Final answer:
Hollywood studios relocating from Los Angeles to areas with lower production costs and more flexible labor laws demonstrate the concept of footloose industries, which can move their operations without substantial detriment to profitability. While costs are a factor, other considerations like infrastructure, taxes, and governmental factors also weigh in on the decision to move production.
Step-by-step explanation:
Hollywood studios that move productions out of Los Angeles to areas with lower costs and more relaxed labor laws are said to engage in a process known within the business world as seeking footloose industries. In essence, footloose industries are sectors that can move locations without significant impact on their operation and profitability. When considering the relocation of production facilities, firms evaluate various factors such as the costs of labor and capital, proximity to suppliers and customers, and the quality of infrastructure, among others.
The film industry, historically centered in places like Hollywood, has seen its share of geographic shifts. Initially dominant in New York due to innovations like Thomas Edison's kinetoscope, the industry gravitated towards sunny southern California, appreciating the favorable climate and avoiding patent costs. Over time, however, as production costs rose, firms sought out cheaper labor markets, often moving beyond California’s borders.
This trend is not unique to the film industry. Car manufacturers apply a just-in-time production strategy, outsourcing to non-union plants in regions with lower labor costs. Textile industries, known for being particularly footloose, similarly relocate in pursuit of more cost-effective labor markets. It should be noted, though, that labor and environmental costs are just one piece of a larger puzzle. Factors such as infrastructure, taxation, and government quality also significantly influence the decision-making process for firm relocations.