Industries In Nigeria | Meaning, Types of Industries & Localization Of Industries

Meaning of Industry An industry comprises a cluster of companies involved in the production of similar commodities, such as the shoe, transport, or cement industry. The term “industry” refers to the productive aspect of business activities, encompassing processes like cultivation, production, processing, or manufacturing of goods.   These goods are classified into consumer goods and […]

Meaning of Industry

An industry comprises a cluster of companies involved in the production of similar commodities, such as the shoe, transport, or cement industry. The term “industry” refers to the productive aspect of business activities, encompassing processes like cultivation, production, processing, or manufacturing of goods.

 

These goods are classified into consumer goods and producer goods. Consumer goods, like food grains, textiles, and cosmetics, are directly used by end consumers. Producer goods, such as machinery and equipment, are utilized by manufacturers in the production of other goods, representing the supply side of the market and influencing the expansion of trade and commerce.

 

Business Entity

A firm is an independently managed business entity engaged in production, construction, or distribution activities. Examples of firms in Nigeria include Dangote Cement and Cadbury Nigeria Plc.

 

Plant

Synonymous with a factory, a plant consists of the tools, equipment, machines, and buildings associated with a business. It serves as the physical location where production is organized, as seen in establishments like the Aladja Steel Plant.

 

Types of Industries

  1. Primary Industry

Primary industries involve the production of goods with minimal human effort, relying on natural resources. Examples include agriculture, farming, forestry, fishing, and horticulture.

 

  1. Genetic Industry

Genetic industries focus on the reproduction and multiplication of plant and animal species for profit, encompassing activities like plant nurseries, cattle rearing, poultry, and cattle breeding.

 

  1. Extractive Industry

Extractive industries involve the extraction of goods from soil, air, or water in raw form, supplying materials for manufacturing and construction industries. Examples include the mining industry, coal and oil extraction, iron ore extraction, and timber and rubber extraction from forests.

 

  1. Manufacturing Industry

Manufacturing industries transform raw materials into finished products using machinery and manpower. Finished goods can be either consumer goods or producer goods, as seen in textiles, chemicals, sugar, and paper industries.

 

  1. Construction Industry

Construction industries focus on building structures like buildings, bridges, roads, dams, and canals. Unlike other industries, the goods produced and sold by the construction industry are erected at the same location.

 

  1. Service Industry

The service sector, crucial for national development, includes industries like hotels, tourism, and entertainment. In modern times, service industries play a vital role in the economic landscape.

 

Location Of Industry

The location of an industry refers to the placement of the industry in a specific area.

 

Factors Affecting Industrial Location:

In general, economic considerations primarily influence the location of industries, although certain non-economic factors can also play a role in influencing specific industries’ locations. The paramount objective is to maximize profit, which implies minimizing costs, leading to a careful selection of specific locations for industries. Various factors contribute to pulling industries toward particular places, and some of the major influencers are discussed below:

 

  1. Availability of Raw Materials:

The proximity to sources of raw materials is crucial in determining an industry’s location. Being close to raw material sources reduces production costs, which is particularly significant for industries heavily reliant on raw materials, such as agro-based and forest-based industries.

 

  1. Availability of Labour:

Industries require an adequate supply of affordable and skilled labour. The attraction of industries to labour centres depends on the labour cost index, with skilled workers’ availability influencing the initial concentration of certain industries in specific regions.

 

  1. Proximity to Markets:

Access to markets is crucial for industries, especially those producing perishable or bulky goods. Industries located near markets can reduce transportation costs for distributing finished products, especially in the case of consumer goods.

 

  1. Transport Facilities:

Transport infrastructure, including waterways, roadways, and railways, significantly influences industrial location. Junction points of these transportation modes become centers of industrial activity, and transportation policies can impact the location of industrial units.

 

  1. Power:

The availability of cheap power sources, such as water, wind, coal, gas, oil, and electricity, influences industrial location. The flexibility introduced by alternative power sources has led to the dispersal and decentralization of industries.

 

  1. Site and Services:

The existence of public utilities, site affordability, and amenities like ground level, vegetation, and related activities can influence industrial location. Government incentives in designated backward areas may attract entrepreneurs to establish units there.

 

  1. Finance:

Availability of capital at favorable interest rates is a dominant factor in industrial location. Historical reviews indicate that concentrations of industries were influenced by the presence of wealthy and enterprising individuals providing financial resources.

 

  1. Natural and Climatic Considerations:

Factors like ground level, topography, water facilities, drainage, and climate can influence industrial location. For instance, humid climates may provide advantages in certain industries like cotton textile manufacturing.

 

  1. Personal Factors:

Occasionally, personal preferences and prejudices of entrepreneurs may influence industrial location, although this is rare.

 

  1. Strategic Considerations:

In modern times, strategic considerations, especially safety during wartime, play a vital role in industrial location. Safe locations become crucial during war, considering potential air attacks on crucial industrial targets.

 

  1. External Economies:

The growth of specialized subsidiary activities and the concentration of industries in specific centers with port and shipping facilities can lead to external economies influencing industrial location.

 

  1. Miscellaneous Factors:

Historical incidents and the size of industrial units can also impact industrial location. The development of the cotton-textile industry in Lancashire and the size of industrial units based on profitable distribution areas and population density are examples of such influences.

 

Localisation Of Industries

Localization of industries refers to the clustering of numerous firms from a specific sector in a particular geographical area.

 

Advantages and Disadvantages of Localization

Advantages

  1. Reputation: The region where an industry is localized gains recognition, and the products manufactured there also acquire a reputable status. Consequently, items associated with that location, such as Sheffield cutlery, Swiss watches, Ludhiana Hosiery, find broad markets.
  2. Skilled Labor: Localization leads to specialization in specific trades, attracting skilled labor to that area. This consistent supply of skilled labor not only sustains the localized industry but also attracts new firms. The growth of industries like the watch industry in Switzerland and the shawl industry in Kashmir is primarily attributed to this factor.
  3. Facilities Development: Industry concentration in a specific region promotes the development of dedicated facilities. Banks, financial institutions, railways, and transport companies establish branches and services, providing timely credit, transportation, and insurance facilities to the firms.
  4. Subsidiary Industries: The concentration of industries gives rise to subsidiary enterprises that supply machinery, tools, and materials. These subsidiaries also utilize by-products, contributing to the overall growth of the industrial ecosystem.
  5. Employment Opportunities: Localization, coupled with the establishment of subsidiary industries, significantly increases employment opportunities in the region.
  6. Common Problem Solving: Businesses form associations to address common difficulties, securing various facilities from the government and other agencies, such as research labs, technical and trade journals, and training centers.
  7. Economic Gains: Localization lowers production costs, enhances product quality, and benefits the economy through increased tax revenue, larger employment opportunities, and improved overall economic performance.

 

Disadvantages

  1. Dependence: The economy becomes dependent on the products manufactured in the localized industry, posing risks during times of war, disasters, or economic crises.
  2. Social Problems: Localization can lead to social issues such as congestion, slum formation, accidents, and strikes, negatively affecting labor efficiency and industrial productivity.
  3. Limited Employment: Employment opportunities become limited to a specific type of labor, and during a slump in the industry, specialized labor may struggle to find alternative employment.
  4. Diseconomies: Over time, the concentration of industries may lead to diseconomies, with issues like restricted transport access, power breakdowns, and increased production costs.
  5. Regional Imbalance: The focus of industries in one region can result in imbalanced regional development, with certain areas experiencing more growth while others lag behind in terms of employment opportunities, earnings, and living standards.

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