Why are industries localized in a few limited areas? Why is there so much of crowding on a few particular spots? The promoter's reply is- 'for economy of production'. That is to say to produce and to sell at the lowest possible cost. And these areas have been selected after much of judgment and calculations.
A modern manufacturing industry requires many things. It must collect raw materials and power resources (coal, petroleum or hydroelectricity) to produce things. It requires finance, machinery and labour to keep it running. It requires a market to sell its products. And above all, it requires transport facilities.
In fact, each and every localized centre has some advantageous factors. But this sort of justifying does not give us a scientific approach to the basis of world's industrial locations.
World industries are found to be localized in any one of the following areas:
1 Power sites,
2 the source of raw materials,
3 the market,
4 some convenient transport point in between these.
1. Iron and Steel Industry: Production of iron is one of the oldest manufacturing industries of the world. The modern process of production through coke-oven plant, blast furnace, steel mill and rolling mill came in after the industrial revolution Europe. A modern steel industry requires coal, iron-ore, manganese, limestone, dolomite, various alloy metals and enough of water and air. Among these water and air are ubiquities (found everywhere). But the other materials are strictly localized and have to be transported to the manufacturing centre. Moreover, it requires a market to sell the finished product. Among the localized raw materials coal and iron-ore are major items, and the others may be considered as minor items. Minor raw materials are needed in lesser quantities, and the transportation of individual minor items cannot materially affect the total transportation cost. Therefore, to find out the centre of minimum transportation cost for an iron and steel industry coal iron-ore and the market are the items, which require consideration.
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