more significant as an industrial location factor than all other factors combined. Webber (1967) in an interview survey of firms in country towns in N.S.W. found that many firms selected a given location because of purely personal reasons.
Apart from these contributions, the other state capitals and even the second rank industrial concentrations within each state, such as Newcastle and Wollongong have received as yet little attention in the published literature from the viewpoint of industry location analysis. LI
Nearly all the previous examples from the Australian literature on industry location, except for Linge (1962) and McKnight (1967), have concentrated on the intra-metropolitan aspect of the location process. No major attempt was made towards understanding the location process from the regional point of view. In other words the Australian studies were more concerned with the problem of selecting a particular site within a metropolitan area. The question of why firms choose a particular region or city always comes first in the location decision. Logan (1963) has drawn the attention to this situation and indicated that firms are always faced with two sets of location decisions, one involving the merits of the six capital cities and the other based on variables operating inside metropolitan areas. However, he stated that he will concentrate only on explaining the behaviour of firms within the Sydney Metropolitan Area.
This study attempts to cover this inadequacy in the Australian literature on industry location by analysing the influence of regional location factors using the case of the Newcastle Region. CHAPTER THREE INDUSTRIAL STRUCTURE, DISTRIBUTION AND GROWTH
This chapter endeavours to analyse the structure, distribution and growth of manufacturing activities in the Newcastle Region.
STRUCTURE The area upon which this study is based covers the Local • Government Areas of Newcastle, Lake Macquarie, Cessnock, Maitland and Port Stephens. These five L.G.A. 's comprise the Newcastle Statistical District (see Map 1)
In this study the Newcastle Statistical District is considered as an independent areal entity and is called "the Newcastle Region" throughout the text. As indicated by Renwick (1961 ), the Newcastle Region is generally a physically integrated part of the Hunter Valley Region. However, the remaining part of the Hunter Valley Region is excluded mainly because it is of little significance industrially, e.g. the industrial workforce in the remaining part of the Hunter Region constitutes 1,202 workers or about 2.6 per cent of total industrial workforce in the region as at 30th June, 1966. 23
PORT STEPHENS
MAl:rLAND
CESSNOCK
LAKE MACQUARIE
THE NE WC AST LE REG I ON
FIGURE MAP 1
The R~~ion'B Boundary Urban Newcastle "':::: ft+ Z4
A further evidence of the adequacy of this regional delimitation is demonstrated by Saunders (1968) who defined the Newcastle Region as an appropriate working framework for analytical and descriptive economic and social geographical studies. The Newcastle Region also canprised the field of operation of the former planning authority, the Northumberland County Counci 1.
In dealing with the industrial structure of the region, the following aspects are analysed: the nature of the regional industrial employment pattern as compared with the state and the nation, the importance of industry as compared with other regional economic sectors, and size categories of industrial firms.
(a) Regional Industry as Compared with N.S.W. and Australia The role the regional industry plays in the state and national economies is examined by analysing firstly the importance of secondary industry in the region relative to N.S.W. and Australia. Secondly, an examination is made of the relative importance of various industry groups in the region compared with the same for N.S.W., Australia and other major industrial concentrations in the state.
In 1967/68 secondary industry in the Newcastle Region employed 45,924 persons and produced an output worth 613 million dollars. The importance of secondary industry in the region can be -0ppreciated when it is considered that about 10 per cent of TABLE 1 INDUSTRY IN NEWCASTLE, 1967/68
Average No. % of Value of output % of of persons N.S.W. $'000 N.S.W.
Sydney Statistical District 401,604 75.2 4,999,820 70.4 Newcastle Statistical District 45,924 8.6 672,993 9.5 Rest of N.S.W. 86,208 1 6. 2 1 , 42 3, 704 20. 1
533,736 1 00. 0 7,096,517 1 00. 0
Source: Commonwealth Bureau of Census and Statistics
V"' TABLE 2 INDUSTRIAL EMPLOYMENT IN THE NEWCASTLE REGION COMPARED WITH N.S.W. AND AUSTRALIA 1967/68
Newcastle N.S.W. % of N'Cle Australia % of N 'Cle Industry Class Region to N.S.W. to Australia
Treatment of Non-Metalliferous Products 1 , 205 1 o,41 7 11 • 6 26,685 4.5 I I Bricks, Pottery & Glass 1 , 308 13,213 9.9 27,171 4.8 I I I Chemicals, Etc. 1 , 904 27,349 7.0 55,053 3.5 IV Industrial Metals, Ect. 31 , 8 58 268,787 11 . 9 626,280 5 .-1 V Precious;,Metals & Jewellery 46 2,382 1 • 9 6, 01 8 0.8 VI 1exti les and Textile Goods 2,188 21 , 07 3 1 0.4 73,804 3.0 V 11 Skins & Leather 1 6 5,038 0.3 11 , 458 0. 1 V111 Clothing 1 , 977 44,944 4.4 111 , 040 1 • 8 IX Food, Drink & Tobacco 1 , 879 44,846 4.2 144,441 1 • 3 X Woodworking & Basketware 1 , 268 1 9,923 6.4 60,274 2 • 1 XI Furniture & Bedding 297 9,861 3.0 25,055 1 • 2 X 11 Paper & Printing 812 36,260 2.2 90,563 0.9 XI 11 Rubber 107 8,205 1 • 3 21,111 0. 5 XIV Musical Instruments 5 540 0.9 831 o.6 xv Miscellaneous Products 223 1 5, 741 1 • 4 35,469 0.6 XVI Heat, Light & Power 811 5, 11 2 1 5. 9 15,804 5. 1 Total 45,924 533,736 8.6 1,331,147 3.5
Source: Commonwealth Bureau of Census and Statistics
1' 0 27 the industrial output in N.S.W. is produced in this region, and nearly 9 per cent of the i·ndustrial workers in N.S.W. are employed in the region's factories (Table 1 ).
Manufacturing activity in Australia is classified by the Commonwealth Bureau of Census and Statistics into 16 general industry classes. Table 2 shows the relative importance of all of these classes in terms of average number of persons employed during periods of operation in 1967/68.
Table 2 indicates that the following industry groups are the most important relative to N.S.W.: heat, light and power with 15.9 per cent; industrial metals with 11 .9 per cent; treatment of non-metalliferous products with 11 .6 per cent; textiles with 10.4 per cent; bricks, etc. with 9.9 per cent and chemicals with 7.0 per cent.
In examining the importance of regional industries in relation to Australia, the following industry groups emerged: industrial metals with 5.1 per cent; heat, light and power with 5.1 per cent; bricks, etc. with 4.8 per cent; treatment of non metalliferous products with 4.5 per cent; chemicals with 3.5 per cent and textiles with 3.0 per cent.
Table 3 indicates the structure of industrial employment in the Newcastle Region compared with other major industrial concentrations in N.S.W. Examination of this table reveals that industrial metals, machines and conveyances group is the largest absorber of industrial jobs in the Newcastle Region with about· TABLE 3 INDUSTRIAL EMPLOYMENT IN THE NEWCASTLE REGION COMPARED WITH OTHER INDUSTRIAL AREAS IN N.S.W. 1967/68
Industry Class Newcastle Region N.S.W. % to Australia% Sydney% Wollongong % to total total to total to total % to total
I 2.6 2.0 2.0 1.3 4.7 I I 2.8 2.5 2.0 2.6 1.7 I I I 4. 1 5. 1 4. 1 6. 1 1 . 5 iV 69.4 so. 1 47. 1 47.8 78.0 V 0. 1 o.s o.s 0.6 0. 1 VI 4.7 4.0 s.s 4.2 1.5 VI I - 1 • 0 0.9 1.3 V11 I 4.4 8.4 8.3 9.4 6.2 IX 4 .1 8.4 10.8 7.8 ·1. 8 X 2.8 3.7 4.5 2.4 0.8 XI 0.7 1 • 9 1 . 9 2.3 0.2 X11 1 • 8 6.8 6.8 8.0 0.7 X11 I 0.2 1 • 5 1. 6 1.8 0.8 XIV - 0. 1 0. 1 0. 1 xv o.s 3.0 2.7 3.8 0. 1 XVI 1 • 8 1.0 1 • 2 o.s 1 • 9 Total 1 00. 0 1 00.0 1 00. 0 1 00. 0 1 00. 0
Source: Commonwealth Bureau of Census and Statistics
N 0) TABLE 4 THE COMPOSITION OF WORKFORCE IN THE NEWCASTLE REGION, N.S.W. AND AUSTRALIA
Newcastle Region N.S.W.
1 961 1966 1 961 1 966
Employ. % Employ. % Employ. % Employ. %
Tertiary 63, 1 82 55.2 73,121 58.0 974,693 60.8 1 , 1 33, 71 3 62.5 Secondary 41 , 586 36.3 44,358 35.2 462,624 28.9 520,324 28.7 Primary 9,708 8.5 8,595 6.8 1 66, 1 99 1 o. 3 1 60, 11 5 8.8
TOTAL 114,476 1 00. 0 126,074 1 00. 0 1 , 602 , 61 6 100.0 1 , 81 4, 1 52 100.0
Source: Commonwealth Bureau of Census and Statistics
N I.O CONT. TABLE 4
(" Australia
1961 1 966
Employ. % Employ. %
Tertiary 2,571,475 60 • 8 3 , O31 , 3 3 6 6 2 • 4 Secondary 1 , 140,335 27.0 1,312,125 27.0 Primary 513,286 12.2 512,994 10.6
TOTAL 4,225,096 100.0 4,856,455 1 oo.o
w 0 TABLE 5 THE COMPOSITION OF WORKFORCE IN THE NEWCASTLE REGION (ACTUAL NUMBER OF EMPLOYEES)
Primary Secondary
1 961 1966 1 961 1966
Employ. % Employ. % Employ. % Employ. %
Newcastle 966 1 • 7 875 1 • 5 23,252 40.5 22,704 38.4 Lake Macquarie 3,420 1 1 • 1 3,262 8.5 10,501 34.0 12,532 32. 7 Port Stephens 732 1 6. 6 81 6 14. 2 1 ,299 29.4 1 , 364 23.7 Maitland 951 9.5 870 8. 1 3,625 36.3 3,988 37.0 Cessnock 3,639 30.8 2,772 22.9 2,909 24.6 3,770 31 • 1
TOTAL 9,708 8,595 41 , 586 44,358
Source: Commonwealth Bureau of Census and Statistics
I..,.;..... CONT. TABLE 5
Tertiary TOTAL
1961 1966 1961 1966 Employ. % Employ. %
Newcastle ~3.,195 57.8 35,521 60.1 57,413 59,100 Lake Macquarie 16,940 54.9 22,508 58.8 30,861 38,302
Port Stephens 2,380 54.0 3,574 62.1 4,411 5,754 Maitland 5,409 54.2 5,933 54.9 9,985 10,791
Cessnock 5,258 44.6 5,585 46.0 11,806 12,127 ..,
TOTAL 63,182 73,121 114,476 126,074
v,. 1-...: 33
69 per cent of total industrial employment. However, this fact shows nothing unusual about manufacturing in the Newcastle Region, for this group also occupies the highest proportion of industrial employment in N.S.W., Australia, Sydney and Wollongong with 5O.l, 47. l, 47.8 and 78 per cent respectively.
For the Newcastle Region, textiles and clothing groups rank second and third respectively in terms of employment. Each accounting for 4.7 per cent and 4.4 per cent of total employment in the manufacturing sector respectively. Other important industrial groups, in terms of employment, are chemicals with 4.1 per cent; food processinr 4.1 per cent; bricks, pottery, glass etc. with 2.8 per cent and sawmills, joinery etc. with 2 per cent.
Other locally important groups are the treatment of non metalliferous mine and quarry products; paper, printing etc. and furniture. Occur1ng in very small quantities is the manufacture of rubber; precious metals; skins and leather and musical instruments.
(b) Manufacturing as Compared with Other Economic Sectors The structure of employment in the Newcastle Region varies slightly from that of N.S.W. and Australia in relative size of its employment sectors (Table 4).
In 1966 the manufacturing sector in the region had a 35.2 per cent share of total regional employment, while the same sector had only 28.7 and 27.0 per cent in N.S.W. and Australia respectively. Tertiary industry employment in the region in 1966 accounted for 58.0 per cent. This sector occupied 62.5 per cent in N.S.W. and 62.4 per cent in Australia. Only 6.8 per cent of the region's employment in 1966 was found in primary sectors, while the same percentage was 8.8 and 10.6 in N.S.W. and Australia respectively.
In spite of the fact that the relative share of the manufacturing sector had declined between 1961-1966, the actual number employed had increased by 2,772, 57,700 and 171,790 employees in the Region, N.S.W. and Australia respectively. Both absolute and relative increases had occured in the tertiary sector between 1961 and 1966. The tertiary sector is now the largest and fastest growing area of economic activity in the Newcastle Region. Employment in the primary sector had both relatively and absolutely declined in importance between 1961 and 1966 in the Region, N.S.W. and Australia with 1.7, 1.5, 1.6 per cent respectively.
Within the Newcastle Region there are significant variations in employment structure between the five L.G.A. 's of the Newcastle Region. Table 5 reveals that the tertiary sector is definitely the largest source of employment in all parts of the region. However, the relative importance of this sector varies considerably among the five L.G.A. 's, from 62 per cent for Port Stephens to 46 per cent for Cessnock. Generally, the relative importance of this sector in any of the five L.G.A. 's separately is well behind its importance in N.S.W. and Australia. On the contrary the relative importance of the secondary sector in any of the five L.G.A. 's except Maitland is above its importance in N.S.W. and Australia. The primary sector (mining and agriculture) plays an imper tant role in the economies of Cessnock and Port Stephens with 23 and 14 per cent of the workforce,· respectively.
Important changes in the employment structure of these five L.G.A. 's (Map l) had occured between 1961 and 1966. While manufacturing had experienced a relative decline in three of the five L.G.A. 's - Newcastle, Lake Macquarie and Port Stephens, absolute employment figures had increased between 1961 and 1966 in four of the five L.G.A. 's - Lake Macquarie, Port Stephens, Maitland and Cessnock. Tertiary activities provided most of the new employment opportunities between 1961 and 1966. The relative importance of this sector had increased in all the L.G.A. 's during this period. Primary employment is declining both in number and share of employment in all areas of the region.
The importance of primary sector in Cessnock causes both manufacturing and service industries to register proportions less than those for the Newcastle L.G.A., but both these sectors are increasing rapidly in size and at the expense of an absolute loss in agriculture workers. TABLE 6 SIZE OF FIRMS IN THE NEWCASTLE REGION
Industry Groups 1-9 10-24 25-49 50-99 100-199 200-299 300-399 400 & over TOTAL
1 Iron & Steel ------6 6 2 Machinery & Engineering 24 19, 10 14 3 1 2 2 75 3 Non-Ferrous Metals ------1 1 2 4 Other Metal Products 13 10 3 3 2 - 2 1 34 5 Electrical & Electronic Equip. 3 1 3 1 1 1 - - 10 6 Motor Vehicles, Parts & Repairs 1 1 2 - - - - - 4 7 Rubber Products - 2 2 - - - - - 4 8 Cement, Clay & Glass Products 7 10 7 4 3 - - 1 32 9 Wood Products 30 4 6 5 1 - 1 - 47 .0 Chemicals 2 2 - 2 3 1 1 - 11 1 Textiles - 1 - - - - - 3 4 2 Clothing - - 1 5 3 1 2 - 12 3 Furniture 6 1 ------7 4 Food Processing 2 8 7 5 3 - 3 2 30 5 Beverages 1 4 1 2 - - - - 8 6 Paper & Paper Products - - 2 - - - - - 2 7 Printing & Publishing 15 8 3 1 1 - 1 - 29 8 Miscellaneous Products 21 10 9 5 3 1 1 - 50 TOTAL 125 81 56 47 23 5 14 16 367 % of Total 34.0 22.2 15. 3 12.6 6.3 1.4 3.8 4.4 100.0
Source: Directory of Manufacturers, 1968 I.,,.; (J' 37
(c) Size of Firms
Information about size categories of manufacturing firms is not available from official sources for Local Government Areas in N.S.W. Fortunately, it was possible to extract this information from the Nev.Jcastle and Hunter Region Directory of Manufacturers (1968). 367 firms, in the Newcastle Region are listed in this Directory, ranging in size from one-man workshops to the vast complex of the Broken Hill Co. Pty. Ltd. with more than 11,200 workers. The firms listed in this Directory represent about 96 per cent of total industrial workforce in the region. Size of firms is measured here by the number of employees.
Firms in the Directory of Manufacturers are classified into eighteen industry groups based on the Vernon Report (1965) grouping. Table 6 indicates the number of factories in each employment size category classifed according to the eighteen industry groups in the Newcastle Region.
Table 6 reveals that the majority of firms in the region are very small. About 50 per cent of firms employ less than 25 persons, 28 per cent employ between 25 and 100 persons and about 16 per cent have in excess of 100 employees. Most of firms in the small size category are found in the following groups respectively, machinery and engineering (43 firms), wood products (34 firms), miscellaneous products (31 firms), other metal products (23 firms) and printing and publishing 3tj
(23 firms). On the other hand, firms in the medium size category, i.e., from 25 to 99 employees are found mainly in the following groups respectively. Machinery and engineering (24 firms), miscellaneous products (14 firms), food processing (12 firms), cement, etc., (11 firms), and wood products (11 firms). Firms employing more than 300 persons are found mainly in these groups: the iron and steel (6 firms), food processing (5 firms), machinery and engineering (4 firms), textiles (3 firms). It may be noticed however that all six firms in the iron and steel group employ more than 400 persons. This is also a characteristic of the textile group where three out of the four firms in this group employ over 400 persons.
In 1967-68 the average factory in the Newcastle Region employed 32 persons, which is well above the N.S.W. average of
21 and Sydney average of 24 persons per factory. This is due to the unique situation existing in the Newcastle Region where one industry group (iron and steel) with only six firms, employs about 69 per cent of total workforce of the Newcastle Region. In Sydney the same industry group employs about 48 per cent and in N.S.W. as a whole, employs about 50 per cent of total industrial employment.
DISTRIBUTION OF MANUFACTURING
The analysis in the previous part took no account of the geographical features of manufacturing within the Newcastle 39
Region. This part attempts to measure the spatial distribution of manufacturing within the region on one hand and within the Newcastle Urban Canplex on the other.
Measuring the localisation of manufacturing industry within the region is attempted here by using the technique of magnitude and intensity ratings. The index of industrial specialisation and coefficient of localisation have been applied to measure the distribution of industry within the Newcastle Urban Complex. The basic data used for each of these measurements were extracted from the Newcastle and Hunter Region Directory of Manufacturers (1968).
(a) Distributim of Manufacturing within the Region There are many methods available for measur~ng the spatial distribution of manufacturing activities within a particular region. Single criterion methods were used by many scholars, for example: Sten de Geer (1927) drew maps showing the location of manufacturing in North America using number of wage earners and Roterus (1938) preferred value added by manufacturing. Alexandersson (1956) constructed what is probably the most detailed series of maps ever drawn in the United States by using number of employees as a criterion.
A multiple-criteria method was used by Thompson (1955) who employed a combination of measures including employment, wages and value added for mapping the manufacturing activities TABLE 2 DISTRIBUTION OF MANUFACTURING ACTIVITIES WITHIN THE NEWCASTLE REGION, 1967/1968
No. of % of Persons % of Salaries & % of Land, % of Firms Total Employed Total Wages Paid Total Buildings Total $'000 & Mach'ry $'000
Newcastle 874 61.1 35,282 76.8 107,747 80.0 267,980 74.4
Lake Macquarie 248 17.3 4,417 9.6 11,921 8.9 66,280 18.4
Port Stephens 55 3.8 1,714 3.7 5,268 3.9 12,081 3.4
Maitland 137 9.6 2,865 6.2 6,482 4.8 9,767 2.7
Cessnock 117 8.2 1,646 3.7 3,263 2.4 4,227 1.1
TOTAL 1,4~1 100.0 45,924 100.0 134,681 100.0 360,335 100.0
Source: Commonwealth Bureau of Census and Statistics
+'" 0 CONT. TABLE 7
Gross Value % of Net Value of % of of Output Total Production Total $'000 $'000
Newcastle 543,113 80.7 200,016 77.0 Lake Macquarie 76,513 11.4 32,757 12.6 Port Stephens 18,677 2.8 10,176_ 3.9 Maitland 25,643 3.8 11,873 4.6 Cessnock 9,047 1.3 4,843 1.9
TOTAL 672,993 100.0 259,665 100.0
+" 42
TABLE 8 MULTIPLE MAGNITUDE AND INTENSITY RATINGS FOR THE NEWCASTLE REGION
Multiple Magniture Multiple Intensity L. G .A. Rating Rating
Newcastle 75.0 143. 5 Lake Macquarie 1 3. 0 68.2 Port Stephens 3.6 91 • 2 Maitland 5.3 66.8 Cessnock 3. 1 36.4 43
For:r STEPHErJS
MAITLAmo
0 CESSNOCI<
FIGURE MAP 2
THE riJE WC/\ST LE BEG IO rJ Int~nsity Hatin~ up to 50 .ii 50 - 100 100 & over Manufacturing Magnitude And Intensity Ratings 44 in the United States. This method was also used by McCarty (1940) in his study of the geographic basis of American economic life, Zelinsky (1958) in measuring the change of the distribution of manufacturing in the United States and Linge (1960) in his analysis of the concentration and dispersion of manufacturing in New Zealand. More recently, correlation analysis was applied to determine what criterion or criteria could be useful in measuring the spatial variations in manufacturing (for example: Alexander and Linderberg, 1961 and Wong et.al, 1968). However, very often the choice of a criterion depends on how much statistical information is available.
In Australia, published statistics normally embrace a considerable number of items including, for example, the total number of factories, persons employed, value of production, etc.
Linge (1962) emphasized the need to take into account t~ considerable differences in area, population and economic structure of the rather broad regions for which industrial statistics are published. He considered the multiple criterion measure valuable under Australian conditions. The reason is that in some statistical divisions few industries dominate the manufacturing sector, some of them were labour intensive whereas others were capital intensive. Linge (1960) applied the multiple-criteria magnitude and intensity ratings on employment districts for measuring the distribution of manufacturing activities in New Zealand and on Statistical TABLE 9. DISTRIBUTION OF MANUFACTURING WITHIN THE NEWCASTLE REGION,
Industry Newcastle Lake Macquarie Maitland Cessnock Groups No. Employ. % of No. Employ. % of No. Employ. % of No. Employ. % of Emp. Emp. Emp. Emp.
1. 6 19,549 54.8 2. 52 5,134 14.4 14 360 15.6 5 161 5.6 4 85 8.2 3. - - - 1 856 37.1 - - - 1 300 28.9 4. 24 1,537 4.3 8 507 22.0 2 25 0.9 5. 9 556 1.6 1 14 0.6 6. 4 74 0.2 7. 3 67 0.2 - - - - 10 0.3 1 44 4.2 8. 17 1,217 3.4 8 -192 8.3 6 243 8.4 9. 29 608 1.7 9 99 4.2 5 93 3.2 2 32 3.1 10. 8 1,136 3.1 1 9 0.4 1 51 1.8 11. 1 430 1.2 - - - 2 1,422 49.3 12. 3 619 1.7 1 65 2.8 5 463 16.0 3 474 45.6 13. 6 41 0.1 - - - 1 5 0.2 - - .- 14. 19 2,396 6.7 3 165 7.1 6 204 7.1 1 24 2.3 15. 4 170 0.5 - - - 2 25 0.9 2 33 3.2 16. 2 58 0.2 17. 20 697 2.0 4 25 1.1 3 82 2.8 1 16 1.5 18. 43 1,391 3.9 1 15 0.8 3 102 3.5 1 31 3.0 rOTAL 250 35,680 100.0 51 2,307 100.0 41 2,886 100.0 16 1,039 100.0
Source: Directory of Manufacturers, 1968
+"" V, CONT. TABLE 9
Port Stephens Industry TOTAL OF THE NEW.~.ASTLE REGION Groups No. Employ. % of No. Employ. % of Emp. Emp.
1. - - 6 19,549 44.8 2. - - - 75 5,740 13.2 3. - - - 2 1,156 2.6 4. - - - 34 2,069 4.7 5. - - - 10 570 1.3 6. - - - 4 74 0.2 7. - - - 4 121 0.3 8. 1 2 0.1 32 1,654 3.8 9. 2 365 20.9 47 1,196 2.7 10. 1 17 1.0 11 1,213 2.8 11. 1 1,100 62.9 4 2,952 6.8 12. - - - 12 1,621 3.7 13. - - - 7 46 0.1 14. 1 9 0.5 30 2,798 6.4 15. - - - 8 228 0.5 16. - - - 2 58 0.1 17. 1 4 0.2 29 824 1.9 18. 2 252 14.4 50 1,792 4.1 TOTAL 9 1,749 100.0 367 43,661 100.0
o,+ 47
Divisions within each Austral.ian State (196t=).
For the reasons outlined above the technique of magnitude and intensity ratings is applied to each L.G.A. within the Newcastle Region. These measures give an indication of the quantity as well as the importance of manufacturing within each L.G.A. Data used for calculating these indices are shown in Table 7.
To calculate the magnitude rating of a particular L.G.A., its percentage for the whole region is worked out for the following criteria using 1967/68 figures: (a) number of establishments, (b) persons employed in manufacturing, (c) salaries and wages paid, (d) value of land, building, plant and machinery, (e) value of output and (f) value of production. The percentages obtained in this way are summed and then averaged to obtain a multiple magnitude rating.
Similarly, to calculate a L.G.A. 's intensity rating the following ratios for each L.G.A. are divided by the fixed base ratios (the region's ratios) using 1966 census figures: (a) number of employees in manufacturing to total workforce, (b) value of manufacturing production per manufacturing employee and (c) value of manufacturing production per person in the workforce. The intensity rating fixed bases for the whole region are (a) 0.36, (b) $5,654 and (c) $2,059. The resulting quotients are multiplied by 100, sumrred and averaged to obtain a multiple criteria of intensity.
The multiple-criteria,magnitude and intensity ratings, for the five L.G.A. 's of the Newcastle Region are presented in Table 8, and then mapped in Figure 2 where the circles are proportional to magnitude scores and shaded according to intensity ratings.
Examination of data presented in Table 8 and shown in Figure 2 reveals that Newcastle L.G.A. stands as the largest concentration of manufacturing activities in the region. Lake Macquarie, Maitland, Port Stephens and Cessnock L.G.A. 's rank next in importance.
As might be expected from the industrial structure of the Newcastle L.G.A., its intensity rating is far more than any of the other L.G.A. 's. The reason for this can be explained from data presented in Table 9. An analysis of this Table reveals that nearly 55 per cent of total industrial employment in the Newcastle L.G.A. is in the iron and steel group. This group together with the machinery and engineering group account for about 69 per cent. The food processing group ranks third in importance with 6.7 per cent. The structure of industry in other L.G.A. 's· of the region is entirely different. In the Lake Macquarie Shire the major concentration is ih the non ferrous metals group, other metal products and the 1TEchinery and engineering group with 37, 22 and 16 per cent of total 49 industrial employment in the shire respectively. In Maitland the two major industry groups are textiles and clothing with 49 and 16 per cent of total local industrial workforce respectively. The pattern in Cessnock is characterised by the concentration in clothing and non-ferrous metal groups with about 46 and 29 per cent respectively. In Port Stephens the manufacturing industry is highly concentrated with the textile group occupying about 63 per cent of total industrial employment in the Shire.
(b) Distribution of Manufacturing within the Newcastle Urban Complex
In the previous parts of this chapter, the geographical distribution of manufacturing within the Newcastle Region has been examined. The task now is to explain the location of industry within the Newcastle Urban Complex, which is the major concentration of manufacturing activities in the region. The area is subdivided by the Census Collectors Districts into 92 minor suburbs, which are further reduced to 37 major suburbs. These 37 suburbs were used by the Hunter Valley Research Foundation, as a basis for surveying the industrial and tertiary activities in the Newcastle Urban Area. In order to facilitate the process of analysis, comparison and mapping, these 37 suburbs are combined into 19 on the basis of their industrial significance. Description of the classification scheme of the · TABLE 10 DISTRIBUTION OF INDUSTRY IN THE NEWCASTLE URBAN COMPLEX
Industry Groups ·May- Carrin- Newca- Waratah Islin- Bool- Broad- Lambton field gton stle gton roo meadow
1 Iron & Steel 17,773 - - 1,776 2 Machinery & Engineering 9 3,103 34 18 583 105 669 89 3 Non- Ferrous Metals - - - - - 856 4 Other Metals Prod. 788 125 - 8 82 - - 31 5 Electrical & Electronic Equip. - 47 303 - 163 6 Motor Vehicle 28 - 40 7; Rubber - - 22 - 34 8 Cement, Clay & Glass Products. 579 - 144 31 98 25 14 9 Wood Products 78 80 187 39 21 16 55 19 10 Chemicals 222 5 342 - 110 11 _Textiles 12 Clothing - - 619 13 Furniture 5 - 13 - - - 17 14 Food Processing 32 - 430 450 185 - - 330 15 Beverages ------170 16 Paper Products - - - - 30 17 Printing & Publishing 22 - 632 - - 16 22 16 18 ·•Miscell.a.neaus 369 119 57 - 10 - 175 211 Total Employment 19,905 3,479 2,823 2,322 1,314 1,018 952 866 % of Total Employment 52.4 9.4 7.4 6.1 3.4 2.7 2.4 2.3 Number of Firms 29 37 44 9 23 10 13 29 Average Size of Firms 689 94 64 258 57 102 73 30
\J'" Source: Directory of Manufacturers, 1968 C CONT. --TABLE 10
Industry Hamil- Wall- Kotara Koora- Adam- Card- Belm- Swan- Charl- Hex- Rest o:f Groups ton send gang stown iff ont sea estown ham N'cle
1 2 149- 54 60 - 98 130 16 5 95 274 3 3 4 328 17 - - 58 18 29 44 399 117 5 43 - - - - 14 6 6 7 11 8 62 283 - - 77 20 67 - 9 9 54 30 6 - 44 16 - - 58 - 3 10 - - - 457 - 9 11 - - 430 12 13 6 14 108 18 - - 116 150 15 - - 329 400 15 16 - 28 17 5 - - - - - 9 18 52 257 - - 6 15 - - - 136 Total 824 687 496 457 399 372 136 114 561 856 406 % of Total 2.2 1.7 1.3 1.2 1.1 1.0 0.4 0.3 1.5 2.3 1.1 No. of Firms 8 28 21 3 3 10 12 8 4 10 3 Average Size 26 24 23 152 133 37 12 14 140 86 135
V, 52 industrial suburbs is presented in Appendix 1.
Using the data extracted from the Directory of Manufacturers (1968), Table 10 presents employment by industry groups for each of the 19 suburbs within the Newcastle Urban Complex. Figure Map 3 shows employment together with the average size of each factory within each suburb of the Newcastle Urban Complex.
Table 10 shows that the high concentration of manufacturing employment is in the older suburbs of the Newcastle Urban Complex. The areas of concentration are mainly Mayfield, Carrington, Newcastle, Waratah and Islington with 52.4, 9.2, 7.4, 6.1, 3.4 per cent of total industrial employment in the Newcastle Urban Complex respectively. This concentration in the older suburbs can be explained by the early establishment 6f the B.H.P. and its associated industries in the earlier parts of this century mainly around the Port. However, concentration is much less in the newer industrial areas such as Hexham, Wallsend, Charlestown, Kotara, the Kooragang Island, Adamstown, Cardiff, Belmont and Swansea. This lower concentration can be explained by the data presented in Table 11 where firms employing over 300 persons are presented together with their date of establishment. This table reveals that among the 25 firms employing more than 300 persons in the Newcastle Urban Complex, only 6 firms established after 1940, TABLE r.,:, FIRMS EMPLOYING OVER 300 PERSONS IN THE NEWCASTLE URBAN COMPLEX
Employ Date of Location ment Establishment
1. The B.H.P. Pty. Co. Ltd. 11,200 1915 Mayfield 2. Stewarts and Lloyds (Aust) P/L. 2,969 1911 Mayfield 3. State Dockyard 2,036 1942 Carrington 4. Commonwealth Steel Co. Ltd. 1,776 1917 Waratah 5. John Lysaght (Aust) Ltd. 1,700 1921 Mayfield 6. Rylands Brothers (Aust) P/L. 1,455 · · 1919 Mayfield 7. Sulphide Corporation P/L. 856 1897 Boolaroo 8. A. Goninan and Co. Ltd. 650 1899 Broad:neadow 9. Newbold General Refractories Ltd. 565 1918 Mayfield 10. The Titan Manufacturing Co. P/L. 510 1953 Mayfield 11. Newcastle District Abattoir 450 1916 waratah 12. The Australian Wire and Rope Works P/L. 449 1937 Mayfiele 13. Bradmill Industries Ltd. 430 1949 Kotara 14. Steggles Holdings Ltd. 400 1918 Beresfield 15. R. & N. Statham Ltd. 399 1951 Bennetts Green 16. Newcastle Morning Herald 374 1858 Newcastle 17. Rundles Manufacturing 352 1908 Newcastle 18. Newcastle Gas and Co.Ke Co. Ltd. 342 1866 Newcastle 19. Allis Chalmers (Aust) P/L. 335 1957 Carrington 20. Oldham Brothers P/L. 330 1921 Lambton 21. The Hunter Valley Co-op Dairy Co •. Ltd. 329 1903 Hexham 22. Hery Lane P/L. a20 1920 Hamilton 23. Vidur En~ineering Ltd. 318 1950 Islington 24. W.B. Appliance Co. P/L. 300 1938 Mayfield 25. Peters Ice Cream P/L. 300 1928 Newcastle
Source: Directory of Manufacturers, 1968
V, +" 55
and the other 19 firms or nearly 76 per cent were established before 1940. Among these 25 firms the six largest were located in the old industrial suburbs of Mayfield, Carrington and Waratah; while 18 of them or nearly 72 per cent are located in old suburbs of Mayfield, Carrington, Waratah, Newcastle, Islington, Hamilton and Broadmeadow.
Figure Map 3 shows that the average number of employees per factory is higher in the heavy industrial suburbs of Mayfield and Waratah, the average is more than 200 employees per factory. Boolaroo, Hexham, Carrington, the Kooragang Island and Kotara have an average between 100 and 199 employees -per factory. Newcastle and Broadmeadow have an average of between 50 and 99 employees per factory, while Islington, Hamilton, Adamstown, Lambton, Wallsend, Cardiff and Swansea recorded an average of between 1 and 19 persons per factory.
Further examination of Table 10 reveals that manufacturing specialisation is more evident in the older industrial suburbs. For example, Mayfield and Waratah specialise in iron and steel production, Carrington, Broadmeadow and Islington are characterised by major concentration of machinery and engineering firms, while Hamilton specialises in the production of other metal products. Patterns of industrial specialisation are characteristic of some of the newly industrial areas such as, TABLE 1 2 INDEX OF INDUSTRIAL SPECIALISATION FOR THE NEWCASTLE URBAN COMPLEX
Industry Mayf- Carri- Newca- Waratah Islin- Boola- Broad- Lamb- Harhi- Walls- Groups ield ngton stle gton roo Meadow ton 1 tori. end
1 89.3 - - 76.5 2 - 89.2 1.2 0.8 44.4 10.3 70.3 1083 18.1 7.9 3 - - - - - 84.1 4 4.0 3.6 - 0.3 6.2 - - 3.6 39.8 2.5 5 - 1.4 10.7 - 12.4 - - - 5.3 6 0.1 - 1.4 - - - - - 0.7 7 - - 0.8 - 2.6 - - - 1.3 8 2.9 - 5.1 1.3 7.5 2.4 1.5 - 7.5 41.2 9 0.4 2.3 6.6 1.7 1.6 1.6 5.8 2.2 6.6 4.3 10 1.1 0.1 12.1 - 8.4 11 12 - - 21.9 13 - - 0.5 - - - 1.8 - 0.7 14 0.2 - 15.2 19.4 13.9 - - 38.1 13.1 2.6 15 ------19.6 16 - - - - 2.3 - - - - 4.1 17 0.1 - 22.4 - - 1.6 2.3 1.8 0.6 18 1.9 3.4 2.1 - 0.7 - 18.3 24.4 6.3 37.4 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Coefficient of Special- isation. 37.8 75 .1 75.8 6. 2·. 81.8 76.4 71.7 69.8 77.6 85.5
Source: Directory of Manufacturers, 1968.
V" 0 CONT. TABLE-1.,2'.
Industry Kotara Koora- Adams- Car- Belm- Swan- Charl- Hex- Rest of Groups gang town diff ont sea estown ham N'cle Total
1 a ------. 51. 5 2 12.1 - 24.6 34.9 11.8 4.4 16.9 32.0 0.9 14.5 3 ------2.3 4 - - 14.5 4.8 21.3 38.6 71.1 13.7 - 5.4 5 - - - 3.8 - - - - - 1.5 6 ------0.2 7 ------0.2 8 - - 19.3 5.4 ·49_3 - 1.6 - - 3.7 9 1.2 - 11.0 4.4 - - 10.4 - 0.9 1.9 10 - 100.0 - 2.4 - - - - - 3.0 11 86.7 ------1.2 12 - - - - - 57.0 - - - 1.8 13 ------~ - 0.1 14 - - 29.1 40.3 11.0 - - 38.4 98.2 6.6 15 - - - - . - - - - - 0.4 16 ------0.1 17 - - - - 6.6 - - - - 1.9 18 - - 1.5 4.0 - - - 15.9 - 3.7 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Coefficient of Special- isation. 100.0 66.4 60.9 70.6 88.4 76.6 91.4 61.6
V, -.....J Kotara in textiles and the Kooragang Island in chemical manufact~ring.
On the other han~ industrial diversification is a dominant characteristic of the inner suburbs of Newcastle. The diversification range of the inner suburbs includes the following industries: printing and publishing, clothing,'food processing, chemicals, electrical and electronic equipment, wood products, cement and clay manufacturing. Industrial diversification also typifies the industrial structure of many new industrial areas such as Wallsend, Adamstown, Cardiff, Belmont, Swansea, Charlestown and Hexham.
A statistical evidence for these patterns of industrial specialisation will be examined below
(1) Index of Industrial Specialisation
The index of industrial specialisation measures the extent to which the distribution of employment by industry groups in a given suburb deviates from such distribution for the whole of Newcastle Urban Complex. Rodgers (1957) applied such index to a large number of metropolitan industrial areas in the United States, in order to measure the degree of deviation of these areas from the diversification pattern of the country as a whole. This index could also be called the index of diversification. This measure has been applied by Linge (1961) to manufacturing employment .districts in New Zealand. For each district the possible range of the index was dependent on the number of industries actually present.
It is noticed that the index of industrial specialisation or diversification was applied to considerably larger areas than the Newcastle Region. Nevertheless, this measure could also be applied to smal 1 areal entities as long as the statistical groupings of industries are homogeneous. Linge (1961) bel,ieves that this measure can be readily applied to areas ranging in size from functional districts wi·thin urban areas to larger divisions of a nation as a whole.
Employment figures for the eighteen industry groups classified in the Directory of manufacturers (1968) are used in computing the 1ndex of Industrial Specialisation for the Newcastle Urban Complex (Table 12). This index is based on a comparison of the percentage of industrial employment in each industry group for the Newcastle Urban Complex with the corresponding percentage for each suburb. Figure Map 4 shows this index for the Newcastle Urban Complex by suburbs.
Either the positive or negative differences are added and the limits to the coefficient are O and 100. If the suburb has a proportional mix of industry identical with the Newcastle Urban Complex the coefficient will be 0~ On the other· hand, if all employment in a suburb is in a single industry the coefficient will approach 100. INDEX OF INDUSTRIAL SPECIALISATION 60 Coefficient from 1 to 39 40 to 69 70 to 79 80 & over
\. \ :,r"--"~ ..,,.-,/ I • ./ I ~ J 19 "# ../ I 61
An examination of Table 12 and Map 4 reveals that the structure of industry within the various suburbs of the Newcastle Urban Complex is characterised by a high degree of specialisation· since 11 out of 19 suburbs recorded a coefficient of specialisation above 70. The highest coefficients obtained are 100, 85.5 and 81 .8 for the Kooragang Island, Kotara and Boolaroo respectively. These areas specialise rTEinly in the production of chemicals, textiles and non-ferrous metals. Most of the new industrial suburbs are characterised by a moderately specialised industrial structure. For example Cardiff has a coefficient of 60.9, Adamstown 66.4, Belmont 70.6, Charlestown 76.8 and Wallsend 77.6. In most of the older industrial suburbs which have a substantial pre-war growth the values of the specialisation coefficient is considerably lower. For instance, Mayfield has a coefficient of 37.8, Hamilton 61 .6 and Islington 62.7.
(2) Coefficient of Localisation
The coefficient of localisation is a method that measures the degree by which a given industry tends to be dispersed or localised. This method is introduced originally by Florence (1948). It is basically a comparison of the percentage distribution of employment in a given industry by suburbs and the percentage distribution of all industries within these suburbs. 62
The coefficient of loca)isation has been previously applied to measure the degree of concentration among industrial regions. However, it_is applied here to measure the relative . . suburban concentration of a given industry within each suburb of the Newcastle Urban Complex, compared to the same situation for the whole of the Urban Complex. This method assumes a standard position, i.e. the case in the Newcastle Urban Complex, and then measures the divergence from this position, the case of each suburb of the Urban Complex.
The computation of coefficient consi~ts of substracting for each suburb its percentage share of total employment in a given industry from its percentage share of total manufacturing employment in these suburbs, then adding all the positive and negative differences and dividing it by 100. The limits to the value of the coefficient are 0 and 1. If the given industry is distributed exactly the same as in the basic magnitude, the value will be 0. If the entire industry is concentrated in one suburb, the value will approach unity. The higher the value of the coefficient, the greater is the concentration of the given industry relative to the basic magnitude. Table 13 shows the coefficient of localisation for the various industry groups in the Newcastle Urban Complex together with data used for the computation of the coefficient.
Table 13 reveals that the non-ferrous metals, textiles TABLE- 13 COEFFICIENT OF LOCALISATION FOR THE NEWCASTLE URBAN COMPLEX
Industry Coefficient Ma f- Carri- Newc- War- Isli- Bool- Broad- Lam- Ham- Wall- Kot- Groups of Localis- . rd ngton stle atah ngton aroo meadow bton ilton send a t·ion ie_ ara
1 • 915 90.9 - - 9.1 2 .697 0.2 56.5 0.6 0.3 10.6 1.9 12.2 1.6 2.6 1.0 1.1 3 1.000 - - - - - 100.0 4 .406 38.6 6.1 - 0.4 4.0 - - 1.5 16.1 O.@ 5 .778 - 8.2 53.2 - 28.6 - - - 7.5 6 .626 37.8 - 54.1 - - - - - 8.1 7 .870 - - 32.8 - 50.8 - - - 16.4 8 .361 41.1 - 10.2 2.2 7.0 1.8 1.0 - 4.4 20.1 9 .480 11.0 11.3 26.5 5.5 3.0 2.3 7.8 2.7 7.6 4.2 0.9 10 .674 19.4 0.4 29.9 - 9.6 11 1.000 ------100.0 12 .923 - - 90.5 13 .757 12.2 - 31.7 - - - 41.5 - 14.6 14 .709 1.2 - 16.8 17.6 7.1 - - 12.9 4.3 0.7 15 1.000 ------100.0 16 .948 - - - - 51.7 - - - - 48.3 17 .816 3.0 - 87.5 - - 2.2 3.0 2.2 0.8 18.2 18 .480 26.2 8.4 4.0 - 0.7 - 12.4 15.0 3.7 Total 52.4 9.1 7.4 6.1 3.4 2.7 2.5 2.3 2.2 1.8 1.3
Source: Directory of Manufacturers, 1968
,....,Ci' CONT. TABLE 1-3- -
[ndustry Koora- Adams- Card- Bel- Swan- Charle- Hexh- Rest of Total :;roup s gang town iff mont sea stown am N'cle
1 ------100.0 2 - 1.8 2.4 0.3 0.1 1.7 5.0 0.1 100.0 3 ------100.0 !l - 2.8 0.9 1.4 2.2 19.5 5.7 - 100.0 5 - - 2.5 - - - - - 100.• 0 6 ------100.0 7 ------100.0 8 - 5.5 1.4 4.7 - 0.6 - - 100.0 9 - 6.3 2.3 - - 8.2 - 0.4 100.0 10 39.9 - 0.8 - - - - - 100.0 11 - - - - 9.5 - - - 100.0 12 ------100.0 13 ------100.0 14 - 4.5 5.9 0.6 - - 12.8 15.6 100.0 15 ------100.0 16 ------100.0 17 - - - 1.3 - - - - 100.0 18 - 0.4 1.1 - - - 9.7 - 100.0 Total 1.2 1.1 1.0 0.3 0.3 1.5 2.3 1.1 100.0
0-, +" 65 and beverage groups have a coefficient of unity. These industries are entirely concentrated in the suburbs of Boolaroo, Kotara and Lambton respectively. Other industries with high coefficients include paper and paper products, iron and steel, clothing, printing and publishing and rubber products. These industries are mainly localised in one or few suburbs, for example about 91 and 68 per cent of employment in the clothing and printing and publishing groups are found in the suburb_of Newcastle. Low coefficients are found mainly in the following industry groups: cement, clay and glass products; other metal products and wood products. This is an indication that employment in these industries are distributed in a relatively more even pattern among the various suburbs of Newcastle
Although the classification of industries by their coefficient of localisation is very useful, this measurement is of little help in identifying cause and effect relationships. It is only a descriptive tool for measuring the localisation pattern.
MANUFACTURING CHANGE
There has been considerable interest in studying the growth of Australian manufacturing industries in recent years. Examples are the studies of Kar~el and Brunt (1962) and Linge (1962). However, little attention has been given to the growth of industry at the regional or urban levels, except for few bb
TABLE 14 NUMBER AND COST OF FACTORIES BUILT IN NEWCASTLE AND SUBURBS, 1954/1968
Suburb No. Cost$
Newcastle (inner) 15 40,640,000 Wickham 9 384,000 Hamilton 5 206,000 Carrington 25 652,000 Islington 9 188,000 Broadmeadow 4 244,000 Tighes Hill 2 34,000 Merewether 2 17,000 Adamstown 6 74,000 New Lambton 3 62,000 Lambton 21 200,000 Mayfield 9 3,160,000 Waratah 3 106,000 Kotara 3 120,000 Cardiff 3 140,000 Wallsend 1 130,000 Jesmond 2 12,000 Windale 3 80,000 Hexham 1 830,000 Swansea 1 60,000 Boolaroo 1 20,000 Warners Bay 1 15,000 Teralba 15,000
Source: Newcastle City Council and Lake Macquarie County Council Records. 0/ attempts 'mainly by Logan (1962) and Hutton (1966).
The purpose here is to analyse major changes in the structure of manufacturing industries in the Newcastle Region, in order to determine what types of industries have played an important role in the changing structure of manufacturing. This is accompanied throughout by comparing the regional pattern with that of N.S.W.
Maiy new industries were attracted to the regim in the post-war period. Most of them were located at or near the port of Newcastle, and therefore, helped to promote the physical growth of the city. However, few industries were located inland and helped in stabilising the urban life of these areas. Thus, two large textile mills at Rutherford, on the outskirts of Maitland, provided employment opportunities for a force of female labour in that centre and in the surrounding areas of Maitland and Cessnock. Several miscellaneous industries in Cessnock helped in a small way to offset the town's absolute dependence on coal mining activities. In the case of Raymond Terrace, new industries, in the form of a large rayon plant and a pulpboard factory, have infused new life in the centre which for long had been relatively depressed because of the loss of its important port function during the last century.
During the past decade the congestion of the inner areas of the Newcastle Urban Complex brought about some suburbanisation. 00
In particular, new residential settlements occured in the West, South and Southwest of the city. This trend was particularly noticeable in suburbs like Adamstown, Lambton, Shortland, Cardiff, Wallsend, Belmond, Swansea and Warners Bay. All of which have become highly urbanised during recent years.
Looking at the pattern of .industrial growth in the Newcastle Urban Complex during 1954/68, Table 14 presents number and cost of factories built in Newcastle during this period. It is noticed that new developments since 1954 did not alter the long term pattern. Almost $47.5 million was spent on building new factories in the inner suburbs of Newcastle between 1954/68, as well as $15 million on additions and extensions. Growth has been dominated by the $35 million Eastern Nitrogen plant, the $5 million Greenleaf Fertilizers factory and the $3 million Kopper's tar plant. Apart from these new plants only $2.5 million was invested in 72 small new factories.
An outstanding example of the suburban development of industry was the suburb of Lambton. About 21 new factories and warehouses were built there between 1954/68. Initially small engineering firms accounted for most of the growth (eight were established in 1954/55 in Lambton at a cost of $28,000), but more recently food and drink companies, such as Streets Ice Cream, Y.Y. Aerated Waters, Smiths Potato Crisps and Cadbury 's have added diversity to the steady development of small engineering firms. TABLE 15 MANUFACTURING EMpLOYMENT, VALUE OF PRODUCTION AND SALARIES PAID, 1954/1968
Employment Value of production Salaries & Wages Paid $'000 $ 1 000 Year N'cle N.. s.w. N'cle N'cle N.S.W. N'cle N'cle N.S.VJ. N/cle Region as % of Region as % of Region as·% of N.s.w. N.s.w. N.s.w;
54/55 37,106 423,126 8.8 82,982 1,166,255 7.1 63,564 653,730 9.~ 55/56 37,972 437,136 8.8 92,390 1,288,172 7.2 69,002 718,047 9. E 56/57 39,061 440,321 8.9 108,790 1,413,598 7.7 75,090 756,663 9.S 57/58 40,055 449,209 8.9 115,004 1,515,724 7.6 78,058 793,3~3 9.E 58/59 40,974 453,486 9.0 116,266 1,610,630 7.2 82,458 826,029 10.c 59/60 41,390 470,784 8.8 130,044 1,832,893 7.1 87,710 922,2ts9 9.5 60/61 42,167 476,314 8.9 137,4-84 1,932,758 7.1 94,916 980,032 9.7 61/62 42,399 464,916 9.1 138,440 1,931,612 7.2 95,224 976,139 9.8 62/63 42,384 478,405 8.9 134,'982 2,074,886 6.5 97,046 1,027,216 9.4 63/64 43,951 490,890 9.0 150,026 2,267,917 6.6 105,140 1,101,021 ,9. 5 64/65 45,363 513,321 8.8 224,791 2,521,476 8.9 115,865 1,229,957 9.4 65/66 45,649 522,382 8.7 231,512 2,664,771 8.7 118,667 1,303,680 9.'1 66/67 45,687 527,166 8.7 250,874 2,928,227 8.6 125,483 1,399,746 9.C 67/68 45,924 533,736 8.6 259,666 3,130,982 8.3 134,681 1,498,067 9.C
Source: Commonwealth Bureau of Census and Statistics o-, ',O TABLE 16 INDUSTRIAL OUTPUT IN NEWCASTLE AND N.s.w., 1964/68, $'000
Newcastle Region N.s.w. Industry Class 64/65 67/68 Growth 64/65 67/68 Growth 64/68 64/68
I 38,260 42,547 11.2 186,512 226,700 21.6 II 9,760 11,616 19.0 107,153 130,585 21.9 III 31,838 36,916 16.0 637,676 812,247 27.4 IV 439, 6-58 478,584 8.9 2,796,639 3,297,441 17.9 V 1t>3 214 31.3 14,895 16,948 13.8 VI 20,760 21,828 5.2 196,012 223,550 14.1 VII - - - 50,170 52,394 4.4 VIII 4,137 6,392 54.5 258,308 293,983 13.8 IX 23,187 27,580 19.0 726,674 864,475 19.0 X 12,975 13,724 5.8 187,776 214,317 14.1 XI 2,304 2,512 9.0 80,853 93,467 15.6 XII 4,822 6,284 30.3 355,978 440,823 23.8 XIII 1,489 1,673 12.4 84,825 89,951 6.0 XIV - - - 7,585 9,927 30.9 xv 671 1,622 141 .. 7 109,868 149,658 36.2 XVI 24,147 21,501 -11.0 150,780 180,050 19.4 Total 614,171 672,993 9.6 5,951,702 7,096,517 19.2
Source: Commonwealth Bureau of Census and Statistics
...... C 71
Generally, the industrial grOvJth in the outer city areas has never been. a strong feature of Newcastle's growth, since it is dominated by light industrial activities compared with the inner suburbs. Between 1954/68 only 15 new factories were established in the Lake Macquarie Shire. None of these factories were large and they were mostly engaged in either steel fabrication or concrete manufacturing.
Table 15 presents data on employment, value of production and salaries and wages paid in the Newcastle Region compared with New South Wales during the period fran 1954/55 ti 11 1967/68. Examination of this table reveals that manufacturing employment tended to rise considerably since 1954/55, and by 1967/68 the increase was nearly 22 per cent above 1954/55 level. Val~e of production also increased, but in a higher rate than employment and by 1967/68 the rise was about 74 per cent above 1954/55 level. The same is also noted for wages and salaries paid where the increase was less significant than in value of production.
lnspite of these absolute increases in employment, value of production and salaries paid in the Newcastle Region, the relative importance of the regional industries compared with N.S.W. remained nearly at the same level during the period of comparison. What is of significance, however, is that the IL
·importance of the regional industry in relation to N.S.W. has always recorded a lower percentage when rreasured by value of production. This implies a considerable difference between the Newcastle Region and N.S.W. in the processes and products of each industry group.
In order to compare the growth of industrial activities in the Newcastle Regim with N.S.W., Table 16 presents value of industrial output for the Newcastle Region and N.S.W. during the period from 1964/65 to 1967/68.
Analysis of Table i6 reveals some very important facts about the growth of manufacturing in the region. The rate of growth of manufacturing output in the region was 9.6 per cent during the period from 1964 to 1968. This was far behind the same rate for N.S.W. during the same period (19.2 per cent). By examining individual industry classes, it is foU1d that precious metals, clothing, paper, rubber and miscellaneous industries in the region all recorded rates of growth well above N.S.W. Nevertheless, these industries combined contributed a very insignificant share of the total industrial output of the Newcastle Region (less than 3 per cent). Basically, industries having a greater share of the industrial output of the region are characterised by a relatively lower rates of growth when compared with the same for N.S.W. as a whole. For instance, the industrial metals, non-metalliferous products 73 and chemicals classes have all grown in the Newcastle Region at a much lower rates of growth than N.S.W. It must be emphasised that the food processing and brick industries have recorded similar rates of growth both in the region and in N.S.W.
In terms of absolute increase the industrial metals class could be considered as the fastest growing industry in the region. The increase in output from 1964 to 1968 for this group amounted to about $39 million, or about 70 per cent of total absolute increase in the regional industrial output. However, the relative rate of increase in industrial output of the metal industry accounted for only 8.9 per cent during the same period. Among other industry classes which contributed to this absolute increase in the regional industrial output during 1964/68 were the chemical industry with an absolute increase of $5.1 million, food industry with $4~4 million and treatment of non-metalliferous products with $4.1 million. These industries comoined with the industrial metals class accounted for more than 93 per cent of total increase in the regional manufacturing output during this period.
Industry classes which experienced a relative growth rate in industrial output above the regional average of (9.6 per cent) during 1964/68 included, miscellaneous products, clothing, precious metals, paper and printing, bricks and pottery, food, chemicals and rubber products. TABLE 1 7 INDUSTRIAL OUTPUT IN THE LOCAL GOVERNMENT AREAS OF THE NEWCASTLE REGION
Industry Newcastle and Lak~ Macquarie Maitland Class Growth Growth 1964/65 1967/68 1964/68 1964/65 1967/68 1964/68
I 38,336 41,396 8.0 194 229 18.0 II 7,908 9,530 20.5 1,170 1,283 9.7 III(a) 15, 120· 19,180 21.1 IV 433,953 470,425 8.4 V 144 192 33.3 VI(b) VII VIII. 7,507 8,318 10.8 16,117 17,891 11.0 IX 20,331 24,480 20.4 1,276 1,198 -6.1 X 8,029 6,763 -15.8 885 _977 10.4 XI 1,854 2,642 42.5 379 135 -64.4 XII 4,327 5,753 32.9 408 442 8.3 XIII 1,180 1,313 11.3 XIV xv 22,523 23,813 6.4 3,243 3,487 7.5 XVI 4,728 4,930 4.3
TOTAL 565,940 619,626 9.5 23,672 25,643 8.3
(a) estimated figures, (b) included in Class VIII,Clothing. ·source: Commonwealth Bureau of Census and Statistics.
..._ + CONT. TABLE 1 7
Industry Cessnock Port Stphens Class 1964/65 1967/68 Growth 1964/65 1967/68 Growth 1964/68 1964/68
I 391 1,014 159.3 - 711 100.0 II III IV 2,748 3·, 905 42.1 V VI VII VIII 1,001 1,521 52.0 IX 1,359 1,580 16.3 222 322 45.1 X 116 57 -50.9 3,946 4,767 20.9 XI XII XIII XIV xv 266 370 39.1 13,875 12,875 -7.2 XVI 636 599 -5.8
TOTAL 6,516 9,047 38.8 18,043 18,677 3.5
-...J V, 76
After comparing the industrial growth pattern of the region with N.S.W., it is interesting now to compare the grcwth pattern of manufacturing industry among the various L.G.A. 's of the Newcastle Region. Fortunately it was possible to breakdown the industrial output data by the five L.G.A. 's of the Newcastle Region. It was decided to combine the L.G.tL 's of Newcastle and Lake Macquarie together, since they constitute together the major concentration of manufacturing activities in the study area (more than 80 per cent of the regional industrial output). Table 17 explains the growth of industrial output among the L.G.A. 's of the region during 1964/68.
Relatively, Cessnock was the area with the highest rate of growth during 1 964/68 (about 29 per cent). However, in absolute terms Cessnock contributed an increase of about $2.5 million to its industrial output in the same period (about 5 per cent of total increase in the industrial output of the Newcastle Region). The highest growth rate among the industrial classes of Cessnock was recorded for the treatment of non metalliferous products (159 per cent). This substantial increase was basically due to the establishment of the Alcan 's Aluminium smelter in the area. The high rate of growth in the output of the clothing industry, 52 per cent during 1964/68, is explained by the favourable location of this industry near cheap supply of female labour i,n the Cessnock area. 77
The growth rate in ind~strial output recorded for the Newcastle Urban Complex was only about 9.5 per cent during 1964/68. This was similar to the average growth rate recorded for the whole of the region. However, in absolute terms the Newcastle Urban Complex industrial output increased by about $54 million during this period, .this accounted for about 90 per cent of total absolute increase in the regional industrial output. The only industry experiencing a relative decline in output in the Newcastle Urban Complex is the saw milling industry. High growth rates were predominant in the following industry classes in the Newcastle Urban Complex: furniture (42.5 per cent), precious metals (33.3 per cent), bricks (20.5 per cent) and food (20.4 per cent). In absolute terms however, the industrial metals class accounted for most of the increase in the value of output during 1964/68 (about $46 million) or nearly 85 per cent of total increase in the industrial output of the Newcastle Urban Complex.
The rate of industrial growth in the Maitland area accounted to 83 per cent during 1964/68. The industrial structure of Maitland is dominated by the textiles and clothing, bricks and pottery, and food processing industries, which recorded growth rates of 11 • 0, 9. 7 and 6. 1 per cent respectively.
Port Stephens is the area with the lowest of industrial growth (3.5 per cent) relative to other L.G.A. 's within the /0
Newcastle Region during 1964/68. The industrial structure of this area consists mainly of textiles and woodworking manufacturing. The textile industry for Port Stephens is included under_ the miscellaneous products class in Table 17, This industry is basically responsible for the relatively low rate of growth recorded for Port Stephens. The woodworking class, however, recorded a strong positive growth rate of about 21 per cent during the same period.
Generally, the growth of the regional industry was dominated by industries like industrial metals, chemicals, non-metalliferous products, bricks and pottery, clothing, textiles and food processing. CHAPTER FOUR SURVEY OF LOCATION FACTORS
The previous chapter dealt with aspects of the manufacturing sector of the Newcastle Region relating to the importance of secondary industry in the region, the kinds of industry established, and their locatim and growth patterns. This chapter seeks to investigate why this particular pattern has emerged and what are the main forces contributing to it. In order to obtain the necessary information for analysing these aspects, it was essential to conduct a survey covering a sample of industrial firms in the Newcastle Region.
In this chapter the examination of industrial location in the Newcastle Region is not restricted to the analysis of new firms. The locational advantages of the regim which have been indicated by both old and new industrial firms are under examination.
DESCRIPTION OF THE SAMPLE One of the most common ways of studying the industrial location pattern of a particular region is by conducting a survey covering a representative sample of industrial firms in that region. Nevertheless, this method encountered many difficulties, particularly in choosing representative sample of firms belonging to different industry groups and of different sizes ~o and locations, in knowing whom to contact, and in the way of quantifying all relevant information.
The method used in this investigation is based on the analysis of data obtained from a sample survey of industrial firms in the Newcastle Region. The survey was conducted wholly by personal interviews during 1969 with managerrent personnel of the sampled firms.
In 1966 the Hunter Valley Research Foundation c01ducted an industrial survey in order to publish a directory of manufacturers in the Newcastle and Hunter Region. This directory was then updated in 1968 to include 367 firms in the Newcastle Region. The response was very high regarding the basic information concerning name, address, date of establishment, employment and products.
In determining firms to be contacted in the locational survey for this study, firms employing less than 10 persons were excluded on the grounds of difficulty in communicating with them. Due to the limited time and resources available, it was impossible to account for all the industry groups of the region. Out of eighteen industry groups used in the Directory of Manufacturers published by the Hunter Valley Research Foundation in 1968, only eight groups were included in the locational survey. These groups are: iron and steel; machinery and engineering; non-ferrous metals; cement, clay UI and glass products; chemicals; textiles; clothing and food processing. According to the Directory of Manufacturers (1968), these eight industry groups combined account for nearly 90 per cent of total manufacturing workforce in the Newcastle Region. These eight groups are also the major contributors to the growth of the manufacturing sector in the region. During the period 1964-68, these groups contributed more than 95 per cent of the total increase in the regional industrial output. The exclusion of other industry groups was based mainly upon three reasons: a) some groups are not important in the structure of the regional industry in terms of number of employees such as the furniture industry (employing 46 persons), paper products (58 persons), motor vehicle parts (74 persons) and rubber products (121 persons); b) the miscellaneous group was excluded on the ground of the difficulty in distinguishing between the types of industries included within i4and c) the printing and publishing group was omitted because it is greatly overlapping with the tertiary sector, since only a very smal 1 proportion of persons employed in.this industry are actually involved in the printing and publishing manufacturing process.
After selecting these eight industry groups and excluding firms employing less than 10 persons, 134 out of 367 firms listed in the Directory of Manufacturers, remained for examination. About 75 of them were visited personally, al 1 of which have responded to all questions. This is a degree of response of about 56 per cen Table 18 explains the sample of firms interviewed presented by both TABLE 18 EMPLOYMENT SIZE CATEGORIES AND DATES OF ESTABLISHMENT FOR THE 75 FIRMS RESPONDED TO THE LOCATION SURVEY
INDUSTRY 10- 25- 50- 1-00- 200- 300- 400.& Responded Responded GROUP 24 49 99 199 299 399 over Firms Est. Firms Est. Before 1945 After 1945
1 Iron & Steel ------6 6 2 Machinery & Eng. 6 5 8 4 1 2 1 7 20 3 Non-Ferrous Metals ------1 1 4 Cement, Clay & Glass 2 4 1 - 1 - 1 4 5 5 Chemicals 3 - 1 3 1 - - 2 6 6 Textiles 1 - - - - - 3 - 4 7 Clothing - - 1 4 - 2 - 3 4 8 Food Processing 2 4 3 - - 2 2 10 3 TOTAL 14 13 14 11 3 6 14 33 42
Source: Location Survey, 1969
a: N CONT. TABLE 1 8
Industry Total Firms Total Firms % of Firms Groups Responded Responded to Total Firms
1 Iron & Steel 6 6 100.0 2 Machinery & Eng. 27 50 54.0 3 Non-Ferrous Metals 1 1 100.0 4 Cement, Clay & Glass 9 26 34.6 5 Chemicals 8 9 88.9 6 Textiles 4 4 100.0 7 Clothing 7 12 58.3- 8 Food Processing 13 26 50.0 TOTAL 75 134 56.0
CXl w 84 heir employment size category and whether they established before r after 1945.
Examination of Table 18 reveals that nearly all firms within he iron and steel, non-ferrous metals, chemicals and textiles roups were interviewed. Fortunately, most of them responded ositively. Firms within these four groups are mostly large scale oncerns. These groups combined employ about 60 per cent of the eg i ona 1 ind us tr i a 1 workforce.
Table 18 also shows that in terms of date of establishment, he iron and steel, non-ferrous metals and food processing groups re dominated mostly by industrial firms established before 1945. owever, in groups like textiles, chemicals, machinery and ngineering, the common age of industrial firms is relatively more ecen t.
Although only 56 per cent of the total number of firms esponded positively to the location survey, they employ about 1,358 employees or m9re than 80 per cent of total number of nployees in these groups (table 19).
UESTIONNAIRE METHOD AND RELIABILITY OF RESPONSES The question arises as to whether it is possible to obtain eliable response by asking decision rrekers to rank the factors that re most important to their location decision.
Most of existing studies can fall into two categories: firstlyJ;I hose using mailed questionnaire to selected firms and sec01dly hose using interview case studies, where questionnaires ould still be used but the interviewer discusses the questions TABLE 19 EMPLOYMENT IN THE 75 FIRMS RESPONDED TO THE LOCATION SURVEY
Industry Total Employment of % of Employment of Groups Employment Responded Firms Respond_ed Firms to .. Total Employment
1 Iron & Steel 19,549 19,549 100.0 2 Machinery & Eng. 5,907 2,888 48.9 3 Non-Ferrous Metals 856 856 100.0 4 Cement, Clay & Glass 1,670 1,073 64 .. 3 5 Chemicals 971 '.760 78.3 6 Textiles 2,952 2,952 100.0 7 Clothing 1,708 1,283 75.1 8 Food Processing 3,568 1,997 56.0
TOTAL 37,181 31,358 84.3
0: v- vv
with the decision maker and clarifies any vague items. In this study the latter approach is used. This helped in establishing a higher degree of validity to the answers of the decision maker. Therefore, if the respondent is not aware of the importance of a certain factor, the case study method can assist him in making up his mind. McMillan (1965) indicated that much of the data obtained from mail questionnaires may not explain the real factors on which a firm's location decision is based. The scope of personal interviews is also much more extensive than that of mail questionnaires.
As the first step in the initial attempt to communicate with the 134 firms remained for examination, it was decided to mail an introductory letter to these firms a few weeks before conducting the personal interviews. This letter was signed by the Director of Research of the Hunter Valley Research Foundation (Appendix 2). A follow-up was then made to arrange for an interview. It was possible to arrange personal interviews with the management of 75 firms, all of which have provided positive answers to the questionnaire during the interview.
Each respondent was asked the exact sequence of questions, allowing him to answer each question at length in his own words, fully expressing his situation and attitudes (questions~ contained in the questionnaire are presented in Appendix 3). 0/
In assessing the location pattern, respondents were first asked to rank the three main factors considered when decided to locate within the Newcastle Region. These are "regional 1ocat ion factors", a 1 i st of which is presented in Appendix 3.
It was then suggested to the respondents that factors should be indicated on the basis of their affecting costs at different locations and of their favouring the Newcastle Region. This helped in evaluating the locational advantages of the region in terms of the decision to locate.
The respondents were then required to rank the three most important factors considered in their decision to choose a particular site within the region or within the Newcastle Urban Complex. These are cal led "site location factors", a list of which is indicated in Appendix 3. In general, replies in both cases appeared useable.
Although the questionnaire tended to cater for recent locations all firms were requested to answer the ' location questions. Firms established before 1945 were asked to complete the questionnaire in terms of a contemporary evaluation of their decision to locate; in other words in the case of factories established before 1945, only regional location factors that are sti 11 relevant were indicated.
As indicated previously the regional location factors are the main concern of this investigation. However, locational data relating to site and relocation factors were also collected during the locational survey conducted during 1969. Site and relocation data are presented without analysis in Appendices 4 and 5 for the information of interested scholars.
PROCESSING OF LOCATION DATA
Locational data obtained from the questionnaire are divided into two groups according to the date of establishment of firms concerned, i.e. before or after 1945. A further breakdown of location factors by industry groups is then introduced.
A weighted average technique is used to rank the relative importance of location factors. In this way, theoretical values are ascribed to location factors chosen by the respondents, i.e. giving three points to the most important factor, two points to the second factor in importance and one point to the next in importance. The method of weighted averages or scores has been used by many writers to evaluate the response to questionnaire surveys. For example Greenhut and Colberg (1962) in their survey of factors of industry location in Florida and Vandermark (1970) in his study of business activities in four suburban areas of Sydney used the method of weighted averages. These theoretical measures do not express exact quantitative values, they only represent the relative importance of various 89
location factors in a more precise manner.
GENERAL ANALYSIS .OF REGIONAL FACTORS
Tables 20 and 21 indicate the regional location factors considered by firms responded to the location survey conducted in the Newcastle Region during 1969. Table 20 presents these factors for 42 firms established in the region after 1945. Table 21 presents the same factors for the remaining 33 firms established before 1945.
Table 20 reveals that closeness to market is the main factor indicated by firms established in the region after 1945. The importance, too of proximity to materials provides a definite explanation for the reason why some industrialists favoured the Newcastle Region as a suitable location. Closeness to labour supply is also a significant factor; but only comes third after material and market factors. Other factors of importance are personal reasons; transportation facilities and rates, anticipation of grovJth of markets, nearness to a parent company, inducements by the Government, and proximity to the ~ort. On the other hand Table 21 shows that 'personal reasons' is the most significant regional factor for firms established in the region before 1945. This conclusion appears to be rather misleading, since nearly all firms indicating personal reasons as a prime location factor are local concerns owned by local 90
TABLE 20 REGIONAL LOCATION FACTORS, WEIGHTED AVERAGES FOR 42 FIRMS ESTABLISHED AFTER 1945
Ranked Regional Factors Weighted Average of Importance Total Points % Weight
1 Closeness to markets 48 1 9. 1 2 Proximity to materials 46 1 8. 3 3 Closeness to labour supply 36 14. 3 4 Persona 1 reasons 34 1 3. 3 5 Transportation facilities or rates 19 7.5 6 Anticipation of growth of markets 19 7.5 7 Nearness to parent company 1 2 4.8 8 Inducements or encouragement by the government 1 0 4.0 9 Proximity to the port 9 3.6 1 0 Takeover or merger 9 3.6 1 1 Local sources of financing 5 2.0 1 2 Adequate supply of water required 3 1 • 2 1 3 Disposal of waste 2 o.8 14 Adequate supply of electric power
TOTAL PO I NTS 252 1 00. 0
Source: Location Survey, 1969 ~I
TABLE 21 REGIONAL LOCATION FACTORS, WEIGHTED AVERAGES FOR 33 FIRMS ESTABLISHED BEFORE 1945
Ranked Regional Factors Weighted Average of Importance
Total Points % Weight
1 Personal reasons 45 22.7 2 Closeness to markets 42 21 • 2 3 Proximity to marterials 41 20.7 4 Anticipation of growth of markets 27 1 3. 6 5 Proximity to the port 1 5 7.7 6 Closeness to labour supply 1 3 6.6 7 Transportation facilities or rates 8 4.0 8 Adequate supply of electric power 3 1 • 5 9 Adequate supply of water required 2 1 • 0 1 0 Inducements or encouragement by the government 1 0.5 11 Local sources of financing 1 0.5 1 2 Disposal of waste 1 3 Takeover or merger 14 Nearness to a parent company
TOTAL POINTS 198 1 00. 0
Source: Location Survey, 1969 people, rather than concerns that moved from outside the region. Also, if location factors are weighted in terms of size of firms, personal reasons as a location factor wi 11 definitely lose its significance. However, it seems that the main reason for the importance of this factor is that local smal 1 scale industrialists are not interested in establishing a business anywhere outside the region and never considered such a move. Thus, in these cases there is no real decision to locate in the Newcastle Region and the decision is to choose a site rather than a 1ocati on.
Closeness to markets as a location factor for firms established before 1945, comes second in importance, and is described as the dominant factor in 21 per cent of the cases. Closeness to markets and materials are almost of equal significance as location factors. Other factors of significance include anticipation of growth of markets, proximity to the port, closeness to labour supply and transportation.
Generally, the rank of location factors for firms established before 1945 differs from those established after 1945. However, with firms established during both periods, the four most significant factors are nearly the same with a slight difference in ranking. So it is likely that these firms are influenced by the same regional location factors. It is also noticed that for firms established before 1945 a small number of location factors account for a high proportion of total weighted points, since the first three factors account for nearly 65 per cent of total points for firms established before 1945, while the same three factors account for only 52 per cent of total weighted points for firms established after 1 945.
REGIONAL FACTORS BY INDUSTRY GROUPS
Table 22 presents regional location factors by industry groups for the 75 firms responded to the location survey during 1969~ The steel industry is often found to be located in close proximity to the main raw material. This is basically because the raw materials used in this industry lose greatly in weight and bulk during manufacturing. For the iron and steel group in the Newcastle Region, proximity to raw materials is a prime locational consideration, since coal deposits of relatively high grades are available locally from coal fields within twenty mile distance from the B.H.P. steel plant. Proximity to the port is also a significant location factor for the iron and steel group, since all iron ore required for this industry comes by ship from Whyalla in South Australia. Other industries producing steel in the region are mostly using by-products of the B.H.P. as the main source of raw materials, i.e. steel coil and rod, Y. bars, wire feed, carbon steel, billets and semi finished steel. Another explanation for the significance of TABLE 22 REGIONAL LOCATION FACTORS, WEIGHTED AVERAGES BY INDUSTRY GROUPS
Iron Machinery Non-Ferrous Cement, Chemicals & 8- Metals Clay & Steel Eng. Glass Products
1 Closeness to markets 1 41 - 1 3 1 1 2 Proximity to materials 1 6 32 3 1 0 10 3 Personal reasons - 37 - 1 2 4 Anticipation of growth of markets - 21 - 1 0 5 5 Closeness to labour supply 3 1 1 - 3 4 6 Transportation facilities or rates 1 5 1 4 4 7 Proximity to the port 1 2 2 - - 5 8 Nearness to a parent company - 9 - - 3 91 Inducements or encouragement by the government - - - - 1 1 0 Takeover or merger - 3 - - 3 1 1 Local sources of financing - 1 - 2 2 1 2 Adequate supply of water required - - 2 1 3 Adequate supply of electric power 3 14 Disposal of wast TOTAL WEIGHTED POINTS 36 1 62 6 54 48
Source: Location Survey, 1969
\..0 +"" CONT. TABLE 22
Textiles Clothing Food Weighted Average Processing of Impor tan ce
Total % Points Weight
1 - 3 21 90 20.·o 2 1 2 33 87 1 9. 3 3 - 9 21 79 1 7. 6 4 - - 1 2 48 1 0. 8 5 9 1 7 - 47 1 0 .4 6 4 6 2 27 6.0 7 - - 5 24 5.3 8 - - - 1 2 2.7 9 5 4 1 1 1 2.4 1 0 - - 3 9 2. o· 1 1 - 1 - 6 1 • 3 1 2 3 - - 5 1 • 1 1 3 - - - 3 0.7 14 2 - - 2 0.4 TOTAL WEIGHTED POINTS 24 42 78 450 1 00. 0
\.0 \.,"1 this factor is that a considerable proportion of the final products (40 per cent) of this group is transported by ship to various overseas and national markets. The factors, closeness to labour supply and adequate supply of electric power are of equal importance for this group.
Generally, the machinery and engineering industry tends to be market oriented, for there is very little loss in weight and a very considerable gain in bulk during the production process, which would make the finished product more costly to transport than materials. For the machinery and engineering industry in the Newcastle Region, closeness to market is the most important locational consideration. This is quite logical when we know that more than 52 per cent of the production of this group is marketed regionally. The personal factor ranks second in importance for this group. Nearly all firms indicating personal reasons as the most important location factor for this group are founded by people who lived in the region when they first decided to start a business. Nearly all of them are very small concerns who have been in the region for long time. Proximity to materials particularly by-products available from nearby companies ranks third in importance. Of equal importance are closeness to labour supply and nearness to a parent company.
There is only one firm operating in the non-ferrous metals group. The main locational considerations for this firm are proximity to materials followed by adequate supply of water required for the production of sulphuric acid, zinc and lead. This firm is the first large industrial company established in the region.
The manufacture of bricks, concrete and cement is widely dispersed mainly because transport costs relative to the value of the materials or products are high. Significant savings are possible with location near the market. In the Newcastle Region all raw materials needed for these industries - clay, shell grit and coal- are available locally. Cement works consume large quantities of water and electricity which would present no problem in the region. Nearness to the market is found to be the most important location factor for the region's cement and clay factories. Both existing and anticipated market factors account for nearly 45 per cent of total weighted points in this group. Personal reasons and proximity to materials appear in the second.rank of importance.
Dtermining the locational attractions of the chemical industry is very complicated since they vary considerably according to the particular case involved. It could be generalised, however, that market, material and transport forces would be the main location factors for this industry. Plants in the chemical group in the Newcastle Region indicated the importance of markets, materials and proximity to the port as the most important location factors influencing their location pattern. Nevertheless, closeness to labour supply and transportation facilities emerge also as important source of attraction to industries within this group. The carbonisation of coal at high temperature into coke in the B.H.P. plant produces a number of by-products such as ammonium sulphate and naphthalene, both of which are used by at least two chemical firm! in the region to produce ammonium chloride, sodium sulphate and fertilizers. Crude tar, a by-product of the B.H.P. steel plant, is piped into a chemical company nearby to be used for the manufacture of road tars. Carbide from the B.H.P. steel plant is also used by at least two chemical companies in Newcastle to produce a variety of industrial and medical gases.
Due to the labour intensive character of the textile and clothing industries, their location pattern is generally oriented to areas having an ample supply of suitable labour at a relatively cheap cost. Industrialists in the textile and clothing groups appear to be strongly influenced by labour factors in their decision to locate in the region. Suitable young cheap female labour is available in some parts of the region, particularly in the rural areas. Inducement and encouragement by the Government, mainly in terms of transport subsidies and provision of suitable land, is also a significant attraction to factories in this group. The food processing industry in the Newcastle Region includes a variety of activities such as bakeries, dairy products, meat packaging and manufacture of smal 1 goods. The bakery industry is generally a market oriented activity. The orientation towards the market for this industry is not only a reflection of the increase in volume and weight of the product but also its perishability. Dairy factories tend to be near milk supplies because of the perishability of this material and the considerable loss in weight (one-tenth in the case of cheese and one-sixth in the case of butter) which takes place during manufacture. The meat packaging industry is governed by the need to be near the source of rrnterials and the desire to have a reasonable access to rrnrkets. In the Newcastle Region the food processing industry is found to be influenced by three main locational factors: nearness to markets, proximity to materials and personal reasons. The bakery industry is tied strongly to the regional market. The dairy industry is located in the region to be near the milk supplies of the Hunter Valley Region. The meat packaging industry is in an advantageous position in Newcastle since it is located within a reasonable access to meat supplies from the Newcastle Abattoir. The nearness to the port of Newcastle is also an important factor for this industry since a considerable proportion of its output is exported to overseas markets. Nearly all firms indicating personal reasons as the I UU
most important location factor within the food processing industry a re 1oca 1 concerns who have been in the region for a
1ong time.
MARKET FACTOR
Among the studies which emphasised the importance of market as a regional location factor are the Mueller and Morgan's study of the location decisions of manufacturers in Michigan (1962), Hunker and Wright's survey of factors of industrial location in Ohio (1963) and more recently Britton 's study of the Bristol Region (1967). In the Newcastle Region, proximity to market as an industry location factor tends to fol law one of several more or less distinct patterns:
a) Some plants produce items for a predominantly local area market depending mostly on quick sale and convenience. The bakery industry of the region is a good example in this respect since processing brings increases in weight, bulk and perishibility.
b) A smaller number of industrialists have actually established branch plants in the region because one of their major customers (normally a much larger firm) is in the region. In many cases one result is that these firms find additional customers in the region and are able to expand their production. The case of sane firms in the machinery and engineering group provides an illustrative example in this respect. TABLE 23 THE IMPORTANCE OF MARKET FACTORS BY INDUSTRY GROUPS
Industry Groups Weighted Points Weighted Points % of Market for Market for all Location Factors to Factors (a) Factors All Factors
Iron and steel 1 36 2.8 Machinery and engineering 62 1 62 38.3 Non ferrous metals - 6 Cement, clay and glass products 23 54 42.6 Chemi cal s 1 6 48 33.3 Textiles - 24 Clothing 3 42 7. 1 Food Processing 33 78 42.3
TOTAL 1 38 450 30.8
(a) Market factors include both proximity to markets and anticipation of growth of markets as location factors. Source: Location Survey, 1969
0 I VL
c) A number of firms were established in the region to satisfy unfilled demands or service needs. An evident example is specialised machine shops or machinery and engineering products. Nearly all these concerns started small, though some have grown to considerable size in a relatively short period of time. The manufacture of concrete blo~ks or pipes and bricks is another example, since the high distribution cost of a heavy and low value product makes access to the local market an important locational consideration.
d) Few industrial concerns have initiated production in the region mainly because it is a convenient mid-point to the northern markets of New South Wales. Associated with this is the feeling that if they do not locate in the region, one of the i r r i val s is l i ke l y to, and the i r market wi l l sh r i n k proportionally. Examples of this category are found in the case of firms in the food processing and machinery and engineering groups.
In the Newcastle Region, market factors both existing and potential were mentioned in the interview survey more often than any other factor. Table 23 indicates that the two factors combined (proximity to markets and anticipation of growth of local markets) were indicated as the dominant location factor by nearly 31 per cent of the respondents. The importance of these two factors combined is quite evident 1 03 in the case of cement, clay and glass products; food processing and machinery and engineering groups. Anticipation of growth of markets was mentioned as the second most influential location factor in a study of the factors influencing the location of industries in Florida by Greenhut and Colberg (1962).
MATERIAL FACTOR There is a long term tendency for material sources as a locational attraction to decrease in importance as economic development proceeds. This is mainly because recent technological changes that have resulted in a general cheapening of transport costs. Harris (1954) indicated that industries tied to the location of raw materials are declining in relative importance. Moreover, the fact that required materials are now obtainable at different locatims, has lessened considerably the need of factories to locate near a particular source of mater i a 1 •
In the Newcastle Region the pull to materials constitutes the second most important locational considerati01 after market factors. Table 24 shaws the importance of material factors relative to all location factors c011bined by industry groups for the 75 firms responded to the location survey conducted in the Newcastle Regicn during 1969. Material factors were indicated by nearly 21 per cent of the respondents as the most significant location factor. The significance TABLE 24 THE IMPORTANCE OF MATERIAL FACTORS BY INDUSTRY GROUPS
Weighted Points Weighted Points Industry Groups % of Material for Material for All Location Factors to All Factors Ca) Factors Factors
1 Iron and Steel 19 36 52.8 2 Machinery and Engineering 32 162 19.8 3 Non Ferrous Metals 5 6 83.3 4 Cement, Clay and Glass Products 10 54 18.5 5 Chemicals 10 48 20.9 6 Textiles 4 24 16.7 7 Clothing 2 42 4.8 8 Food Processing 13 78 16.7
TOTAL 95 450 21.1
(a) Material factors include both proximity to materials and adequate supply of electricity and water as location factors. Neverthel~ss, adequate supply of electricity and water as location factors account for only 8 weigh2d points or nearly 9 % of total material factors. Source: Location Survey, 1969
0 ~ TABLE 25 THE IMPORTANCE OF MATERIAL FACTORS COMPARED TO OTHER FACTORS BEFORE AND AFTER 1945
Firms Established After Firms Established Before 1 945 1 945
Total Points % Weight Total Points % Weight
Proximity to materials 46 1 8. 3 42 21 • 2 Other location factors 206 81 • 7 156 78.8
TOTAL 252 1 00. 0 1 98 1 00. 0
Source: Location Survey, 1969
0 V, IUO of material factors is quite noticeable particularly in the case of non-ferrous metals, iron and steel and chemicals groups, where nearly 83, 53 and 21 per cent of respondents in these groups respectively indicated material factors as the most significant locational consideration. Other important groups, however, are the machinery and engineering; cement, clay and glass products; and food processing group.
The trend towards the declining importance of the influence of materials pull on the location decision, is quite applicable also to the Newcastle Region. Table 25 presents the importance of material factors for firms established in the region before and after 1945. It is noticed that the proportion of the proximity to materials as a location factor is declined in importance from about 21 per cent for firms established in the region before 1945 to about 18 per cent after 1945. This trend is more evident particularly in the machinery and engineering; and cement, clay and glass groups, where the significance of materials as a location factor is dropped by about 72 per cent and 33 per cent respectively.
Generally, it appears that present-day material orientation in the Newcastle Region occurs in the following cases:
a) where the raw material changes its bulk or character during manufacture and allows the finished product IV/
to be carried cheaper than the material itself. The iron and steel industry and some sections of the food processing industry in the region provide a good example in this regard.
b) The growing dependence of factories in the region on manufactured materials or by products of other related industries would result in promoting the agglomeration of industry and the emergence of some kind of specialised industrial complexes. The region's steel, chemicals and machinery and engineering industries are examples of the strong dependence on manufactured materials.
Basically, this chapter dealt with sample procedures, methods of conducting the field work and analysing the main findings of the location survey. Generally, the main factors influencing the location pattern of manufacturing activities in the Newcastle Region could be outlined as closeness to markets, proximity to materials, nearness to the port and personal considerations. CHAPTER FI VE
INPUT-OUTPUT PATTERNS OF MANUFACTURING
So far this study has concentrated on analysing and evaluating the location pattern of manufacturing in the Newcastle Region. Attention, however, has been drawn to the locational significance of linkages developed among the region's industries on one hand and between the region's industries and industries outside the region on the other. Nevertheless, these linkages have not been specifically explored. With the examination of the bases of the manufacturing connections of the Newcastle Reg1.on with other areas, a departure is made by the study from its concern with locational phenomena. Emphasis in this chapter is based on the interpretation of the movement of material inputs to the region's manufacturers from wit~n and outside the region, and the despatch pattern of production outputs from the region's manufacturers. Evaluation of the locational significance of the industrial linkages of a particular region has been noted in many empirical discussions of industrial location such as the studies of Britton (1967), McCarty (1956), Kenyon (1960) and steed (1970). 109
In order to collect the data required for this kind of analysis, firms interviewed during the location survey (1969) were asked to indicate the market destinations for their products and the sources of their materials as percentages of value of products and materials respectively.
SPATIAL PATTERN OF INPUT
The areal relationships established by the flow of raw and semi-processed materials to the Newcastle Region's industries are under examination in this section. In evaluating the locational significance of linkages related to material inputs, three types of locational orientations are distinguished in the Newcastle Region: port oriented industries, regionally oriented industries, and non-port and non-regional oriented industries. a) Port Oriented Industries (Input Connections)
Questionnaire results indicate considerable variability among industry groups in the proportion of crude materials to total materials used (Table 26). The heavy tonnage of relatively low value crude materials used by the region's industries is quite evident when examining Table 27. The steel and chemical industries in the region receive high proportion of crude materials (low proportion of manufactured materials) relative to their total inputs. These crude materials are made available in the region through the port of Newcastle. I IV
TABLE 26 ESTIMATED PROPORTION OF CRUDE MATERIALS TO ALL MATERIALS USED BY INDUSTRIAL FIRMS, WEIGHTED AVERAGE BY NO. OF EMPLOYEES
Industry Groups % of Crude Materials to All Materials Used (Tonnage Base)
1 Iron and Steel 90.7 2 Machinery and Engineering 0.0 3 Non Ferrous Metals 79.9 4 Cement, Clay and Glass Products 74. 0 5 Chemicals 76.4 6 Textiles o.o 7 Clothing o.o 8 Food Processing 63.2
Source: Location· Survey, 1969 TABLE 27 PORT OF NEWCASTLE: RANKED SELECTED IMPORTS 2 1969/1970 ( 1 000 TONS)
Interstate Overseas Total· % of Commodities Total
Ironstone 3,030 3,030 62.38 Bulk Oil 189 299 488 10.05 Limestone 78 282 360 7.42 Phosphatic Rock 270 270 5.56 Limesand 189 189 3.89 Chemicals 64 121 185 3.81 Dolomite 79 79 1.63 Manufactured Goods 43 14 57 1.17 Sulphur 35 35 .72 Earths, Clay, etc. 25 25 .51 Machinery (including electrical) 20 20 .41 Timber 13 13 .27 Iron ans Steel Products 11 11 • 23 Pig Iron 7 7 .14 Others 22 66 88 1.81 TOTAL INTERSTATE AND OVERSEAS IMPORTS 3,712 1,145 4,857 100.00
Source: Maritime Services Board, Port Statistics 11 2
The dependence of these industries on port facilities is explained by the importance of commodities listed in Table 27, which presents the total import traffic through the port of Newcastle during 1969/70. Total crude materials imported from interstate and overseas origins through the port of Newcastle is estimated at about 4 million tons during 1969/70, or nearly 83 per cent of total interstate and overseas imports. Of these crude materials ironstone, limestone, phosphatic rock and limesand are the major items with nearly 62, 7, 6 and 4 per cent of total interstate and overseas imports respectively.
In terms of tonnage handled, interstate imports are far more significant than overseas imports. Interstate imports account for nearly 76 per cent of total imports through the port of Newcastle. The greater part of interstate imports consists of ironstone (81 .6 per cent) which is imported from South and Western Australia for the use by the B.H.P. steel plant in Newcastle. Limesand (5.1 per cent) is imported wholly from South Australia. Another important interstate import category is limestone (5.1 per cent) which comes also from South Australia to be used mainly by the expanding basic oxygen plant at the B.H.P.
Overseas import of bulk oi 1 (26.1 per cent) is the major overseas import item, which comes mainly from South West Asia. Overseas import of phosphatic rock is also of great significance I I ;)
(23. 6 per cent) and comes main 1y from the Pacific Is 1ands to be treated with sulphuric acid to produce phosphoric acid which is a principal ingredient in the manufacture of double super phosphatic and high analysis N.P.K. fertilizers (manufactured by Greenleaf Fertilizers Limited at the Kooragang Island). Imports of limestone (24.6 per cent) for the use by the steel furnaces of the B.H.P. steel plant and for the manufacture of cement are imported from Canada. Sulphur (3.1 per cent) is imported also from Canada and is being used in the region for the manufacture of industrial chemicals, aluminium sulphate and sulphuric acid (manufactured by the C.S.R. Chemicals Pty. Ltd., Sulphide Corporation Limited, Genkem Pty. Ltd. of Newcastle and Greenleaf Fertilizers Ltd.).
The ties between iron and steel and chemical groups and the port is further demonstrated by the following two facts. Firstly, al 1 firms within the iron and steel group have ready access to port facilities and are located in close proximity to the port. The iron and steel group is the largest employer in the Newcastle Region, with nearly 62 per cent of total industrial workforce in the region. Also 3 out of 9 firms in the chemical group have direct access to deep water port facilities, and another 4 are located in close proximity to the port of Newcastle. Secondly, nearly 60 per cent of the firms interviewed within the steel and chemical groups indicated proximity to the port as a location factor among the first three TABLE 28 ORIGIN OF MATERIAL INPUTS FOR INDUSTRY IN NEWCASTLE
% of Value of Materials (with sources Indicated,) Weighted Average by No. of Employees
Newcastle N.s.w. Australia Overseas Region
1 Iron and Steel 53.8 3.5 28.2 14.5 2 Machinery and Engineering 67.8 29.4 1.1 1.7 3 Non Ferrous Metals - 98.0 - 2.0 4 Cement, Clay and Glass Products 28.0 44.9 17.8 9.3 5 Chemicals 35.5 9.2 5.3 50.0 6 Textiles 10.1 32.2 28.0 29.7 7 Clothing 15.3 32.3 33.0 19.4 8 Food Processing 65.3 30.2 2.5 2.0
TOTAL 46.1 16.4 22.7 14.8
Source: Location Survey, 1969
...... + 115 most important location factors taken into consideration when they first decided to locate in the Newcastle Region. Nevertheless, this factor if weighted by the size of firms instead of number of firms, will undoubtedly be the most important location factor not only for these two groups but also for all industry groups in the region combined.
The movement of material inputs through the port of Newcastle could be explained in more detail by examining Table 28 which shows data related to the origin of material inputs by industry groups for the 75 firms interviewed in the Newcastle Region during 1969. It should be mentioned that data presented in Table 28 are related to the value of material inputs, since information about tonnages of material inputs was so difficult to obtain. Examination of these industrial output relations reveal strong overseas connections in relation to the value of inputs in the chemicals, textiles, clothing and iron and steel groups, with about 50, 30, 19 and 15 per cent of the value of material inputs for these groups respectively are originated from overseas.
The chemical industry relies largely on overseas imports through the port of Newcastle for its material supplies such as phosphatic rock, sulphur amonia, naphtha, carbide and acetylene. For the iron and steel group the main overseas import is limestone. Ironstone which is the major raw material used by 11 6 this industry comes from interstate origins, though it is still impor.ted through the port. Raw materials used by the chemical and iron and steel groups are mostly bulky and heavy in relation to value, so data about value of material inputs do not fully demonstrate the importance of overseas as an origin of material inputs for these groups.
The clothing and textiles groups have strong overseas input relations in terms of value. In contrast most overseas imports for these groups consist of semi-processed materials, that are relatively costly in relation to weight. For the textiles group the main semi-processed materials imported from overseas are synthetics for the rrsnufacture of tapes, ribbons and yarns; dyes and chemicals for dyeing of woven cotton product; and acetate andcaustic soda for the manufacture of acetate and high_density viscose yarns. For the clothing group the major overseas import inputs include wool for the manufacture of men's suits; crystal for the manufacture of shirts, blouses and ladies slacks; and nylon and elastics for the manufacture of women's underwear. b) Regional Linked Industries
An examination of the relationships between manufacturing industries in a particular region is of assistance in understanding its industrial structure and the location pattern of manufacturing industry. Perloff (1960) argues strongly for 11 7 this and maintains that "intra-industry absorption is perhaps the most significant of the input-output relationships for manufacturing". McCarty (1956) indicated that industrial linkages represented by physical flows of goods between industries reveal the existence of production sequences or chains.
The fact that 46 per cent of all materials purchased by the Newcastle Region's industries come from regional sources (Table 28) substantiates the belief that there is a considerable degree of linkage among local industries. The present agglomeration pattern of industrial activities in the region is a direct consequent of these strong linkages among local industries, i.e. if raw material of one factory is the output of another factory, both wi 11 obviously gain through the savings in transport costs by being close together. Generally agglomeration economies in the region tend to coincide with concentration of population and consequently with labour supply and markets. Nearly 79 per cent of the industrial workforce and about 76 per cent of the popul;ati on 'Of the. Newcastle Region are concentrated in the Newcastle Urban Complex.
In certain industries in the region the linkage with other industries is significantly high. This is particularly true in the case of the complex of the machinery and engineering firms in the region, in which nearly 68 per cent of materials originates from regional sources (Table 28). The strong 11 8
dependence of this group a, semi -processed mater i a 1s (Tab 1e 26), explains the existence of a high degree of inter-firm linkages in this group. In addition, the engineering field is one where extensive sub-cootracting is undertaken between large and smal 1 enterprises. Yet, survey respondents have omitted the assessment of such plant-to-plant flows, which frequently occur within the region, perhaps because of inadequate records. The main raw materials used by the engineering group are mild and alloy steel, which are produced by the various iroo and steel producers of the region which are located in most cases in close proximity to the machinery and engineering firms. In this group sane metal fabricated products are proceeded through a chain of small establishments, each member of the chain is drawing economies from the agglomeration of the industry as a whole. In other cases, the individual firm has expanded through incorporating all the functions previously provided by a number· of sma 11 firms. This wou 1d be an instance of a fi rm reaping internal economies of scale rather than external economies of scale, here a manufacturing region would give rise to few large firms rather than numerous smal 1 ones.
The food processing industry is also heavily dependent upon regional supplies of raw materials particularly flour for the manufacture of bread, rolls, and other bakery products; and milk and cream for the manufacture of butter, dried milk 11 9 powder, ice cream and bottled milk. Materials originating from regional sources account for about 65 per cent of total value of materials used by this group (Table 29). Moreover all meat required for the--manufacture of small goods, frozen food, bacon curers and other meat products is obtained from local sources.
Regional flov,Js of raw materials to the iron and steel group consist mainly of bituminous coal (suitable for coc.king) obtained fran the various scattered coal mines of the region. Regional supplies of coal and other raw materials used by this group account for nearly 54 per cent of the value of materials used.
Another example of the strong linkages among industries of the region exist s1 ii n the chemi ca 1 group where part of the amonia production of the Eastern Nitrogen plant at the Kooragang Island is piped into-the neighbouring plant of Greenleaf Fertilizers, to be used in the manufacture of high analysis N.P.K. fertilizers. Other semi-processed materials produced within the region and used by other firms in the region include coal and coal tar for the manufacture of natural gas pipelines (produced by Koppers - P.G.H. Pty. Ltd.), naphthalene and amonia for the manufacture of industrial gases (produced by C.S.R. Chemicals), and sulphuric acid produced by the Sulphide Corporation plant at Cockle Creek for the manufacture of 120 aluminium sulphate and a variety of industrial chemicals. Materials originating from the region amount for nearly 36 per cent of total value of materials used by the chemical group.
For the cement, clay and glass group regional supplies of raw materials account for 28 per cent of total value of materials used. The bulk of these regionally supplied materials include sand, soda ash and costic soda for the manufacture of glass components of the lighting industry in the region. Of importance also is cement for the manufacture of all classes of concrete production such as foundations, floors, concrete pipes and masonary blocks; and clay for the manufacture of all types of building bricks.
The clothing industry is less dependent on regional supplies of materials. Inter-plant movements of materials within the region for this group are primarily concerned with locally made yarn, nylon, elastic and viscose for the use by tailoring establishments producing ladies underwear, men's outwear, shorts, slacks and jeans.
For the textile industry the only inter-plant movement is restricted_ to sulphuric acid, wood and pulp for the manufacture of acetate yarn and high tensity viscose yarns; and cotton yarns for the manufacture of woven cotton products. 1 21 c) Non-Regional and Non-Port Oriented Industries Many industries in the Newcastle Region are dependent upon intra-regional supplies of raw and semi-processed materials. This is what Robinson (1931) identified as "longer production chains" or longer distance contacts.
The firm most heavily dependent on supplies of raw materials originating from outside the region is the Sulphide Corporation Limited at Cockle Creek, Newcastle. This firm obtains nearly all of its needs of basic raw materials; i.e. zinc and lead from Broken Hill, N.S.W. to be used for the manufacture of non-ferrous metals (zinc, lead, bullion and cadmium) and sulphuric acid.
The cement, clay and glass group stands as the group with major part of its raw materials come from N.S.W. Nearly 45 per cent of total value of materials used by this group originates from N.S.W. The principal raw material originating from N.S.W. for "t~--use by this group is magnesite which is transported from Lake Cargellico, Weedalion and Tullamore. Other raw materials include those used in making fibrebricks, high aluminium, silica, basic super refractories and those used as fluxes. Manganese, sillimanite, rhondite, kaolin and chrome are also among the materials used by this industry and their orig ins range· from Nowr a, Cooma, Urana, Bowenfe 1 s, Ma ru l ana and Hornsby in the South; to Merrygoen and Gulgong 122 in Central N.S.W. and Baraba ~nd Wauchope in the North.
For the clothing industry nearly 75 per cent of wool and cotton yarns come from Australian sources particularly from
Queensland for the manufacture of men 1 s suits, underwear, outwear and sleepwear.
In the textile group materials originating from areas outside the region but within Australia occupy about 66 per cent of total value of materials used by this group. These materials include mainly synthetics from Australian origins and acetate and caustic soda from N.S .W.
The food processing industry is also another group that obtains a considerable proportion of its raw materials from areas outside the region but within N.S .W. About 30 per cent of total value of materials used by this group is imported from N.S.W. For instance Newcastle Abattoir depends almost entirely on northern of N.S.W. for animals supplies for slaughter. Livestock appears to be consigned only from centres that have regular sales of animals. Leading despatch centres include Tamworth, Gunnadah, Quidindi and Welcha Road. Moreover, wheat required for the production of flour is imported wholly by rail from north-west of N.S .W. with Baggabri and Lunnadah as the main areas of supply.
For the machinery and engineering group, materials originating from N.S.W. account for only 29 per cent of 123 total value of materials used-by this group, with machinery spare parts and accessories as the main item imported from N.S.W. sources.
The most important single item transported by rail from N.S.W. sources for the iron and steel group is limestone which is railed from Marulan south-west of Sydney to the B.H.P. steel works at Port Waratah, Newcastle.
Generally, materials originating from Australian sources are significant for the machinery and engineering, food processing and chemicals groups.
SPATIAL PATTERN OF OUTPUT
In this section, the areal relationships established by the regional flows of industrial products from the Newcastle Region are under examination. Generally, markets consist of either ultimate consumers or of intermediary organisations that handle the distribution of products to various channels.
In the Newcastle Region manufacturing products are distributed through several primary channels as shown in Table 29. These channels are: wholesale, where products are redistributed mostly to retail establishments or to other producers for further manufacturing processes; retail, where products are to be sold directly to final consumers; and finally, direct to other producers for further processing. TABLE 29 TYPES OF MARKETS FOR INDUSTRY IN NEWCASTLE
% of Value of Products (Weighted Average by No. of Employees) Industry Groups Wholesale Retail Direct to OtllC:r Industries
1 Iron and Steel 46.8 0.9 52.3 2 Machinery and Engineering 18.8 81s2 3 Non Ferrous Metals 5.0 95.0 4 Cement, Clay and Glass Products 18.5 81. 5 5 Chemicals 34.7 65.3 6 Textiles 35.3 64.7 7_- .ClotlJ,ing 32.2 49.8 18.0 8 Food Processing 34.9 40.1 25.0
TOTAL 39.6 5.2 55.2
Source: Location Survey, 1969 TABLE 30 PORT OF NEWCASTLE, RANKED SELECTED EXPORTS 1969/1970 ('000 TONS)
Commodities Interstate Overseas Total % of Total
Coal 606 6,505 7,111 76.00 Iron and Steel 598 222 820 8.76 Products Wheat - 728 728 7.78 MetalliferrouS Ores and Metal Scraps 1 324 325 3.47 Wool - 66 66 .71 Cork 39 22 61 .65 Crude Fertilizers and Crude Minerals 3 36 39 .42 Non Ferrous Metals - 38 38 .41 Zinc - 17 17 .18 Mineral Tar and Crude Chemicals from Coal, Petroleum and Natural Gas 5 5 10 .11 Petroleum Products 9 - 9 .10 Chemical Elements and Components 5 3 8 .09 Fertilizers 7 - 7 .07 Meat and Meat Preparations - 6 6 ... .06 Anhydrous Ammonia 4 - 4 .04 Others 106 2 108 1.15 TOTAL INTERSTATE AND OVERSEAS EXPORTS 1,3-S3 7,974 9,357 100.00 .... l"V Source: Maritime Services Board, Port Statistics \..n 126
Table 29 indicates that ·on the average products sent directly to other users occupy the most important position among the various channels of distribution. This is quite evident in the case of non-ferrous metals; cement, clay and glass products; machinery and engineering; chemicals; textiles; and iron and steel groups. These groups produce mainly semi finished products not for the use by final consumers. Wholesale and retail channels come second and third in importance respectively. These two channels are the most important only in the case of clothing and food processing groups, which produce mainly final products to be used by ultimate consumers.
In evaluating the locational significance of linkages related to the flows of industrial outputs, two types of locational orientations emerged: port oriented industries and consumer and market oriented industries. a) Port Oriented Industries (Output Connections) There are many industries serving a non-local market of interstate or overseas dimensions. These industries are strongly oriented by transportation considerations. Most obvious of these are industry groups whose primary raw material is imported by sea fran distant sources and whose finished product can be moved only by water transport. This part examines port oriented industries due to the strong dependence on port facilities in marketing their output. 127
The non-ferrous me ta 1s, ·iron and stee 1 , food pr oces sing and chemical groups are prominent among industries transporting a significant proportion of their products through the port of Newcastle and thereby have chosen waterfront or near waterfront location in an effort to avoid unnecessary transport costs. The dependence of these industries on the facilities of the port of Newcastle in marketing their products is demonstrated by the importance of the commodities listed in Table 30, which represent the total export traffic through the port of Newcastle during 1969/70.
Total industrial products exported to interstate and overseas destinations through the port of Newcastle during 1969/70 is estimated at nearly 16 per cent of total interstate and overseas exports. Of these iron and steel products metalliferous ores, non-ferrous metals, fertilizers and meat products are the most important items.
In terms of tonnage handled overseas exports are far more important than interstate exports. Exports of steel and allied products which include iron and steel products, corrugated iron sheets, pipes and tubes, wheels and axles, wheelwright materials, wire?wire melting and wire rope are the most important industrial products shipped through the port. Over the past few years, overseas steel exports increased steadily from nearly 28 million tons in 1955/56 to 128
TABLE 31 OVERSEAS EXPORTS OF IRON AND STEEL PRODUCTS THROUGH THE PORT OF NEWCASTLE ('000 TONS)
Year Overseas Exports
1 955/56 28.0 1960/61 1 84. 6 1 964/65 126. 1 1 969/70 221 • 6
Source: Maritime Services Board, Port Statistics 129
nearly 222 million tons in 1969/70 (Table 31).
Overseas exports of iron and steel products are shipped mainly to New Zealand, South East Asia and the United States. The greater part of interstate exports of iron and steel products are shipped to Victoria, South Australia and Western Australia. Fertilizers and chemicals products are also another important export item, which are shipped mostly to South Australia.
The movement of industrial outflows through the port of Newcastle could be further examin:ed by data presented in Table :32, which shows the outflow relations for manufacturing industries in the Newcastle Region. Examination of this table reveals that overseas connections are of particular importance to the non-ferrous metals, iron and steel, food processing and chemicals groups, where nearly 35, 12, 10 and 3 per cent of production in these groups respectively is shipped through the port of Newcastle to overseas destinations.
For the non-ferrous metals group the main products exported to overseas markets are zinc and lead which are mainly shipped to South East Asia, U.S.A. and West Europe.
A considerable proportion of the products of the iron and steel group is shipped through the port of Newcastle. However, the major part of these products is being shipped to interstate· TABLE 32 INDUSTRY OUTFLOW IN NEWCASTLE
% of Value of Products (with Destinations Indicated), Weighted Average by No. of Employees Ihdu s try Groups Newcastle N.s.w. Australia Overseas Region
1 Iron and Steel 23.9 27.1 36.6 12.4 2 Machinery and Engineering - 51.7 28.3 17.3 2.7 3 Non Ferrous Metals 17.0 40.0 8.0 35.0 4 Cement, Clay and Glass Products 45.4 25.0 26.9 2.6 5 Chemicals 20.8 50.6 26.0 2.7 6 Textiles 6.5 46.1 46.4 1.0 7 Clothing 17.6 41.6 39.2 1.6 8 Food Processing 65.3 12.6 12.1 10.0
TOTAL 31.0 33.9 26.6 9.5
Source: Location Survey, 1969
'-"' 0 1 31 destinations (about 73 per cent - see Table 30) with Victoria, South Australia and Western Australia as the main destinations. New Zealand, South East Asia, U.S.A. and Japan are the main overseas countries importing iron and steel products through the port of Newcastle. The main iron and steel products shipped through the port of Newcastle include iron sheets, blooms, billets, bars, slabs, pipes and tubes, wheels and axles, wheelwright materials, wire, wire netting, wire rope, nails and electric control panels.
The food processing group is also exporting a considerable amount of its products through the port of Newcastle, however, all the products are shipped to overseas markets. The food products exported to overseas destinations are ham, bacon, butter, dried milk powder, frozen foods, frozen meat and poultry frozen meat. These products are shipped mainly to South East Asian markets. Products exported through the port of Newcastle occupy only a minor role for the chemical group. However, the main products sh.ipped include fertilizers, phthalic anhydride, anhydrous amonia, sodium sulphate and mineral tar. b) Consumer Market-Oriented Groups This category produces primarily for the regional market. Industry groups under this category include food processing; machinery and engineering; and cement, clay and glass products, 1 32 where the regional market accounts for nearly 65, 52 and 45 per cent of the output of these groups respectively (Table 32). For these groups a central location - the Newcastle Urban Complex - within the Newcastle Region is a potential rrarketing advantage in terms of convenience and for lO\t-./er distribution costs to customers. Nearly all firms within these three industry groups could be classified as "non-basic" industries, that is, their dominant markets are located within· the region. Thus the question of marketing within the urban area is of importance to them and is certainly influencing their location decision.
In the food processing group the rrajor items produced are bakery products where almost 100 per cent of production is distributed for the local consumption; meat products where more than 70 per cent of production is distributed within the region's boundaries;_small goods, stock feed and poultry meat where the region's share accounts for nearly 60 per cent of total production. Only a small proportion of output of the food industries is despatched to other manufacturers in the region. So the inter-industry linkages are not very important to this group. Moreover, the average size of firms in this group is relatively small, so rrany firms may not be competing for the entire regional market but only for one particular geographic division of it. 1 33
In the machinery and engineering group the regional market plays an essential role particularl·y for industries producing mining and drilling equipment, textile equipment and spare. part~ machinery overheads and general engineering. Nevetheless, there is evidence to suggest that in this group a number of firms which may have been es tab 1 i shed to take advantage of the regional market possibilities, have expanded to a size where they are able now to serve markets outside the region.
For the cement, clay and glass group building bricks and concrete pipes are manufactured almost for the local market. Havvever, the market for glass components, light fittings and basic super refractories is widely spread outside the regional boundaries. CHAPTER SIX
ANALYSIS OF INTERELATIONSHIPS AMONG LOCATION VARIABLES
In the previous parts of this study an attempt was made to account for the economic and industrial structure of the Newcastle Region, the spatial distribution of manufacturing industry, manufacturing growth, evaluating the relative importance of regional location factors and analysing the impact of industrial linkages on the locational pattern of manufacturing in the Newcastle Region.
In this part the task is to discover the associations and regularities among the data compiled from the results of the location survey conducted during 1969. Accordingly, a factor analysis proc~dure is used to gain some quantitative insight into the interaction of regional location factors with other variables related to the location of manufacturing firms in the Newcastle Region.
Factor analysis is generally used to resolve a massive amount of quantitative or qualitative observations into distinct patterns of occurrence, so the linkages and inter-relationships among these observations become more understanble. Among the very few writers who attempted to simplify the technique of 1 35
factor analysis and emphasised its suitability in explaining various locational problems are Rummel (1967), Cattell (1952) and Schnore (1961).
Basically the technique of factor analysis is employed in this study to arrange the linear relatimships among the various variables into separate patterns. Each pattern appears as a factor delineating a distinct cluster of interrelated data. In additim, the massive amount of locational data are reduced to an economical descriptim. Practically, data on 29 x 75 = 2175 pieces of information are so difficult to handle. The analysis, description and understanding of such data are facilitated by reducing them to their common factor patterns. These patterns can replace the 29 variables without much loss of information. Furthermore, factor analysis is used to classify firms' profiles into types with similar characteristics or behaviour and to chart major sources of variation among the data.
DATA MATRIX Since factor analysis can use as data input, a relatively large number of intercorrelated variables, a broad selection of indicators, characteristics or variables is included. Using data obtained from the location survey conducted in the Newcastle Region during 1969, a data matrix is formulated. 136
Information included in the da~a matrix are presented in the various tables. and appendices contained in this study. To avoid repetition and due to the length of the data matrix, it was decided not to include it in this study. Normally in factor analysis studies, the data matrix is never presented. The data matrix includes 29 variables for 75 firms (2175 pieces of information). These variables have been combined into six major groups. A description of the classification scheme for each group of variables is as follows:
The first group includes only one variable (VI) which is employment. The size of employment is measured in absolute figures and recorded for each firm.
The second group includes variables related to sources of materials for the region's industries. Four material sources are distinguished, each is recorded under a separate variable, the region (V2), New South Wales (V3), Australia (V4) and overseas sources (VS). Figures recorded. for each variable express the proportion of value of materials from the various sources.
The third group combines variables related to means of transporting materials. Three means of transport are used and each is associated to a separate variable, road transport (V6), rail transport (V7) and ship transport (V8). These variables are expressed by recording percentage of value of materials 137 transported by these means.
The fourth group includes variables related to market destinations for the region's industries. Four market destinations are distinguished, each is recorded under a separate variable, the region (V9), New South Wales (VlO), Australia (Vl l) and overseas destinations (Vl2 ). The proportion of value of products marketed to the various destinations is recorded for each variable.
The fifth group includes variables related to means of transporting final products. Three means of transport are used and each is recorded in a separate variable, road (Vl3), rail (V14) and ship (Vl5). The percentage of value of products transported by each mean is recorded for each variable.
The sixth ~roup includes variables related to the regional locati01 factors recorded by firms in the location survey for Newcastle conducted during 1969. 14 regional location factors are indicated in the location survey, each is recorded as a separate variable-closeness to markets (Vl6), anticipati01 of growth of markets (Vl7), local sources of finance (Vl8), closeness to labour supply (Vl9), proximity to material sources (V20), transportation facilities or rates(V21 ), proximity to the port (V22), disposal of waste (V24), adequate supply of water required (V25), inducements or encouragement by the Government (V26), takeover or merger (V27), personal 1 38
reasons (V28) and nearness to a parent company (V29). A value for each variable is given by weighti~g the significance of the three most important location factors selected by executives of the 75 firms responded to the location survey. Three points are given to the first most important factor, two points to the factor second in importance and one point to the factor third in importance. By this rrethod only three location factors are classified as important for each firm.
The results of factor analysis are presented in four matrices. These incorporated mainly: the correlation matrix, the unrotated factor matrix, the rotated factor matrix and the factor score matrix. The form and characteristics of the indices displaying factor results will be examined below.
CORRELATION MATRIX
Normally in factor analysis studies, the correlation matrix is presented without explanation. However, the correlation matrix in this study has revealed sane interesting features about the locational pattern of the region's industries. Moreover, it is of interest to canpare the results of the correlation matrix with the other factor matrices. The coefficient of correlation expresses the degree of linear relationship between the row and column variables of the matrix. The closer to one the 139 greater the relationship between the variables. A negative sign indicates that the variables are inversely related. To interpret the correlation coefficient, square it and multiply by 100. This will give the per cent variation in common for the data on the two variables.
The correlation coefficients revealed that only few of the relationships appeared to be tenable. Among the 435 correlation coefficients for the 29 variables only 103 are considered to be meaningful. Meaningful correlations are considered as those with coefficient greater than .30.
High positive coefficients are found when examnining the relation between size of employment and ship as a mean for transporting products; the importance of proximity to the port as a location factor and percentage of products transported to overseas destinations. These relationships indicate that the larger the size of the firm the more it could be dependent upon sea transportation for its products. This is quite evident when we find that 6 out of the 10 largest firms in the region have port facilities, while the other 4 are located in close proximity to the port.
V2 is highly correlated with V6 (coefficient of .67). This strong association implies that regionally recruited materials are transported mainly by road transport (49 per cent of variation in V2 and V6 is in common). The high positive 140
coefficient between V2 and V20 explains that firms when indicating proximity to materials(V20) as the most important regional location factor, they rrean the regional sources of materials in most cases. Negative correlation coefficients are recorded between the region as a source of materials and other variables such as: New South Wales, Australia and overseas as sources of material; and rail and ship as means of transporting materials.
A coefficient of .53 between V3 and V13 indicates that materials originating from N.S.W. but outside the region are transported to the region's factories mainly by rail. Actually, the State Department of Railways fixes freight rates that encourage the movement of goods within, rather than between states. Another factor that contributes to the importance of rail transport for materials originating from N.SJW. is the road tax that applies to road carriers when they are operating in competition with the railways in distances over 50 miles.
However, materials transported from Australian sources outside the state of N.S.W. come to the region mainly by ship. This is quite evident from the coefficient of .49 recorded between these two variables. This is particularly applicable to bulk cargoes such as iron ore that comes to the region from South Australia. The second highest coeff1cient in the whole correlation matrix is .84 recorded for the relation between VS and V8. About 70 per cent of the variation among firms in these two variables is in common. This emphasises the fact that all materials originating from overseas come to the regim by ship.
The proportion of the region as a market destination for products has shown considerable association with many variables. A coefficient of .56 is found in correlating this variable with Vl3. This implies that road transportation is used extensively by firms indicating the region as a major destination of their final products.
The region as a market destination for products is also related with the importance of both proximity to markets and antic.ipation of gr™th of markets. This is a strong indication of the role the regional market exerts in influencing the location pattern of industries in the region.
The importance of personal reasons as a location factor has also a reasonable association with the region as a market destination (coefficient of .31 ). This is a reflection of the nature of firms located because of personal considerations. These firms are generally local smal 1 size concerns established in the region to serve the local market, and are unable to penetrate into markets outside the region. 142
TABLE 33 THE UNROTATED FACTOR MATRIX
Factor Patterns Variables I II III
1 .50 -.23 .22 2 -.41 .78 -.30 3 .01 .35 .38 4 .24 .45 .06 5 .50 .53 -.02 6 -.66 -.37 -.54 7 .37 -.04 .61 8 .52 .57 • 08 9 -.78 -.15 .46 10 .47 .36 -.27 11 .54 -.01 -.49 12 .48 -.49 .36 13 -.84 -.39 -.02 14 .72 -.27 -.15 15 .67 -.44 .35 16 -.51 -.09 .14 17 -.24 • 05 .53 18 .12 .17 • 03 19 .06 .45 -.45 20 • 29 -.74 -.21 21 .32 .19 -.35 22 .56 -.27 .14 23 .10 .19 -.02 24 .10 .19 -.02 25 .37 · -. 27 .18 26 .08 .21 -.31 27 .oo -.21 -.32 28 -.39 .31 .33 29 .26 .14 -.06
5.81 3.78 2.79 143
Meaningful negative coefficients with the region as a market destination are found in these variables: Australia and New South Wales as market destinations and rai 1 as means of transporting products, i.e. -.74, -O.66 and -.56 respectively.
UNROTATED FACTOR MATRIX Factor matrices are usually displayed in three forms. The first is the unrotated factor matrix which is normally presented without interpretation (see Rummel 1967). The second is the "rotated factor matrix", it is generally the object of interpretation since it delineates the distinct patterns of interrelationships. The third is the "factor score matrix", it presents the loading by which the existence of a pattern for the variables can be ascertained.
Table 33 presents the unrotated factor matrix. Only three factors were identified from the factor analysis. The columns define the common factors, the rows refer to the variables. In the intersection of a row and a column the loading is given for the row variable on the column. The row beneath the table is for the eigen-values which equal the sum of the column of squared factor loadings for each factor.
ROTATED FACTOR MATRIX The rotated factor matrix is not different in shape from 144
TABLE 34 VARIMAX ROTATED FACTOR MATRIX
Variables I II III
1 .'58 .08 -.03 .35 2 -.03 .92 -.15 .86 3 -.02 .37 .36 .26 4 -.02 .51 -.02 .26 5 .10 .70 -.19 .53 6 -.52 -.73 -.22 .86 7 .54 .26 .38 .51 8 .13 .76 -.12 .61 9 -.32 -.44 .74 .85 10 .06 .49 -.42 .42 11 • 20 .19 -.67 .52 12 .76 -.12 .08 .60 13 -.84 -.09 .37 .85 14 .63 .10 -.46 .62 15 .87 .01 -.01 .76 16 • 28 -.31 .34 • 29 17 .01 .02 .59 .35 18 .01 .21 -.01 .04 19 -.36 .34 -.40 .41 20 .52 .53 -.37 .68 21 .oo .26 -.44 .26 22 .61 .07 -.14 .40 23 -.03 .20 -.05 .04 24 -.03 .20 -.05 .04 25 .49 -.01 .:.... 01 • 24 26 -.17 .17 -.29 .14 27 -.02 -.23 -.31 .15 28 -.33 .13 .49 .36 29 .10 • 24 -.15 .09 Summ of Squares 4.78 4.25 3.35 145
TABLE 3~ THE COMMUNALITIES OF· VARIMAX ROTATED MATRIX (h2 X 100)
Variables I II III
1 34.1 .7 .1 34.9 2 .1 84.1 2.2 86.4 3 .1 13.4 12.7 26.2 4 .1 26.2 .1 26.4 5 1.0 48.6 3.8 53.4 6 27.1 53.7 5.1 85.9 7 29.5 6.6 14.6 50.8 8 1.7 57.7 1.3 60.7 9 10.5 19.0 55.2 84.7 10 .3 23.9 17.5 41.7 11 4.1 3.7 44.6 52.4 12 58.3 1.4 .7 60.4 13 70.6 .8 13.9 85.3 14 39.2 1.1 21.5 61.8 15 76.1 76.1 16 8.1 9.5 11.4 29.0 17 34.6 34.6 18 4.4 4.4 19 13.3 11.4 16.1 40.8 20 27.1 27.6 13.5 68.4 21 6.8 19.5 26.3 22 37.8 .5 1.9 40.2 23 .1 4.1 .2 4.4 24 .1 4.1 .2 4.4 25 24.2 24.2 26 3.0 2.8 8.7 14.5 . 27 5.5 9.4 14.9 28 10.7 1.7 23.6 36.0 29 1.1 5.6 2.4 9.1
Summ of Squares 4.78 4.25 3.35 % of Total Variance 16.5 14.7 11.5 47.7 •
• Percent of variation among all the variables inv~lved in the pattern, is derived by dividing the.sum of h by the number of variables. 146 the unrotated matrix. The unrotated factors successively define the most general patterns of relationship in the data, while the rotated factors delineate the distinct clusters of relationship among the data. The unrotated factors are rotated to a simple structure solution. That is, each factor has been rotated until it defines a distinct cluster of interrelated variables. Through this rotation the factor inter-relations shift from unrotated factors delineating the most comprehensive data patterns to factors delineating the distinct groups of interrelated data. Table 34 presents the rotated factor matrix for the 29 variables selected for analysis.
The loadings measure which variables are involved in which factor pattern and to what degree. They can be interpreted like correlation coefficients. The SA-Jare of the loading multiplied by 100 equals the per cent variation that a variable has in conmon with an unrotated factor. The per cent figure can be considered as the per cent of data on a variable that can be produced or predicted by knowing the values of a case of the factor or on the other variables involved in the same pattern.
The column headed 11 h211 displays the communality of each variable. The communality coefficient shown in this column, multiplied by 100, gives the per cent of variation of a variable in common with each pattern. Table 35 presents the communalities or the h2 values for al 1 factors presented in 14 7
n 1,00
2
~a
4-·-1 ---· 20 10 ·
3 19 ' 21 7 29 26 23 11 28 24 i'l8 -- -1.00 -1---~;]'4 15 1,00 J7_~ -- l 22 __!,!.~ l - : -~13- ::s ----·r 12
27 !16
9 ------
6 ··-- - ... -·-
-1.00
FIGURE. 5(A) FACTOR Axts (I & II) IDENTIFIED WITH LOADINGS OF VARIMAX ROTATION 148
m,.oo
9
, 17 ' \--~8
i 13 7 16 3 1,'
6 f
nJ 1.00 Il -1·00 r r·. 1s .. m~· 2s<-'·,:.:i' 113 4 I I 22 r:23 24 ~-;_-:,=.:A ··~,.- ·t 29 IIIl 5 ! j 27 2.6 ~ 20 19 10 ·-- 14 21
11
- -1.00
FIGURE 5(8) FACTOR AXES (11 & 111) IDENTIFIED WITH LOADINGS OF VARIMAX ROTATION 149
m 1.00
9 17 28
7 13 I '· 16 3 ~
'< 12 1.00 _1.00 . 18 I I '15 4 , I 1 25 ·t ~~ 1-;:l)a 22 2 ,- • 29 6 ' 5 26 .__.'. 27 20 19 10 21 14
11
-1-00
FIGURE 5(C) FACTOR AXES (I & I I I) IDENTIFIED WITH LOADINGS OF VARIMAX ROTATION 150
Table 34. The communalities are multiplied by 100 to present them in a percentage form. ,,
At the foot of the factor columns in Table 35, the per cent of total variance figures show the per cent of the total variation among the variables that are related to a factor pattern. The sum of these figures for e~ch pattern equals the sum of the column of h2 x 100. The first rotated factor pattern delineates the largest pattern of relationships in the data, the second delineates the next largest pattern, and so on. Thus the amount of variation in the data described by each factor decreases successively with each factor. In other words, the first unrotated factor defines the \,Jidest net of linkages and the greatest order in the data.
· An understanding of the patterns defined by the rotated factor matrix can be enhanced through a graphic interpretation. Figures 5(a), 5(8) and 5(C) take each pair - the pairs are: I & I I , I I & I I I and I & I I I res pee ti ve 1 y - of the patterns identified by the varimax rotation (Table 34) and graph the interrelationships among them. The loadings of the 29 variables are.plotted on the axes of each pair. The configuration 6f points will then reflect the data inter relationships. Variables that are unrelated will be at right angles to each other. 1 51
By examining these graphs, the distinct clusters in the data can be discovered. Generally, these graphs can clarifyv how the rotated factor loadings can define the pattern of relationships and the association of each variable with each pattern. For instance, rail as a mean of transporting materials (V7 ), Australia as a, market destination (Vl l) and rail as a mean of transporting products (V29) are highly interrelated positively with each other vertically and horizontally on factors l and 11. If we refer to Figure 5 (A), we find that these variables are clustering together compared with other variables presented. On the other hand, the region as a source of materials (V2), overseas as market destination (Vl2), closeness to markets as a location factor (Vl6) and transportation facilities as a location factor (V21) are unrelated to each other. Consequently, they are plotted at far distances from each other.
INTERPRETING FACTORS Once the factors are determined, they need to be identified by giving a reasonable explanatiai of the underlying forces. The rratrix of rotated factor loadings, in addition to delineating the distinct clusters of relationships among the observed variables, provides the basis for grouping the variables into common factors. Each factor rray be reasonably assigned to those variables with which it sha,..,s the closest 1 52 linear relationships, i.e. vaFiables with highest loadings. Where loadings of a variable on two factors are very close, the variable is to be assigned to the one with which it is judged to have the closest affinity. Among the researchers who recognised this procedure as a reasonable way of combining variables into corrmon factor groups are Ferber and Verdoorn (1962), Adelman and Merri s (1965) and Rummel (1967).
An appropriate label should always be attached to each factor. These labels facilitate the interpretation and discussion of the results. The factors may be labelled in any one of these ways: symbolically, deicriptively or causally.
Rummel (1967) considered that the approach to the interpretation of factor patterns is a matter of personal taste, communication and long run research strategy. In addition to considering the variables with the highest factor loadings as a mean of interpretation and labelling, the previous results of analysing the original data are used as a guide. Nevertheless: it must be indicated that only very slight difference is found when canparing factor results with the results of analysing the original data •
.identifying the content and nature of the factor patterns is done by inferring what the variables with high loadings on a factor have in common· that is present to a lesser degree in variables with moderate loading and absent from variables 1 53 with zero or near-zero loadings. The rotated varimax factor loadings presented in Table 34 are used for this purpose.
Factor I for instance is positively interrelated with the following variables: V15 (.87), V14 (.63), V22 (.61 ),
Vl (. 59), V7 (. 54) and V20 (. 52). These types of int er relation ships explain the influence that transporting of final products, particularly by mean of ship and rail, has on the formulation of factor I. Nevertheless, significant negative loadings are found in V13 and V6. This implies that these two variables have adverse interrelation with both factor I and other variables with positive loadings on that factor. Factor I is identified accordingly as the "market pattern".
The variables with the highest positive loadings on
Factor I I are: V2, VB, V20, V4. These are all indicators which describe the role that sources of materials play in influencing the industrial location pattern of the region. The importance of regional sources of materials is reflected by high loadings on variables V2 and V20. While the influence of overseas sources of materials is emphasised by high loadings on variables
VB and VS. Factor I I is i dent i fi ed therefore as the "material factor pattern".
The high negative loading of V6 (road as a mean of transporting materials) on Factor I I reflects an interesting feature. In spite of the great importance of regional sources 1 54 of materials, road is not important in transporting these materials to local or outside· users. Instead rail transportation is used extensively in this respect. This is quite evident in the case of coal shipments by rail from the local deposits to the B.H.P. steel plant at Port Waratah. Iron ore is recruited by sea transport from Whyalla in South Australia to the B.H.P. plant at Newcastle using the company's own fleet. By examining the relationships between the loadings of various variables on factor I I it is found that adverse relationships exist between variables V6 and V9 on one hand and variables V2, V4, VS and V20 on the other hand.
Factor I I I i s gen er a 1 1y ch a r act er i s e d by re 1at i v e 1y 1ow loadings compared with factors I and I I. The highest factor loadings on factor I I I are presented through three variables: V9 region as a market destination, V17 anticipation of growth of market as a regional locatton factor, and V28 personal reasons as a location factor respectively. Thus, this factor reflects the relationship between the influence of regional market and its growth, and the effect of personal considerations on the location pattern. Consequently, this factor is identified as the "regional and personal forces" factor.
High negative 1oadi ngs on factor I I I are found in variables: V11 Australia as a market destination, V14 rail as a mean of transporting products and V21 transportation facilities and rates as a regional location factor. These TABLE 36 FACTOR SCORE MATRIX FOR THE 75 FIRMS
I II III
1 Iron and 1 2.7679 -1.2997 1.9595 Steel 2 1.4647 -1.0109 -.1786 3 1.8266 -1.7103 .0423 4 2.3560 -1.2102 .8470 5 .210;3 -.9645 -1.1464 6 1.0023 -1.7982 -.5013 2 Machinery 7 .5543 .0844 1.4775 and 8 1.0894 .1968 -.1590 Engineering 9 -1.1119 -.2122 .6772 10 -1.0211 -.6284 .1877 11 -1.0681 -.3371 .0563 12 -.6429 -.2455 -.2549 13 .2157 -.6957 -.7153 14 -.9372 .1547 .5432 15 -.9046 -.5399 -.3189 16 .3156 -.6012 -.9149 17 -1.3214 -.3089 .2457 18 -1.1449 - .1410 -.3690 19 -.9898 -.3770 -.1223 20 -1.1847 -.0934 .1219 21 -.0955 -.8910 -1. 7225 22 -.3283 -.8093 -.0494 23 -.6807 -.7963 .3136 24 .0411 .1238 -.5804 25 -.9669 -.2370 .1413 26 -.5203 -.5658 -.3448 27 -1.".1.429 .0421 -.2712 28 -.4227 -.0248 -.6529 29 -1.1790 .0172 -.2283 30 -.0642 .8935 1.4899 31 -.8748 -.396:3 -.3261 32 -.9340 -.0324 -.6783 33 .0173 1.4779 .3304 3 Non-Ferrous Metals 34 2.1451 -2.2792 1.5173 4 Cement, Clay 35 -.5149 .2058 .4170 and Glass 36 -.8829 -.4579 -.3950 Products 37 -1.1151 .5741 .9953 38 -1.0436 -. 5185 -.1201 39 -1.0534 -.2888 -.1445 40 .1912 .4166 1.0032 41 1.4651 1.2344 .0862 42 -1.0446 -.7144 -.3803 43 -.8206 .2103 • 9175 156
CONT. TABLE 36
I II III
5 Chemicals 44 .8511 -1.2028 -2.0711 45 .3238 1.5547 -.5517 46 .4284 -.9948 -.7706 47 .5445 -.6761 -.6667 48 2.2404 1.1801 -.4583 49 2.0235 1.1340 .3801 50 .7504 .3958 .4090 51 -.9368 .0701 .3446 6 Textiles 52 .8096 1.0238 -1.5639 53 1.2966 1.4451 -.5736 54 .5871 1.8796 -1.4618 55 .8278 1.5917 -.1977 7 Clothing 56 .8860 1.4813 -1.4960 57 -.2284 .0880 -1.6852 58 -.1766 1.4452 -.3092 59 .8736 2.5907 -.4246 60 -.0050 1.2688 -1.1484 61 .3520 .9003 -.2360 62 .0538 1.3170 -1.2661 8 Food 63 -.2204 -1.2869 .4321 Processing 64 -1.5546 -.2552 .4020 65 .4101 -1.1699 -.6115 66 .9345 -.5875 3.0869 67 -.4411 1.4448 1.7079 68 .0775 1.6497 .7064 69 -.0293 -.9749 -1.1966 70 -.3525 .6030 1.6687 71 .4980 -1.6207 -.1581 72 -.5223 -.2034 1.3130 73 -.7203 .6901 2.1874 74 -.6971 .7265 2.3625 75 -.7317 -.9501 -.9456 I I ..., ~ . ... 0 0 ...... 0 -UI 0 u, vi 0 1.,, 0 64 17 20 29 18 27 77 37 ,i) "\ C) 11 3G C 42 :::0 ZG IT1 10 19 25 CJ'\ ).') ..---... :,1 J:;:, 32 ...... 15 :!6 3l ~ 75 73 74 I 23,2 71 ~6.,,, {,7 ~·S I1~ ;o 22 57 c:i 5$ :;:1 30 69 [,O 77 24 0 33 :::0 63 62 77 23 J:;:, 55 40 n 45 -I 16 0 .:.e, :::0 65 61 47 71 54 7 55 so52 06 56 59 44 6 s 53 41 2 3 49 V, i4 48 "-,,J 4, I I -~v FIGURE 6(8) FIRMS PROFILES FOR FACTOR II - FIRMS ON THE HOR I ZONTAL AXIS /-\RE ORDERED IN EACH CASE BY THE 1.R MARKET PATTERN SCORES. . MATERIAL PATTERN
2,0
1,5
~i 1,0
0.5
; .-,~--~;.· .. J""*'..,"-""-i .. . cw,t,;.i,.,,· ~,-.:,.,,_., ••. ""° ~ i"-'IJ i
-0.5
-1.0
-1.5
-2.0 FIGURE 6 (C) FI RMS PROF I LES FOR FACTOR I I I - FI RMS ON THE HORIZONTAL AXIS ARE ORDERED IN EACH CASE BY 1HEIR MARKET PATTERN SCORES. REGIONAL AND PERSONAL FORCES PATTERN
1.s
1.0 I
\ _J~ I i =11 ! i i -0,5 { l
-1.0
--1,5 l
-2,0 1 60 variables have an adverse relationship with variables V9, V17 and V28 on factor I I I.
FACTOR SCORE MATRIX
The factor matrix presents the loadings by which the existence of a pattern for the variables can be ascertained. The factor score matrix gives a score for each firm on these patterns.
The factor scores are divided in the following way: each variable is weighted proportionally to its involvement in a pattern; the more involved a variable, the higher the weight. Variables not at all related to a given pattern - like the case of factor I as a relation to firm 33 - would be weighted near zero.
To determine the score for a firm on a pattern, the firm's data on each variable is multiplied by the pattern's weight for that variable. The sum of these weights-times data produced for all the variables yields the factor score.
Table 36 presents the factor scores for the 75 firms on the unrotated three patterns of Table 33. These scores are standardised, which means they have been scaled so that they have a mean of ~ero. About two-thirds of the values of the scores l i e between +1 • 00 and -1 • 00. Accordingly, scores greater than +1.00 or less than -1.00 are unusually high or low. 1 61
Figures 6(A), 6(8) and ~(C) plot these factor scores for the three patterns separately. These patterns are plotted as profiles for the 75 firms. On the horizontal axis, firms are ordered from low to high values on pattern. Magnitudes on the vertical axes are in standard scores. The average score is zero, and 90 per cent of these 75 firms will (if normally distributed) fall between scores of +2.00 and -2.00.
The higher the positive score of a firm on a factor pattern, the greater the relationship of that firm with the factor concerned and vice versa.
Figure 6(A) indicates that only 34 firms recorded positive scores with factor I (market forces). Most of these firms are found in the chemicals, machinery and engineering, iron and steeJ, food processing and clothing groups respectively. On the horizontal zxis firms are ranked according to their factor scores starting from.the highest negative scores to the highest positive scores on the right side of the figure.
By using the same ranking order of firms in Figure 6(A) but plotting their scores on factor IP, the shape of Figure 6(8) will be absolutely different. It is noticed from Figure 6(8) that the number of firms with positive scores remained the same (34 firms). However, firms with positive scores are found mainly in the machinery and engineering; clothing; cement, clay and glass products; and chemical groups. This means that firms in 1 62 these groups usually have strpng involvement with factor pattern I I (material forces).
For Figure 6(C), firms with positive scores amount to 32 firms most of them are found in the machinery and engineering, and food processing groups. This indicates strong relation between these groups and factor 111 (regional and personal forces).
The fact that each factor pattern has a different shape illustrates what is meant by indicating that factor analysis divides the regularity in the data into distinct patterns. Generally, the results of the factor scores analysis agree considerably with the results revealed previously in this study, particularly when analysing the results of the location survey cond~cted during 1969.
As indicated previously the main objective of using the technique of factor analysis was to gain some quantitative i n s i g ht i n to t he i n t er act i on of reg i on a 1 1oca t i on fact or s wi t h other variables related to the location pattern of manufacturing firms in the Newcastle Region. Basically, the application of factor analysis on the location data has revealed that markets, materials and regional considerations are still the main influences on the location pattern of manufacturing in the Newcastle Region. In general, both the results of factor analysis and the location survey have coincided. CHAPTER SEVEN SUMMARY AND CONCLUSIONS
This study focused attenti.on on the manufacturing sector of the Newcastle Region. The themes of investigation ranged through many aspects of the manufacturing geography of the region which have been inter-related with one another. The study examined the structure, distribution and growth of manufacturing in the regi.on. An attempt was made to evaluate the relative importance of the various regional location factors influencing the location pattern of manufacturing activities within the region. An analysis was then made of the locational significance of likages developed among the region's industries on one hand, and between the region's industries and industries outside the region on the other hand. Finally, a factor analysis technique was applied to develop a simple framework of factors whose interplay can adequately represent the interaction of the wide range of the various location factors with many variables related to the location process.
One of the major conclusions that could be drawn from the analysis presented in this study is that the present industrial location and growth pattern of the region is basically a reflection of the expansion of industries to which Newcastle's 1 64
function as a port has given significant locational advantage. For instance, the continued growth of the iron and steel industry has provided a core around which the present industrial structure of the region has been built. The growth of this industry together with industries like chemicals, textiles and machinery and engineering, have stimulated the establishment and growth of a variety of other industries. This occured directly through industrial linkage and indirectly through the creation of a favourable industrial environment.
In Australia possibly the most important statistical deficiency of centrally collected information is the unavailability of detailed data on industrial activities broken down by the various Local Government Areas. Generally, official statistics are capable only of being used in the solution of a limited number of research problems. Accordingly, it was decided to undertake a samp}e survey so that detailed information could be obtained on factory location and input output fl(?WS.
Despite the importance of scale economies and the ability of regional firms to supply national and overseas markets in many occasions, firms in the region are related commercially to one another far more than might be expected from the diversity of the industrial structure of the area.
Earlier studies of location determinants in Australia 1 65 suggested that availability of transport, labour, markets, inter-industry linkages and proximity to raw material supplies were the major regional location factors. Examples of these studies are the study conducted by the Institute of Urban Studies for the Sydney Region (1970), McKnight's study of industrial location in South Australia (1967) and Rimmer's study of manufacturing in Melbourne (1969). The results of this study conform to a large degree with the results obtained by these workers. The Newcastle Region is a desirable location for manufacturing firms because: a) it provides the second largest single market in N.S.W.; b) it provides basic resources of raw materials, power, fuel and labour necessary for industrial operations; c) its port facilities provide a favourable industrial atmosphere for many firms; d) it is relatively well provided with adequate transport faci lites and e) existing concentration of manufacturing and other industries provides the inter-industry linkages and economies necessary for modern industrial agglom2ration. All of these factors combined have interacted to promote the region in the minds of management of many expanding Australian and overseas industrial firms.
There are two important factors which may make significant impact on the future industrial development of the region, especially in the long run. Firstly, the development of 6,400 acres of industrial land on the Kooragang Island right 166
in the middle of the Port of Newcastle. In contrast to Sydney, the major proportion of industrial growth in Newcastle is not likely to take place in peripheral areas. At the beginning of 1971 about 540 acres of land were fully reclaimed on the Kooragang Island and another 1,200 acres were partially reclaimed. Greenleaf Fertilizers Ltd. was the first industry established on the Island in 1964, then followed by Eastern Nitrogen Ltd. in 1966. Koppers P.G.H. Coating Pty. Ltd., started operation on the Island in 1967. More recently Adelaide Cement Company commenced operation early in 1970. Another important qevelopment on the Island is the development of a chemical plant by Bayer Leverkuson Ltd. on a 100.acres site (expected canpletion by the end of 1973). A firm commitment has also been made by B.H.P. Ltd. to obtain 750 acres on Kooragang Island for future expansion of the company's steel plant. A plant to produce anhydrous hydrofluoric acid is to be established by the Australian Fluorine Chemicals and is expected to comnence operation in 1973. Also the independent Oil Company will build an oil refinery at Kooragang, but it would be about four years before the reclamation would allow the company to start. Generally, future development of the Island is characterised by a wide range of chemical plants most of them are highly inter-related with each other (like the case of Eastern Nitrogen and Greenleaf Fertilizers) and dependent on sea transport either for importing rraterials or exporting products. 1 67
The second factor that might have a great influence on the future industrial development of the Newcastle Region is the proposed plans relating to the development of Port Stephens into a large export-oriented industrial Complex.
A recent article by Buchanan (1971) describes and suggests future lines of actions to be taken by the Government in this respect. Buchanan in his paper strongly supported the view that the Government should concentrate its efforts on developing efficient and large scale export-oriented industries based on strategic natural resources, and to gradually pull out of non-competitive labour-intensive industries. He believed that if N.S.W. is to continue to be Australia's most important industrial state, and compete effectively with other emerging industrial centres in Australia, the most important single step is to establish a major heavy industrial estate on the coastal strip between Newcastle and Port Stephens. Port Stephens is recommended for immediate development in reference to other areas in N.S.W. particularly Jervis Bay because of the greater population, industrial development and opportunities for integration, the existence of a good airport and fairly well developed transport facilities, the much larger area of land that would be utilised and the more congenial climate and life environment.
If the Government decides to establish a major deep water industrial estate in the area; arrangements would be made to 1 68
serve the estate with natural.gas pipelines, and to establish a power station. The combination of the low priced hydrocarbons coal and power coupled with the estate's other assets would lead inevitably to the establishment of many large metallurgical and chemical process industries producing mainly for the overseas market.
The establishment of a large scale export-oriented industrial complex (mainly for secondary metallurgical and chemical industries) will lead eventually to Port Stephens becoming the regional centre with Newcastle and the land between providing the economic basis for much of its growth particularly in the early years. Instead of hindering the development of the Kooragang Island the new complex would greatly improve the competitive economies of existing industry and the Island would fi 11 up much more quickly with satellite industries not needing deep-water or extensive services. Buchanan's article could be criticised on the basis of: a) the development of the industrial complex at Port Stephens wi 11 co.st about $250 mi 11 ion. It seems to be that this would be the major obstacle to this plan; b) the effect of developing Port Stephens on the existing industry in Newcastle was not discussed in detail; c) when suggesting the type of industries to be established in Port Stephens, Buchanan did not base ~is argument on the expected future demand and competition for the products concerned and d) no detailed account. was made to the 1 69
losses to the economy as a result of abandoning present industries that were considered uneconomic. It could be then generalised that Buchanan's recommendations were constructed with very little qualifications as to their general applicability.
Basically, the argument about the development of Kooragang Island and Port Stephens emphsises the fact that the future industrial development of the Newcastle Region lies mainly in the secondary metallurgical and chemical industries. The results.of this investigation revealed that, in addition to these two industries, the Newcastle Region provides locational attractions to many other types of industrial activities including machinery and engineering, clothing, textiles and food processing •
. For better understanding of the pattern of industry location in the Newcastle Region, further research needs to be undertaken into the following aspects: a) detail study of site location factors including the pattern of industrial land values and the corresponding industrial location pattern; future industrial land requir.ements and the amount of land to be industrially zoned in the region; and effect of planned highways; b) nearly 40 per cent of firms interviewed in the location survey (1969) have experienced relocation within the region. This factor by itself warrants a separate study of the process of industrial movement within the Region and the various 1 70 factors influencing this relocation process; and c) study of the availability of labour required and problems associated with obtaining suitable labour skills in the region. It must be considered that the location survey conducted in 1.969, provides the basic data necessary for initiating extensive research programme into these suggested lines of research. However, according to the limited scope of this inquiry, analysis of site factors, relocation factors and the labour situation will be left to other researchers interested in confinuing research into this field.
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Aderfer, E.B., 1965, 11 Portland Cement 11 , Federal Reserve Bank of Philadelphia Business Review.
Ahmed, G.M., 1956, 11 Manufacturi ng Structure and Pattern of Waukegan-North Chicago11 , the University of Chicago, Research Paper No. 46.
Airov, J., 1959, 11 The Location,of the Synthetic-Fiber Industry: A Case Study in Regional Analysis11 , Cambridge, Massachusetts and New York.
Alexander, J., 1958, 11 Location of Manufacturing: Methods of Measurement11 , Annals of the Association of American Geographers, 48.
Alexander, J., et.al., 1958, 11 Freight Rates: Selected Aspects of Uniform and Nodal Regi ons 11 , Economic Geography, 34.
Alonso, W., 1 964, 11 Location and Land Use: Toward a General Theory of Land Rent 11 , Cambridge, Mass.
Baker, A., 1969, 11 Models of Spatial Behaviour in Urban Envi ronments 11 , University of Toronto, Component Study No.15.
Barloon, M.J., 1965, 11 The Interrelationship of the Changing Structure of American Transportation and Changes in Industrial Locat i on 11 , Land Economics, 41 •
Beckmann, M.J. and Marschak, T., 1955, 11 An Activity Approach to Location Theory11 , Proceedings Second Symposium on Linear Programming, Washington.
Berry, B.J.L., 1960, 11 An Inductive Approach to the Regionalisatio of Economic Development11 , University of Chicago, Research Paper No.62.
Boventor, E.V., 1961, 11 The Relationship Between Transportation .Costs and Location Rent in Transportation Problems 11 , Journal of Regional Science,3.
Britton, J.N.H., 1969, 11 A Geographical Approach to the Study of Industrial Linkages 11 , Canadian Geographer, 13.
Cole, J.P. and King, C.A.M., 1968, 11 Quantitative Geography 11 , London. 1 78
Craig, P., 1957, 11 Location Factors in the Development of Steel Centres11 , Papers and Proceedings, Regional Science Association,3. Dunn, E.S., 1956, "The Market Potential Concept and the Analysis of Location", Papers and Proceedings, Regional Science Association,2~ Estell, R.C. and\Buchanan, R.O., 1966, "Industrial Activity and Economic Geography", London. Evely, R. and Little, M.D., 1960, "Concentration in British Industry~ England. Fuchs, V.R., 1962, "Changes in the Location of Manufacturing in the U.S. Since 1929", Yale University Press. Garrison, W.L., 1956, "Applicability of Statistical Inference to Geographical Research", Geographical Review, 46. Gathrie, J.A., 1955, "Economies of Scale and Regional Development", Papers and Proceedings, Regional Science Assoc i at i on , 1 • Golledge, R.G., 1969, "The Geographical Relevance of Some Learning Theories", in Cox and Golledge (Eds.), A Symposium, North Western University, Evanston. Haggett, P., 1965, "Locational Analysis in Human Geography", London. Haggett, P. and Chorley, R.J., (Editors), 1967,, "Models in Geography" .
Hall, P., 1962, "The Industries of London Since 1861 11 , London Harvey, D., 1967, "The Problem of Theory Construction in Geography 11 , Journal of Regional Science, Supplement 2. Hirsch, W.Z., 1959, "Inter-industry Relations of a Metropolitan Area", Review of Economics and Stati sties, 41. lsard, W., 1948, "Some Locational Factors in the Iron and Steel Industry Since the Early 19th Century11 , Journal of Political Economy, 56. lsard, W. and Schooler,E.W • ..t1955, 11 Location Factors in the Petrochemical Industry", U.::,. Department of Commerce. lsard, W., Schooler, E.W. and Vietorisz, T., 1959, "Industrial Complex Analysis and Regional Development 11 , Cambridge, Massachusetts. 179
lsard, W. and others, 1960, '.'Methods of Regional Analysis", Cambridge, Massachusetts. Kadas, C., 1963, "The Impact of the Development of Transportatior on the Optimal Size of Plants and on Optimum Regional Location 11 , Papers and Proceedings, Regional Science Association, XI I. Koch, A.R. and Snodgrass, M.M., 1959, "Linear Programming Applied to Location and Product-Flow Determination in the U.S. Tomato-Processing Ind us try" , Papers and Proceedings, Regional Science Association, 5. · Lefeber, L., 1958, "General Equilibrium Analysis of Production, Transportation and the Choice of Industrial Location", Papers and Proceedings, Regional Science Association, 4. Lewis, P.W., 1969, "A Numerical Approach to the Location of Industry", Occasional Papers in Geography, 13. Lindsay, R., 1956, "Regional Advantage in Oil Refining", Papers and Proceedings, Regional Science Association, 2. Lloyd, P.E., 1965, "A Method for Conducting Regional Reconnaissance Surveys of Manufacturing in Australian Cities", Australian Geographical Studies, 3. Manne, A.S., 1964, "Pl.ant Location Under Economies of Scale, Decentralisation and Computation", Management Science, 11. Martin, J.E., 1961, "The Location of Industry in Inner North East London, Ph.D.Thesis.
Martin, J.E., 1966, · 11 Greater London: An Industrial Geography", London. Mayer, H. and Kohn, C., 1959, "Readings in Urban Geography", University of Chicago Press. McKnight, T., 1962, "Manufacturing in Arizona", University of California Press.
Moses, L. N., 1 958, 11 Location and the Theory of Production", Quarterly Journal of Economics, 72. Mueller, F., Wilken, A. and Wood, M., 1961, "Location Decision Industrial Mobility in Michigan", University of Michigan, Institute of Social Research. Needleman, L., Editor, 1968, "Regional Analysis", England. 180
North, D.C., 1955, "Location "Theory and Regional Economic Growth", Journal of Political Economy, 63. Richardson, H., 1969, "Regional Economics", England. Ray, M., 1965, "Market Potential and Economic Shadow: A Quantitative Analysis of Industrial Location in Southern Ontario", University of Chicago, Department of Geography, Research Paper No. 1 01 • Scott, R.D., 1963, "The Suburbanisation of Manufacturing Industry in Perth, Western Australia'', Australian Geographers, 9. Segal, M., 1960, "Wages in the Metropolis: their influence on the Location of Industries in the New York Region", Harvard University Press. Stafford, H.A., 1969, "An Industrial Location Decision Model", Annals of the Association of American Geographers, 1. Thompson, J.H., 1966, "Some Theoretical Considerations for Manufacturing Geography", Economic Geography, 42. Thomas, M.D., 1962, "Regional Economic Growth and Industrial Development", Papers and Proceedings, Regional Science Association, X. Ullman., E.L., 1954, "Amenities as a Factor in Regional Growth", Geographical Review, 44. Wallace, L.T. and Rutton, V.W., 1961, "The Role of the Community as a Factor in Industrial Location", Paper and Proc. of the Reg. Science Association, 7. Wise, M.J., 1962, "On the Writing of Regional Economic Geography" Economic Geography, 38. Yaates, M.H., 1968, "An Introduction to Quantitative Analysis in Economic Geography", New York. Yaseen, L.C., 1956, "Plant Location", American Research Council, New York. APPENDICES 1 82
APPENDIX 1 CLASSIFICATION SCHEME ON INDUSTRIAL SUBURBS IN THE NEWCASTLE URBAN COMPLEX
1. NEWCASTLE 10. ASH ISLAND Newcastle East Ash Island Civic Walsh Island Newcastle West 11. WALLSEND Cook's Hill Wallsend The Hill Shortland 2. CARRINGTON Birmingham Gardens Stockton Wallsend South Carrington 12. HEXHAM Wickham Beresfield 3. ISLINGTON Tarro Islington Minmi Maryville Hexham 4. HAMILTON 13. KOTARA Hamilton South 14. CARDIFF Hamilton Cardiff (incl. Garden Suburb) The Junction Cardiff Heights Glebe Cardiff South Merewether Heights Glendale ADAMSTOWN 5. 15. CHARLESTOWN Adamstown Charlestown Adamstown Heights Kotara South Bel Air Whitebridge 6. BROADMEADOW Kahibah (incl. par of High Broadmeadow fields) Tighes Hill Dudley Gateshead 7. MAYFIELD Mayfield East 16. BOOLAROO Mayfield Warner's Bay Mayfield West Windale Sandgate Mt. Hutton (incl. Tingira Head. Floraville 8. WARATAH Waratah Eleebana Georgetown Valentine Argenton 9. LAMBTON Edgeworth Lambton Barnsley (incl. part of New Lambton Edgeworth) New Lambton Heights West Wallsend Boolaroo 1 83
CONT. APPENDIX l
17. BELMONT Redhead Belmont North Belmont Belmont South (incl. Mark$ Pt.) Blacksmiths·(incl. Pelican) 18. SWANSEA Swansea Caves Beach (incl. Swansea Heads and Mawson) 19. REST OF NEWCASTLE Teralba Booragul Marmong Pt. Bolton Pt. (incl. part of Fennell Bay) Fennell Bay (incl. par of Fassifern) Toronto Toronto West Wakefield Blackalls (incl. part of Fassifern) Coal Pt. (incl. part of Kilaben Bay) Awaba Rathmines(incl. part of Fishing Pt.) Wangi (incl. Balmoral and Arcadia Vale) Dora Creek Morisset Cooranbong (incl. Avondale and Martinsville) Morisset East (incl. Scarborough, Sunshine and Brightwater) Wyee Catherine Hill Bay Nords Wharf 1 84 FROM: P,lOFESSOR C C RENWICK PO BOX 23 TIGHES HILL 2297 DIRECTOR or- RESEARCH HLEPHONt 61 4821
APPENDIX 2 INTRODUCTORY LETTER FOR THE LOCATION SURVEY
The Hunter Valley Research Foundation is continuing research into secondary industry in the Region with a study of Industry Location. This study will be of benefit to existing industries in planning for expansion and to firms considering the establishment of new plants. Also the study will have wide implications for the government in making investment decisions and in giving help to firms. Generally, the study will lead to a better understanding of both the structure and the location patterns of secondary industry in the Newcastle Region.
It is essential in making an accurate evaluation of the various factors which influence the location patterns that interviews,on a sample basis, be held.
During the next tew weeks one of the Foundation's research staff will be contacting you to arrange such an interview.
You may be assured that the information given by each firm will be strictly confidential, and only the aggregate for all industries will be used in publications arising from the study.
Your co-operation in this survey will be highly appreciated by the Foundation. We assure you that there is no duplication of material already so willingly supplied and on test patterns the inter view will occupy 30 minutes.
With all good wishes, 185
APPENDIX . 3
THE HUNTER VALIEY RESEARCH FOUIJDATION
LOCATION OF INIUSTRY SURVEY
(a) I:Escription of Catpany 1. Narre of the Conpany 2. Address of the Corrpany 3. Narre of the Manager 4. Person interviewed 5. Date of interview 6. Date of establishment in the Region 7. HCM long have you occupied the present site?
(b) Materials Used
1.
Types of Materials Sources of Materials % Value Means of Transoort % Value Used Region NSW Aust. Overseas - Road Rail Ship Ai.r
2. (a) D'.:)es the Conpany use any kind of scrap materials? (b) If so, what is the estirrated percentage of total scrap materials to total materials used?
3. Please estirrate the proportion of crude materials to all materials used by your Corrpany ('ronnage base)
(c) Markets and Production
1.
Types of your rrarkets Mllrket Destinations Means of Trans- % % portation % Products Whole- sale Retail Direct Region NSW Aust 0/Seas !bad Rail Ship Air
2. What is the nature of your llEllUfacturing operation? (Tick v.rhere applicable) ( ) Finished product ( ) Semi-Finished Product ( ) Assembly ( ) Others 186
3. Please .indicate the estimated percentage of the follcwing i terns to total cost of production:
- Cost of materials - Wages and salaries - Fuel purchased other than electricity - Cost of electric energy - Cost of water intake - Cost of transport of rEM rraterials and products - others
(d) Physical Characteristics of the Plant (ticl{ where ar,plicable)
1. Street parking space adequate 2. Special facilities for trucks 3. Rail sidings 4. lily additional space for expansion 5. Is this the only site?
(e) Labour
1. No. of enployees in each of the follartlng categories: Male Female Under 21 - Professional and managerial - Clerical and sale staff - Skilled (tradesrren) - Semi-skilled (Apprentices) - Unskilled (Labourers)
2. Have you found any difficulties in recruiting labour in the follo:Ning categories:
Shortage Supply There is no Exists just · shortage Adequate
() Professional and managerial ( ) Skilled () Semi-skilled () Unskilled
3. r:o you believe that productivity with regard to the kind of labour you. enploy is: Above Average BelON Average Average 4. Do you have proolems with labour turnover, and with labour relations in general?
(f) '!he location Process
1. Wnat were the main reasons for choosing the Nevvcastle Region as a suitable location? (please arrange nurrerically the three rrain factors by inserting, 1, 2, and 3 in order of irrpor.tance).
( ) Closeness to rrarkets ( ) Anticipation of growth of markets ( ) local sources of financing ( ) Closeness to Labour supply ( ) Proximity to rraterials () Corrmunity attitudes f ) Transportation facilities or rates () Proximity to the port ( ) Disposal of waste ( ) Adequate supply of water required ( ) Adequate supply of electric pa,1er ( ) Inducerrents or encouragerrent by t.he Goverrment ( ) Takeover or :rrerger ( ) Personal reasons ( ) Nearness to a parent Corrpany
2. What are the rrain reasons for choosing this particular site (please arrange nurrerically the three :n:ajor factors by inserting 1, 2, and 3 in order of irrportance.
( ) Access to suppliers ( ) Closeness to ancillary services ( () Land available at the right price ( ) Availability of land of suitable size ( ) Zoning and other regulations ( ) The J;X)Si tion on a main arterial road () The position on a railway siding ( ) Closeness to the Port ( ) Business contacts ( ) Personal reasons () Nearness to Labour Supply. ( ) Plentiful supply of water ( () others
3. Has the present location/site any handicaps, \.fuich were not present at tine of location or not foreseen?
4. lb you nCM find that the present location/site has advantages which were not present at tine of location or not foreseen? 1 88
(g) T'ne Process of Relocation (Only if the corrpany has relocatal or intends relocation)
1. What relocation has taken place since the establishment of your plant?
2. If the company is in the process of relocation, where is the company planning to relocate?
3. If the corrpany seeks relocation and is oonfronted with difficulties, what are these difficulties?
4. If the conpany has decided to relocate, or is conterrplating relocation, what are the main reasons? (please arrange nurrerically the three major factors by inserting 1, 2 and 3 in order of inportance.
( ) Lack of space for .irrm:rliate expansion ( () High price offered for eY,.:i.sting site ( ) Movement of closely linked f:i.:rm ( ) Non-oonfonning of existing zoning ( ) Change in the nature of operation ( ) Proximity to custaners and markets ( ) Availability of land of suitable size at the right price ( ) Proximity to materials ( ) Move from rented premises ( ) To bring plants together ( ) ~rger with another firm ( ) Proximity to lat.our skills required ( ) Lc:Mer costs, not specific ( ) Others . APPENDIX 4 SITE LOCATION FACTORS, WE l·GHTED AVERAGES BY INDUSTRY GROUPS
Iron Machinery Non-Ferrous Cement, Chemicals & & Metals Clay & Steel Engineering Glass Prod.
1 Land available at the right price. 1 51 3 16 12 2 Availability of land of suitable size. 9 30 2 19 8 3 Access to suppliers. 6 14 - 3 9 4 Zoning and other Regula- tions. - 21 - - 7 5 Closeness to ancillary services. 3 20 - 4 5 6 Closeness to the Port. 11 6 - - 5 7 The position on a Railway siding. 4 1 1 2 8 Business contacts. - 13 - 2 1 9 Personal reasons. - 2 - 4 10 Others. - - - 3 1 11 Nearness to labour s.upply. - 1 12 The position on a main arterial road. - 3 - 1 13 Plentiful supply of water. 2
Total Weighed Points 36 162 6 54 48
Source: Location Survey, 1969
_. CX) \..0 CONT. APPENDIX 4
Textiles Clothing Food Weighted Average of Processing Importance Total % Points weight
1 6 15 18 122 27.1 2 8 11 20 107 23.8 3 1 - 7 40 8.9 4 2 - 8 38 8.4 5 1 3 1 37 8.2 6 - - 3 25 5.7 7 1 - 11 20 4.4 8 - 3 1 20 4.4 9 - 3 8 17 3.8 10 5 1 - 10 2.2 11 - 6 - .7 1.6 12 - - 1 5 1.1 13 - - - 2 0.4 Total Weighed Points. 24 42 78 450 100.0
\.0 0 APPENDIX 5 RELOCATION FACTORS, WEIGHTED AVERAGES CLASSIFIED BY INDUSTRY GROUPS
Machin- Cement, Chemic- Cloth- Food Weighted Average ery & Etc. als ing Eng. Total Points %
1 Lac& of Space for Immediate Expansion 33 4 3 14 17 71 42.3 2 High Price Offered for Existing Site - - - 1 2 3 1.8 3 Non Conforming with Existing Zoning 6 - - 1 4 11 6.5 4 Change in the Nature of Operation 2 2 - - - 4 2.4 5 Proximity to Customers and Markets 1 - - - 3 4 2.4 6 Availability of Land of Suitable Size at the Right Price 17 3 2 8 8 38 22.6 7 Proximity to Materials 2 2 - - 3 7 4.1 8 Move from Rented Premises 6 3 - - - 9 5.3 9 To Bring Plants Together - - - . 3 - 3 1.8 10 Proximity to Labour Skills 2 1 - 3 4 10 6.0 11 Rail Siding Available 1 - - - - 1 0.6 12 Lower Costs, Not Specific 1 - 1 - 1 3 1.8 13 Others 1 3 - - - 4 2.4 TOTAL POINTS 72 18 6 30 42 168 100.0
Source: Location Survey, 1969
\.0.... APPENDIX Q_ CORRELATION MATRIX FOR THE 29 VARIABLES
1 2 3 4 5 6 7 8 9 10
1 1.000 2 -.071 1.000 3 -.089 -.601 1.000 4 .212 -~515 -.108 1.000 5 .061 -.526 -.174 -.195 1.000 6 -.288 .686 -.315 -.365 -.482 1.000 7 .180 -.339 .526 .032 -.129 -.721 1.000 8 .208 -.598 -.150 .488 .840 -.611 -.106 1.000 9 -.188 .325 -.021 -.158 -.412 .302 -.076 -.349 1.000 10 .030 -.350 .074 .045 .483 -.275 .001 .395 -.662 1.000 11 .154 -.148 -.036 .200 .139 -.096 .001 .138 -.736 .018 12 .340 .061 -.006 -.054 -.054 -.304 .434 -.058 -.182 -.036 13 -.426 .056 .120 -.081 -.191 • 425 -.364 -.196 .555 -.200 14 .207 -.057 -.096 .092 .15 2 -.347 .312 .143 -.560 .246 15 .669 -.026 -.110 .018 .178 -.379 .293 .211 -.273 .007 16 -.131 .207 -.140 .119 -.285 • 25 2 -.190 -.144 .522 -.272 17 -.147 -.127 • 256 -.073 -.054 -.103 .191 -.075 .411 -.271 18 -.053 -.135 -.048 .257 .082 -.133 .062 .121 -.086 .139 19 -.048 -.249 .122 .211 .095 .032 -.132 .102 -.292 .198 20 .186 .479 -.237 -.294 ·-. 278 .139 .108 -.323 -.260 .090 21 -.062 -. 251 . is 2 .133 .127 -.118 .040 .125 -.429 .278 22 .520 -.019 -.139 -.058 .272 -.266 .091 .277 -.265 .088 23 .063 -.114 .149 -.056 .051 -.081 .078 .027 -.143 .061 24 .063 -.114 .149 -.056 .051 -.081 .078 .027 -.143 .061 25 .129 .016 -.106 -.063 .167 -.185 .115 .134 -.164 .045 26 -.007 -.110 .064 .072 .047 -.030 .012 .030 -.178 .066 27 -.043 .171 -.107 -.098 -.076 .181 -.141 -.098 -.107 -.048 28 -.185 -.112 .097 .006 .063 .003 -.025 .024 .309 -.132 29 -.023 -.128 -.083 -.056 .388 -.161 -.080 .323 -.159 .344
\0 N CONT. APPENDIX Q_
11 12 13 14 15 16 17 18 19 20
11 1.000 12 .034 1.000 13 -.443 -.523 1.000 14 .460 .294 -.930 1.000 15 .190 .741 -.654 .332 1.000 16 -.426 -.163 .309 -.274 -.228 1.000 17 -.313 -.043 .193 -.198 -.088 -.036 1.000 18 .006 -.062 -.183 .247 -.037 .019 -.149 1.000 19 .289 -.226 .180 -.124 -.209 -.294 -.223 -.077 1.000 20 .179 .400 -.486 .436 .351 -.150 -.214 -.164 -. 254 1 • .000 21 .337 .071 -.145 .178 .006 -.200 -.196 -.009 .318 .110 22 .222 .284 -.257 .406 • 518 -.357 .069 -.089 - .. 167 .220 23 .150 -.020 .022 -.011 -.032 -.116 -.077 -.026 .039 -.119 24 .150 -.020 .022 -.011 -.032 -.116 -.077 -.026 .039 -.119 25 .080 .431 -.339 .104 .657 -.162 -.108 -.036 -.111 .177 26 .204 -.070 .044 -.008 -.096 -.164 -.130 -.069 .333 -.180 27 .192 -.078 -.105 .170 -.080 -.093 -.135 -.045 -.140 .091 28 -.268 -.213 .432 -.418 -.250 -.017 .012 .150 -.160 -.442 29 -.097 -.020 -.212 .280 -.032 -.116 -.077 -.026 -.079 -.018
21 22 23 24 25 26 27 28 29
21 1.000 22 -.094 1.000 23 -.069 -.046 1.000 24 -.069 -.046 1.000 1.000 25 .010 .062 -.018 -.018 1.000 26 .144 -.123 -.035 -.035 -.050 1.000 27 -.121 .007 -.023 -.023 -.035 .049 1.000 28 -.350 -.281 -.092 -.092 -.128 -.245 -.162 1.000 29 -.069 .257 -.013 -.013 -.018 -.035 -.023 -.092 1.000
...... I,,!) w