1.1 Background of the Study
Industry is an important segment of the economy, the collapse of which will result in the collapse of the economy (South East Queensland (SEQ), 2001; Judy, 2002; and Slogett and Wood, 2005). The activities involved and the result of industrial processes permeate all aspects of society because it is all-encompassing. It improves trade balance because home-grown products, substitute imports, thus saving valuable foreign exchange (Ekholm, 2003), and the more the foreign exchange earned the better for the nation (Cortright, 2001a, Inamura, 2003, Gates, 2006).
Industry generates benefits such as the creation of wealth via the multiplier effect, prosperity, employment and is a vital component in foreign trade. Industrial activities can operate and export to gain more foreign exchange that structurally diversifies the economy, which grows faster and becomes more resilient. It is one of the processes of spatial transformation especially with migration and information flows. There has been traditionally wide support for the leading role of manufacturing in generating wealth and income, which in turn can support expansion in other sectors (Mano and Otsuka, 2000; Feldman, Aharonson and Baum, 2006). Development is based upon growth, which results from further industrialization and increased industrial production.
The location or the locality where an industrial plant situates is accepted to be significant in the processes of economic change. In location of industries, assembly, processing, and shipment are vital because input materials are collected to a point where processing takes place, and production and shipment of the outputs to areas of consumption. For instance, the preferred location of each individual producer is that where demand is large or supply of inputs is particularly convenient. In general, this is the location chosen by other producers (Krugman, 1991a). Such agglomeration is a strategy whereby producers ease the tasks of transactional interaction because proximity translates into lower costs and wider opportunities for matching needs and capabilities and only by close agglomeration can the industrializing country/region usually afford the necessary infrastructure (Mano and Otsuka, 2000; Galan, Benito and Vicient, 2006; and Feldman et al, 2006;). Also, manufacturers are attached to a region by the fact that such agglomeration can sustain a well-developed transport network and a wide range of specialized technical and financial services.
Furthermore, there are certain places in which it is most convenient for the exchange of commodities to take place. These are great business centers or commercial towns. There are special conveniences for exchange that have favoured their rise and growth, and the mere fact that a town lies about the middle of a densely populated district is likely to make it the most convenient place of exchange for the products of that district and for articles brought from more distant parts. Thus, towns situated where a number of roads converge are likely to grow into more important business centers (Cortright, 2001a; Badri, 2007; and Wong, 2007).Therefore, it is only by studying industry as it is already located, and by investigating the principles which lie behind successful industrial location in an area, can we hope to guide its spread and progress spatially.
1.2 Statement of the Research Problem
Geography is a science of location that is interested in the decoding spatial similarities and variations (Onyenechere, 2011). As a result, geographers are often concerned with the spatial distribution of phenomena and human activities including industries, and the processes which influence that distribution. Specifically, the processes which contribute to determine the location and distribution of industries are complex and dynamic (Grahame et al 2001; Sloagett and Woods, 2005; Badi, 2007; and Kefela, 2010). Also, not all industries choose the same plant site because their production (costs) and market needs differ. The location problem is complicated by changes occurring over time. For instance, a location because of high market demand may suffer a serious disadvantage when competitive industries begin to carve out that market (Rural Businesses Forum (RBF), 2007).
As a result of changes in location factors, the degree of industrial concentration fluctuates widely according to the type of industry, and industrial plants producing many different types of goods cluster in a region that provides the needed resources. Regions according to Stategy for Economic Vitality (SEV) (2002a), Sloagett and Woods (2003), Yang (2004), Agboli and Ukaegbu (2006), and RBF (2007) that provide such better location opportunities will attract industries and growth away from regions with less favourable initial conditions. In this regard, access to individuals or designated firms, whether physical (via transport) or non-physical (via information links) is vital. Access is considered in terms of costs of production variables, reliability, and convenience. This is one of the many factors that promote regional disparity in location decision (SEV, 2002a; Sloagett and Woods, 2003; Mertins, 2010; and Onyenechere, 2011). At times a region may or may not possess all the location variables either as a result of geographical position/environmental conditions or due to spatial inhibitions in relation to variations in industrial location requirements. Again, the existence of active industry may make the location attractive to other industries since some industries may use the products or by-products of already established firms as their raw materials (Feldman et al, 2006). Conversely, new industries may be set up to supply established firms with certain parts or materials. As the nucleus grows, it becomes a center of concentrated earning power, and therefore, of purchasing power. As such, it becomes attractive to industrial location and a better market for the products of industries. Therefore, location decisions are tied to the degree of availability of the necessary and required variables. Moreover, in the recognition of importance of location of industrial activities, there is increase in research for better location decisions because location can either make or break a business. However, many of such studies focus more on the characteristic descriptions and the effects of each of the location factors (Crafts and Mulatu, 2006; and Ogbu, 2008, 2011) without adequate involvement of different industrial types in order to determine the relative position of each location factor in accordance with industrial types. In addition, studies abound on the cluster benefits in the more developed countries as in Europe, America, and China among the industrial plants and industrial pull towards regions where resources are available, but few of such studies and studies on the multiplier effect from the activities of industry exist especially in developing countries like Nigeria.
Moreover, researches by 20th Century geographers in Nigeria were based on the reasons (Location factors) for the concentration of industries in the Lagos – Ibadan axis, Port Harcourt-Aba-Enugu area, Kaduna- Jos-Kano triangle, and Benin-Sapele-Warri region. Also, shortfall exists in the various studies conducted in Nigeria in the 21st Century by Ikpeze, Soludo and Elekwa (2004), Ogunkola and Jerome (2006), Amsterdam (2009), Ugbajah (2010), and St. Mathew-Daniel (2012). These various studies mostly dwelt on the development of conducive environment especially on regulatory policies (Amsterdam, 2009; Ugbajah, 2010; Kashim, 2011), and infrastructure (Sambo, 2010; Musa and Ndawayo, 2011) for both local and Foreign Direct Investment (FDI) in Nigeria. Other studies like that of Monday (2011) were on the factors that push industries out of Nigeria.
At regional levels in Nigeria, researches were mainly on the challenges and opportunities available for industrial development (Olokesusi, 2011) in the south western Nigeria. In the southeast of Nigeria, Majuk, Erim and Ajor (2010) studied location characteristics of speific (pottery) production activities, while Onyenechere (2011) was interested in the spatial distribution of informal economic activities in rural areas. Therefore, studies pertaining to industrial locations in many parts of Nigeria were in such areas as factors in the concentration of industries in four main areas of southeast, west, Niger delta, and north; industrial attractions through resource and infrastructural development; and factors in the locations of specific industries. Thus, few location studies exist on the new and emerging industrial areas like the 9th Mile. In addition, the few available studies on industrial areas like that of Areola and Okafor (1998), Alokan and Onyemelukwe(1994), Onyemelukwe(1983), and Okeke (1982) are old and cannot be relevant in assessing the present location conditions in modern industrial areas.
These circumstances make it desirable for the application of techniques such as Multiple Linear Regression (MLR) and Principal Component Analysis (PCA) in the location assessment of industrial plants at the new industrial area of the 9th Mile in order to detect the major location variables and issues on benefits and problems in contemporary industrial locations in the study area.
1.3 Aim and Objectives of the Study
The aim of this study is to investigate the location factors, linkages and the multiplier effects of industrial plants at the 9th Mile area of Enugu state, Nigeria. In order to achieve the general aim of this study, the following specific objectives were pursued. They are:
To determine the factors that influenced the location of the industrial plants.
To identify the characteristics of the industrial plants, profitability, and the effects of costs of production in the location of the industrial plants in the study area.
To determine the multiplier effects of the industrial plants.
To identify the industrial plants’ linkages in the area.
1.4 The Study Area
The 9th Mile area is located in Udi Local Government Area of Enugu State (Fig.1) in the southeastern part of Nigeria. It is bounded by Abor and Eke in the North, Nsude in the South, Ngwo and Enugu in the East, and Owa-Imezi (Ezeagu LGA) in the West (Fig. 2). It lies geographically between latitudes 60 24′ 45″ and 60 26′ 45″ North of Equator, and between longitudes 70 23′15″ and 70 25′ 00″ East of Greenwich Meridian (Fig. 3). It covers an area land that is of about 7 hectares square. The 9th Mile area is a nodal environment, being found at the junction of many roads (Fig.3). Such roads are Enugu to Markurdi highway, Enugu to Onitsha dual carriageway. Other subsidiary roads are Oji-River – Udi – Ngwo – Enugu road, Nsukka – Okpatu – Abor – Enugu road, Nsukka – Enugu road, and Ezeagu – Eke – 9th Mile – Enugu road. In fact, it is a gate-way to the northern Nigeria from the eastern part as shown in Fig. 3. This study discovered that none of the 32 studied industrial plants at the 9th Mile area is located in the clans of Okwe in the east, and Owa-Imezi in the west. Okwe is more a residential area, and as such houses few industrial plants none of which accepted to attend to the researcher. However, because it is a residential area, it is included in this study.