Urban and Regional Report No. 81-3 DETERMINANTS OF INTRA-URBAN LOCATION OF MANUFACTURING EMPLOYMENT: AN ANALYSIS OF SURVEY RESULTS FOR BOGOTA, COLOIBIA* By Kyu Sik Lee January, 1982 (Revised) - This report was prepared under the auspices of the City Study Research Project (RPO 671-47) as City Study Project Paper No. 23. The views reported here are those of the author, and they should not be interpreted as reflecting the views of the World Bank. This report is being circulated to stimulate discussions and comment. An earlier version of this paper was presented at the Annual Meetings of the Eastern Economic Association, Plhiladelphia, Pa., April, 1981. Urban and Regional Economics Division Development Economics Department Development Policy Staff The World Bank Washington, D.C. 20433 PREFACE This paper forms part of a large program of research grouped under the rubric of the "City Study" of Bogota, Colombia, being conducted at the World Bank in collaboration with Corporacion Centro Regional de Poblacion. The goal of the City Study is to increase our understanding of the workings of five major urban sectors - housing, transport, employment location, labor markets, and the public sector -- in order that the impact of policies and projects can be assessed more accurately. The author has benefited from comments and discussions with Gregory Ingram, Douglas Keare, Steve Putman, and participants in seminars at The World Bank and Corporacion Centro Regional de Poblacion. He thanks Maria Clara de Posada and Jose Fernando Pineda who conducted the survey of establishments; Wilhelm Wagner and Leslie Kramer for research assistance. ABSTRACT This paper describes the sampling strategy of the establishment survey conducted in Bogota to study the determinants of manufacturing employment location, and reports descriptive findings based on the survey. The analysis of the survey results revealed that the industry is dominated by single plant operations with a moderate production scale; most firms use a line-flow type production process housed in a single story plant; new firms are small and operate in old buildings. Most of shipments of inputs and final products are made by trucks; rail is seldom used. The firms export less than 50% of their products to outside Bogota. The plant relocation tends to accompany changes in production technology. For most movers, the distance moved was short, about 1-2 km; the large size firms moved longer distances. More than 80 percent of workers stayed with the same firms after relocation. For the majority of firms, both input and output delivery distances and the commuting distance of produc- tion workers stayed about the same r.fter move while the commuting distance of administrative workers increased only slightly. The plant space was the most important factor in the firm's location choice, followed by rent payment, proximities to suppliers, amenities of zones, road access, proximities to clients and the quality of public services. Twentv-two percent of sample firms had a plan to relocate within the next five years; the medium size firms (with about 50 employees) showed the highest propensity to relocate, while most of the large firms (with more than 100 employees) did not have such a plan. TABLE OF CONTENTS Page 1. Introduction . . . . . . . . . . . . . . . . . . . . . . 1 2. Overview of Bogota's Employment Location Patterns . . . . 3 3. Sampling Strategy and Sample Outcome . . . . . . . . .. 9 4. Selected Findings . . . . . . . . . . . . . . . . . . . 14 5. Summary of Findings,and Concluding Remarks . . . . . . . 34 References I 1. Introduction The work reported in this paper is part of the continuing research effort in the Bogota "City Study" project in the World Bank. This paper presents selected findings on the determinants of manu- facturing employment location in Bogota, Colombia, based on the establishment survey conducted for the City Study project. Using the annual industrial directory data compiled by the National Statistics Department (DANE), Bogota's manufacturing location patterns and their changes were extensively analyzed before (Lee, 1981); this analysis, performed in terms of births, deaths, and relocation of firms, revealed a high degree of employment location dynamics and strong evidence of the spatial decentralization of manufacturing employment in Bogota, which is briefly described in the next section. In order to explain these location patterns, a survey of manufacturing establishments was conducted in Bogota usitug the indus- trial directory as the sample base. The survey questionnaire was designed to take no more than one hour to respond and did not require the respondents to look up their accounting books, but the question- naire contained a large amount of information with nearly 300 compurer readable variables. This paper will present most salient aspects of the survey results which provide the basis for understanding the changing location patterns of manufacturing employment summarized in the next section. The analysis in this paper is descriptive; an analytical model of employment location was constructed earlier and estimated using this survey data (Lee, 1982). -2- After a brief overview of the manufacturing employment location patterns in Bogota, the sampling strategy is briefly described and the nature of the sample outcome is summarized. -/ In the rest of the gaper, the survey results are presented in three categories of findings: (1) Establishment characteristics, (2) site characteri3tics, and (3) the factors considered to be important for the respondent's location.-choice. These results are contrasted and compared among the sample establishments by establishment size, location history (i.e., mature firms, births, and movers), and tvpe of industrv. The underlying theoretical framework is that of a firm of particular type will locate at a site with particular attributes in such a way that the selected location is optimal to the firm in an urban area, in terms 2/ of profits, costs, or some other criteria.- The establishment charac- teristics include type of products, production process, building characteristics, lot size, floor space, and employment size by skill. The site attributes include proximities to product markets and input suppliers, commuting distance, transport modes, the quality and availability of public utilities and municipal services. 1/ The studies by Schmenner (1981) on Cincinnati and New England were useful for the survey work reported in this paper. 2/ See Lee (1982) for a formulation of such a model and the estimation results using the same data set described in this paper. 33 2. Overview of Bogota's Employmetc- Location Patterns-/ In the studies of employment location in the literature, changes in location patterns in an urban area were examined at the margin by decomposing changes in the stock of employment in an area by the flows of births and deaths, relocation of jobs, and stationary 4 / growth and decline of employment.- This approach is analytically attractive and avoids cross-section bias. The Bogota study also followed this approach, and the survey results reported in this paper will contrast and compare the behavioral responses by this classifi- cation of firms. According to a 1977 DANE household survey, manufacturing jobs accounted for 25 percent of employment in Bogota,5- which comes close to the manufacturing share of 25 to 30 percent in large U.S. cities such as Boston, Chicago, and Los Angeles. In terms of employ- ment dynamics, however, Bogota does not resemble large old U.S. cities 3/ This part-comes from a previous study reported in Lee (1981). 4/ Schmenner (1981), Struyk and James (1975), and Leone (1971) in the U.S., and Firn (1976), Dennis (1978), and Mason (1980) in thle U.K. 5/ In 1977, Bogota's population was less than 4 million. -4- like New York, Boston,or Cleveland. Table 1 indicates that the annual birth rate of firms in Bogota exceeds that of all five U.S. cities compared; Phoenix, with a birth rate of 7.6 percent,comes closest to Bogota's 8.8 percent. It should be also noted that the annual birth rate is greater than the annual death rate for Bogota, Cali,-/ Phoenix, and New York;-/ the opposite is true for Boston, Minneapolis, and Cleveland. In all cases, the activity rates in terms of establishments are greater than the rates based on employ- ment. This indicates that the marginal firms are small ones which have a greater propensfty to move, to start up and close down business. Bogota is divided into 38 subareas called comunas. To ob- serve changes in employment location patterns, we aggregated the comunas to 6 rings (see the attached map). In Table 2, we find strong evidence of decentralization of manufacturing employment in Bogota. During 1970-75, the central business district (Ring 1) expe- rienced a net loss of manufacturing jobs, but manufacturing employment grew at an accelerating rate as the distance from the city center increases. This resulted from a steady movement of manufacturing firms outward as they grew larger and needed more space. Moreover, small new firms (with less than 25 employees) tended to locate in the central area wnere various externalities were readily available, and the birth of large new firms (with 100 or more employees) tended to take place in the outer areas of the city. 6/ Cali is the third largest city in Colombia with a population of about 1 million. 7/ This was for the late 60's. The situation might have been reversed by now. 8/ The data were unable to reject the "incubator hypothesis" (Lee, 1981). -5- Table 1:. BIRTH, DEATH AND RELOCATION RATES IN BOGOTA, CALI AND U. S. CITIES Births Denth_s a/ _______ _ l Establish- Employment Establish- . Employment Establish- Employment ments ments ments % of Annual % of Annual Z of Annual % of Annual % of Annual Z of Annua base rate base rate base rate base rate base rate base rate a! Cleveland-! , 9.97 3.22 2.59 0.86 14.07 4.49 7.75 2.52 13.83 4.41 5.77 1.89| Minneapolis- 12.29 3.94 6.17 2.02 18.00 5.67 11.25 3.62 15.93 5.05 8.28 *2.69 St. Paul Boston a/ 6.10 1.99 1.30 0.43 13.40 4.28 8.00 2.60 9.80 3.17 4.70 1.54 PhoeniLmW 24.40 7.55 12.10 3.88 20.20 6.32 5.30 1.74 8.90 2.88 4.70 1.54 New Yor.b" 10.21 4.98 3.95 1.96 7.56 3.71 3.55 1.76 11.45 5.57 1.24 0.62 Bogota- 52.38 8.79 31.96 5.70 27.01 4.90 12.61 2.40 19.12 3.56 16.59 3.12 C/ Caili 43.13 7.44 24.48 4.48 26.88 4.88 11.27 2.16 18.33 3.42 10.40 2.00 a8 From R. St'uyk and F. James, Intrametropolitan EmDloyment Location, Legto Books, 1975; covered 1965-68 period (1965- was the base year). 1V From R. Leone, Location of M!anufacturing Activity in the New York Metropolitan Area, 1971; covered 1967-69 period (1967 was the base year). c! The period covered was 1970-1975; 1970 was used as the base year. The base year figures can be seen in Lee (1978). d/ In the case of Bogota, the figures include -stablishments whiUch moved at least to another seccion chang ig DANE's six--digit zone code; in the case of Cali the figures include esta1l6ishments which moved at least to another barrio changing the first four digits of DANE's zone code. Including the moves within the same seccion, the annual relocation rate of establishments was 5.12 pircent for Bogota and 4.28 percent for Cali. Source: Lee (1981). -6- BOGOTA: Ring System Based on Comunas ,\> 6 5 XV I -7- Tabla 2: DISTRIBUTI0NF MAUFACTURniG EMPL0OYENT-: BY RING, BOGOTA, 1970-75 1,970 1,973 Annual Average Ring Persons % Persons Z GrOth Rate (Z) 1(CBD) 4,538 5.60 4,102 3.47 -2.00 2 11,767 14.53 14,898 12.59 4.83 3 34,351 42.42 47,858 40.44 6.86 4 18,112 22.37 25,958 21.94 7.46 5 11,548 14.26 24,047 20.32 15.80 6 391 0.48 729 0.62 13.27 a.a. 266 0.33 741 0.63 - Total 80,973 100.00 118,333 100.00 7.88 a/ Establishments with 10 or more employees. Source: Lee (1981). 8 3. Sampling Strategy and Sample Outcome - A sample of 126 establishments interviewed in the survey was.drawn from DANE's 2,629 distinct firm records in the industrial 10 / directory files covering 1970-1975,- stratified by the following four categories: (1) location history, i.ee., mature firms, movers, and births;1-/ (2) the zone system defined by 38 comunas; (3) the type of industry defined by three digit SIC codes; and (4) firm size by employment. In order to minimize the cost of sampling while having a sufficinet number of observations for econometric estimation, we chose the, textile industry and the fabricated metal industry as two main industries to be studied. These industries without much locational idiosyncrasy should be more amendable to policies than some other industries such as cement or steel. Moreover, both industries had a large share of establishments in Bogota's manufacturing, accounting for 50 percent of total manufacturing employment. The homogeneity of firms in each industry aroup makes it possible to test behavioral hypotheses with sufficient degrees of freedom. However, we added as a third group, the "other industries" category, to do mainly descriptive studies about establishments in various other types of industries. 9/ This part was reported earlier in Lee (1982) where the same data set was used. 10/ The origiinal DANE (National Statistics DeDartment) files had 3,388 records for the six--year period. In order to maintain consistency in coverage over the period, however, firms with less than 10 employees or those which appeared only for one year in the directory were not included in our master file. The basic structure of the i.ndustrial directory data was documented. in Lee (1978). 11/ Mature firms are defined as those that appeared in all six annual directories with the same address; "births" are those chat appeared for the first time in any year during 1971-1975; movers are those - --ii -e n it r Qota ..in nnrinz 1971-L975. .. -9- The second consideration given in the sampling process was to over-sample large firms so that the number of workers included in the samp e could be maximized. Finally, an attempt was made to cover a wide geographic area in such a way that sDatial analyses could be possible including the estimation of the rent and wage gradients covering the entire city area. Our target sample size was 120 with about equal shares of establishments among the three types of location historv. 12/ The realized sample of 126 establishments- consists of: 58 mature firms, 50 movers (including two firms that moved to Bogota from outside) and 18 births (see Table 3). The newly established firms were mostly small (Table 5). 13/ The sample coverage across zones was satisfactory; with 27 comunas covered, the spread was fairly even over the three Rings which have high manufacturing employment densities (see Table 2 and the map on page 6). On the other hand. onlv a small number of establishments was selected from Ring I (CBD) and Ring 6 (three residential comunas in the north). In some cases the four-way stratification severely limited the possibility of drawing sample establishments from a specific population category. For example, not enough textile firms were located in certaiin comunas. Therefore, sample establishments were also selected from two 2k Of the 128 interviews completed successfully, two cases had to be dropped from the final sample: One firm was located outside Bogota, and the other one had recently moved to another city (Barranquilla). 13/ Making interview appointments with small new firms was extremely difficult and the rate of making a final visit for interview was low. - 10 - Table 3: SAMPLE COMPOSITION: NUMBER OF ESTABLISHMENTS BY ZONE AND FIRM TYPE Movers Movers Within From Zone Mature Births Bogota Outside Total 0 2 2 0 4 Ring 1 0.00 50.00 50.00 0.00 100.00 0.00 11.11 4.17 0.00 3.17 7 3 5 0 15 Ring 2 46.67 20.00 33.33 0.00 100.00 12.07 16.67 10.42 0.00 11.90 17 6 13 1. 37 Ring 3 45.95 16.22 35.14 2.70 100.00 29.31 33.33 27.08 50.00 29.37 16 3 13 1 33 Ring 4 48.48 9.09 39.39 3.03 100.00 27.59 16.67 27.08 50.00 26.19 16 4 12 0 32 Ring 5 50.00 12.50 37.50 0.00 100.00 27.59 22.22 25.00 0.00 25.40 2 0 3 0 5 Ring 6 40.00 0.00 60,00 0.00 100.00 3.45 0.00 6.25 0.00 3.97 58 18 '48 2 126 Total 46.03 14.29 38.10 1.59 100.00 100.00 100.00 100.00 100.00 100.00 Source: The City Study Establishment Survey Table 4: SAMPLE COBOSITION: NUMBER OF ESTAHLIS1.TS BY ZONE AND-INDUSTRY Non- Fabricat- electric Zone Textile Apparel ed Metal Machinery Ote-r Total 1 1 1 C 1 4 Ring 1 25.00 25.00 25.00 0.00 25.00 100.00 3.03 10.00 2.86 0.0 0 2.56 3.17 3 1 4 1 6 15 Ring 2 20.00 6.67 26.67 6.67 40.00 100.00 9.09 10.00 11.43 11.11 15.38 11.90 6 6 13 4 8 37 Ring 3 16.22 16.22 35.14 10.81 2:1.62 100.00 18.18 60.00 37.14 44.44 2Q..51 ;9.37 12 1 9 2 9 33 Ring 4 36.36 3.03 27.27 6.06 27.27 100.00 36.36 10.00 25.71 22.22 23.08 26.19 10 1 6 2 13 32 Ring 5 31.225 3.13 18.75 6.25 40.63 100.00 30.30 10.00 17.14 22.22 33.33 25.40 1 0 2 0 2 5 Ring 6 20.00 0.00 40.00 0.00 40.00 100.00 3.03 0.00 5.71 0.00 5.13 3.97 33 10 35 9 39 126 Total 26.19 7.94 27.78 7.14 30.95 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Source: The City Study Establishment Survey -12- Table 5: SVMLE C0MPOSITION: NUMBER OF ESTABLISHMENTS BY FIRM TYPE AND EMPLOYMENT SIZE 100 - 1 - 421 5 - 9 10 - 19 20 - 49 50 -99 9,999 Total Mature 0 1 8 13 4 32 58 0.00 1.72 13.79 22.41 6.90 55.17 100.00 0.00 25.00 38.10 34.21 23.53 72.73 46.03 - 6.00 16.25 33.54 81.75 324.72 194.66 b Births 1 2 3 9 1 2 18 5.56 11.11 16.67 50.00 5.56 11.11 100.00 50.00 50.00 14.29 23.68 5.88 4.55 14.29 3.00 6.00 13.00 26.56 63.00 174.00 39.11 Movers 1 1 10 16 12 10 50 2.00 2.00 20.00 32.00 24.00 20.00 100.00 50.00 25.00 47.62 42.11 70.59 22.73 39.68 3.00 7.00 13.50 31.94 78.75 335.60 99.14 Total 2 4 21 38 17 44 126 1.59 3.17 16.67 30.16 13.49 34.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 3.00 6.25 14.48 31.21 78.53 320.34 134.53 a/ Persons. b/ The bot-^om number in each cell is the mean employment size of firms in that cell. Source: The City Study Establishment Survey. I- -13- other industry categories that are closely related with the two main industries, namely, the textile industry was supplemented by the apparel industry, and the fabricated metal industry by the non-electric machinery industry. As shown in Table 4, the final sample has fairly even shares among the three industry groups: about 35% each for the two main industry groups and 30% for the "other" category. In Table 5, we see that the average size of mature firms in the sample is about four times larger than the average size of births, and more than twice that of movers. This resulted from the design of over-sampling of large size firms; the sanple average firm size of 135 persons is about twice as large as the average firm size of the establishments in the population.14/ 15 / 4. Selected Findings - This section presents selected findings of the survey results in three categories, as mentioned above: (1) Establishment characteristics, (2) site characteristics, and (3) important factors for location choice. Particular attention is given to the characteristics of the movers and importa t factors that influene their location choice. The discussion will be focused on variations among the three 14/ According to the industrial directory file of 1975, the average firm size of 1,829 establishments with 10 or more employees was 65 persons. 15/ The data file has gone through a number of iterations of cleaning and editing. The final data file is stored with a label, D/WILI/KSLSURVEY297, at the World Bank computer center. -14- types of firms and variations across the space as the distance from the CBD increases. Establishment Characteristics Production plant. Table 6 shows several aspects of operational characteristics of the production plant. For the sample firms as a whole, more firms use a line-flow type production process housed in a single story plant. There is, however, an interesting contrast between the births on one hand, and the mature firms and the movers on the other. The "birth firms" 16/ - are much smaller in size (about one-third of the sample average) without having much land space for expansion. Compared with other two types of firms, a large proportion of the birth firms tend to produce with a batch process type production technique on a single shift basis. The buildings used by the birth firms are much older (twice as old as those of movers) and tend to be more complex with a combination of single and multi-level structures. These general plant attributes of the birth firms represent the characteristics of places of manufacturing activities in the central area. These findings on the attributes of the birth firms are consistent with the "incubator hypothesis" which states that small new firms tend to locate in a central area where various externalities are readily available. 17/ 6-/ For convenience, the births, i.e., newly established firms, will be called the "birth firms." 7/ The "incubator Hypothesis" was formally tested in Lee (1981) for Bogota. Struyk and James (1975) tested this hypothesis for U.S. cities. -15- Table 6: PLANT CHARACTERISTICS BY FIRM TYPE Mature Births Movers All Production Process (% of estab.) Batch 29 44 24 29 Line flow 45 33 50 45 Both 16 11 10 13 Other 10 12 16 13 Total 100 100 100 100 Average Age of Buildings (yearsJ 19 24 12 17 Land for Ex=ansion (% of estab.) Yes 41 17 30 33 No 57 78 56 60 n.a. 2 5 14 7 Total 100 100 100 100 Number of Floor Levels (% of estab.) One story 64 67 64 64 Two stories 19 17 14 17 Three stories 5 0 8 6 Four or more 2 0 2 2 Combination 10 17 12 12 Total 100 100 100 100 Number of 8-Hour Shift (% of estab.) One 48 83 70 62 Two 33 6 14 21 T-ree 16 11 16 15 n.a. 3 - - 2 Total 100 100 100 100 Average EmDloyment Size (Persons) 195 39 99 135 Number.of Establąshments 58 18 50 126 Source: The City Stu:dy Establisiment Survey. - 16 - The plant ch;aracteristics of the recent movers are quite similar to those of the mature firms except that the latter have a larger firm size and use more multi-shift operations. It is possible that the level of production technology of the movers tends to approach that of the mature firms, which may represent the currently available level of technology. Multi-plant operations. It is worth to note that only fifteen firms in the sample reported multi-plant operations; of these fifteen establishments visited, eleven were the company headquarters with their main plant and only the remaining four were branch plants. Eight firms had two branch plants while one firm had as many as seven. Of a total of 33 branches reported in the survey, 20 were located in Bogota. Only two establishments of the multi-plant firms were specializing in a portion of manufacturing process, indicating the near absence of the vertical integration of production process. We may conclude that the manufacturing industry in Colombia is dominated by single-plant operations with a moderate scale of production. 18/ Site Characteristics Shipments and market access. In order to assess various means of input and output shipments, the questionnaire asked the percentage distribution of the value of goods shipped by different modes of 8/ Based on the industrial directory data, Bogota's average firm size in the largest size category (500 or more) was about 700 persons, only about half the size of the same category in large U.S. cities. lilt --tf'- '. .- -17- transport. The use of trucks was by far the dominating means of goods shipments; Table 7 shows that 81 percent of firms use trucks for shipping more than 95 percent of their final products, and 79 percent of firms receive more than 95 percent of their inputs delivered by truck. On the average the sample firms use trucks for shipments of about 87 percent of bo'th inputs and outputs. The use of trucks by the birth firms was much less than in the case of the other two groups, indicating their apparent difficulties with the access to roads and trucking facilities in the central area; or they may use cheaper *.eans of transport. The use of trucks has been well documented as a major explanatory factor for the decentralization trend in the U.S. cities 19/ Although the highway network in Colombia is by no means at a scale comparable to the U.S., it seems clear that the extensive use of trucks (or the lack of the importance of rail) has contributed to the decentralization trend of manufacturing employment in Bogota. It is remarkable to note that none of the 126 firms uses rail for shipment of outputs and only three firms indicated that they receive about 20% of their inputs by rail. Only two decades ago, the rail station near the CBD played the central role for goods shipments. On the average the sample firms exported (to outside Bogota) about 43 percent of their outputs and imported abouted the same percent 19/ - For example, Hoover and Vernon (1959), and Moses and Williamson (1967). - 18 Table 7: SHIPMENTS OF OUTPUT AND INPUTS BY FIRM TYPE Mature Births Movers All Output Shipped by Truck (% of estab.) Less than S0% 1.7 0.0 2.0 1.6 50-94% 6.9 0.0 12.0 7.9 95-100% 84.5 77.8 78.0 81.0 n.a. 6.9 22.2 8.0 9.5 Total X 100.0 100.0 100.0 100.0 (mean) "' (89.7) (77.8) (88.8) (87.7) Inputs ShiDped by Truck (% of estab.) Less than 50% 1.7 11.1 2.0 3.2 50-94Z 13.8- 5.6 6.0 9 5 95-100% 81.0 66.7 80.0 78e6 n.a. 3.5 16.7 12.0 8.7 Total 100.0 100.0 100.0 100.0 (mean) a! (92.4) (75.3) (84.6) (86.8) Output Sold in Bogota (% of estab.) Less than 25Z 15.5 16.7 22.0 18.3 25-49% 19.0 0.0 20.0 16.7 50-74% 25.9 33.3 34.0 30.2 75-100% 39.7 50.0 22.0 34.1 n.a. 0.0 0.0 2.0 0.8 Total 100.0 100.0 100.0 100.0 (mean) a! (58.8) (71.7) (50.6) (57.4) Inputs Bought in Bogota (% of estab.) Less than 25% 31.0 5.6 12.0 19.8 25-49% 13.8 11.1 24.0 17.5 50-74% 15-.5 11.1 12.0 13.5 75-100% 32.8 66.7 44.0 :2.1 n.a. 6.9 5.6 8.0 7.1 Total a/ 100.0 100.00 100.0 100.00 (mean)- (50.7) (75.7) (58.1) (57.2) Number of Establishments 58 18 50 126 a/ The average percent of the value of output or inputs for categories of firms. Source: The City Study Establishment Survey. - 19 - of inputs (Table 7). The extent of exports by the manufacturing industries in Bogota is small compared to that of large U.S. cities. The birth firms are more oriented to the local markets for both output and inputs than the other two groups. On the whole it seems difficult to classify the manufacturing industries as the export sector in Bogota. According to Schmenner (1981), in Cincinnati, for example, manufacturing firms exported between 70 to 90 percent of their output depending on the size of the firm; the mover firms with 100 or more employees in that city exported 95 percent of their outputs. Evaluation of present location. In order to evaluate the conditions of the present locations, the respondent was asked to state whether he feels very satisfied, more or less satisfied, or dissatisfied with respect to various locational attributes. Table 8 reports the percent of firms in each firm type that answered "very satisfied" with respect to each individual attribute. For example, 43 percent of the mature firms responded "very satisfied" with respect to plant capacity at the present site. On the whole, the sample firms were "very satisfied" with road access, proximities to clients and suppliers, and the availability of unskilled workers, while dissatisfied with the quality of municipal services, zonal amenities, the availability of skilled workers, and the cost of land for expansion. It is interesting to note that a much larger proportion of the movers felt "very satisfied" with plant capacity than the mature firms. However, only a few movers responded "very satisfied" with respect to the cost of land f'or expansion. This may indicate the -20- Table 8: EVALUATION OF PRESENT LOCATION BY FIRM TYPE Mature Births Mo"ers All (Percent of Establishments in Each Type) I, 'Very satisfied" with: Plant Capacity 43 39 62 50 Cost of Land for Expansion 31 17 16 23 Availability of Skilled Workers 31 22 10 21 Availability of Unskilled Workers 62 39 60 58 b/ Quality of Public Services 26 -- 50 36 33 Quality of Municfipal Services 14 11 16 14 Road Access 81 72 88 83 Proximity to Clients 78 72 74 75 Proximity to Suppliers 72 28 52 58 Amenities of Zone 24 6 18 19 Number of Establishments 58 18 50 126 a/ The questionnaire offered three possible responses: very satisfied, satisfied, not satisfied. b/ Electricity, water, etc. cl Police, fire protection, etc. Source: The City Study Establistment Survey. - 21 - potential for further growth of the movers and subsequent relocations. Another point to note is the unavailability of skilled workers in the case of movers. Since the majority of workers stays with the firm after move (Table 11), this need for skilled workers must be for additions to the current work force after move. The new location may be too far from high income residential areas or may have other undesirable attributes. The birth firms seem to have difficulties with attracting even unskilled workers. 39' All three types of firms felt dissatisfied with the quality of municipal services. The birth firms showed the highest satisfaction with the quality of public services and the lowest for zonal amenities relative to the other two types of firms, again indicating the characteristics of their central locations. The information in Table 8 was processed according to the zone of location (by ring) and reported in Table 9. The level of satisfaction increases with the distance from the center with respect to all attributes except for the quality of public services, the quality of municipal services, and the proximity to clients. This may indicate that public policies for infrastructure investment have been lagging behind the demand for better-quality utilities and municipal services and for improved transport facilities in the outer areas. The quality of public services was more closely evaluated in the survey for specific items. Table 10 shows spatial variations in Lo The average monthly wage paid by this group of firms (2,700 pesos) was much lower tian the sample average (3,400 pesos). Table 9: EVALUATION OF PRESENT LOCATION BY ZONE Ring 1 Ring 2 Ring 3 Ring 4 Ring 5 Ring 6 All (Percent of Establishments In Each Ring) a/ "Very satlsfled" with; Plant Capacity 75 47 38 52 59 60 50 Cost of Land for Expansion 0 27 5 33 38 0 23 Availability of Skilled Workers 25 7 14 15 47 0 . 21 Availability of Unskilled Workers 25 53 58 55 66 80 58 b/ Quality of Public Services 50 40 41 36 19 20 33 Cl Quality of Municipal Services 0 27 14 18 9 0 14 Road Access 50 47 89 85 94 80 83 Proximity to Clients 75 80 89 76 59 60 75 Amenities of Zone 0 7 14 21 25 60 19 Number of Establishments 4 15 37 . 33 32 5 126 a/ The questionnaire offered three possible responses: very satisfied, satisfied, not satisfied. b/ Electricity, water, etc. c/ Police, flre protection, etc. 'qoirce:TheCityStuy Esablihmet Suvey Table 10: QUALITY OF PUBLIC SERVICE BY ZONE ltlng 1 Ring 2 Ring 3 Ring 4 Ring 5 Ring 6 All (Percent of Eatablishmeats In Eachl Ring) Electricity Never Interrupted 15.0 66.7 73.0 63.6 62.5 40.0 6. Excellent Fire Protection 0.0 20.0 8.1 15.2 6.3 20.0 1. Sew'erage and Garbage Collection 75.0 13.3 32.4 33.3 31.3 60.0 39.7 Seldom Interrupted Road Never Interrupted 100.0 100.0 70,3 90.9 96.9 80.0 87.3 Number of Firmis 4 15 37 33 32 5 126 Source: The City Study Establishmnent Survey. - 24 - the quality of public services in terms of the frequency of interruption. For all four items considered, the quality level shows a declining tendency as the distance from the center increases. Such tendency was most vivid in the case of sewerage and garbage collection. On the whole the sample firms were least satisfied with fire protection while most satisfied with road services. Important Factors for Location Choice Characteristics of movers. As shown in Table 11 irn all three main industry categories, the proportion of movers that had "still serviceable" conditions at the previous plant was greater than that of firms with previous plants which were cramped, obsolete, or worn out. Nevertheless, the majority of the movers went through considerable changes in production technology. The fabricated metal industry, however, experienced only moderate changes in technology; as much as 40 percent of firms in this industry kept the same production method after move. In the case of the textile industry and the "other industry" category, the plant relocation tends to accompany substantial changes in technology. The fabricated metal industry, without much changes in production technology, was able to retain the highest percent of workers after relocation. For all sample firms, 80 percent of employees stayed with the same establishment after relocation. -25- Table 11:; LAACTERISTICS OF MOVEZRS Fabricated Non-elect. Textiles ADvarel Metal Machinerv. Other A (Percent of Establishments) Condition of Previous Plant Good but cramped 18 25 30 0 32 2 Good but obsolete 24 50 20 33 19 2 Still serviceable 35 0 50 67 31 3 Vorn out 23 25 0 0 13 1 a.a.0 0 0 0 .6 Total 100 100 100 100 100 10 Change in Technology After Move Considerably 47 100 0 67 38 Moderately 41 0 60 33 31 No change 12 0 40 0 19 'a.a. 0 0 0 0 13 Total 100 .100 100 100 100 1 Percent of Workers Stayed After Move. Less than 50% 18 0 0 33 19 50-99% 29 0 50 0 25 100% 53 100 50 67 44 '. a. 0 0 0 0 13 Total a/ 100 100 100 100 100 1 (mean)- (79) (100) (90) (90) (67) ( Nt=ber of Establishments 17 4 10 3 16 Less Than 25 100 or More Distance of Move by Firm Size Persons 25-99 Persons Persons 1-2 km 67% 32% 30% 44 35 km 11 18 20 16 63.0 km 6 36 30 24 'More than 10 km 11 9 20 12 n.a. 6 5 0 4 Total 100 100 100 b 100 (mean in km) (3.5) (5.3) (46.3)- (12. Number of Establishments 18 22 10 50 a/ Average percent of the number of workers who stayed after move. b/ Irncludes two firms that moved to Bogota from other cities. Source: The City Study Establisument Survey. -26 Table 11 also shows that the moving distance. increases with firm size. 21/ Most of small firms moved about 1 to 2 kilometers while large ones more than 5 kilometers. For the movers as a whole, the majority moved only a short distance. 22/ Important Location Factors for Movers. In order to examine the experiences of the movers after relocation, the respondent was asked to evaluate changes in various attributes of the establishment and the plant site. Table 12 lists these attributes and reports to what extent they changed after relocation. First we note that in terms of median percent increase after move, the plant space increased most, followed by land space and the cost of public services. On the ot~her hand, there were virtually no changes in the input delivery distance and the product shipment distance as was also the case for commuting distance of workers. This does not mean that these factors were unimportant for location choice; it is more likely that these factors were so important that the firms tended to move without affecting proximities to the markets and suppliers, and access to labor. Table 13 lists a number of factors that may influence the location choice. Seventy-five percent of the movers indicated that This is consistent with the previous findings based on the industry directory files in Lee (1981), and also confirms the similar findinzs by Moses and Williamson (1967) in the case of Chicago. 22/ Schmenner (1981) found similar evidence. 23/ This increase is obviously in total cost of public services, not unit cost. /{ - 27- Table 12: EXERIENCES AFTER RELOCATION OF MOVERS I Percent of Movers Median/ After