During the last years of the 20th century, developments in transportation diminished the relevance of Weber’s theory. In the first place, freight rates have increased at a faster rate than have the costs of raw materials, but relative transportation costs are declining. This means that the impacts of transportation costs on industrial location and market analysis are relatively less important than they were at the beginning of the 20th century when Weber first articulated his theory. Third, natural resources are now less important because smaller, lighter and smarter products have replaced the heavier products of the past. In particular, plastics and lighter materials made from soybeans, petroleum, and other fibers have replaced the use of steel and wood. As a result, furniture and appliances are lighter (and sometimes stronger). Even automobiles now use a great deal of plastic and other fibrous materials as a substitute for steel. It is far less costly to move petroleum through pipe lines, or to ship plastics than it is to ship wood, iron ore, and steel.
Currently, labor tends to be the most important determinant of industrial location. This is particularly true for firms that produce expensive, high tech goods. For most of these firms, transportation costs are of minor importance. In part, this is because high tech goods are usually relative light and small. This is nothing new however. Long ago, the Swiss figured out that as a land-locked mountainous nation, they could not competitively ship their dairy products to foreign markets. Therefore, they processed liquid milk into far less bulky cheese and chocolate. They also realized that anything they manufactured should have a high value relative to its bulk and weight. Thus, instead of making automobiles or steam trains, they made time pieces. Even the Dutch, with access to excellent ports and water transportation, realized the benefits of shipping high-value, low-bulk products. Thus, they processed diamonds, and focused on flower bulbs, cheese, and chocolate. In recent years, firms have developed many new and innovative ways in which to avoid transportation costs. For example, soft drink manufacturers do not ship full bottles of their products all over the world. Instead, they ship containers of syrup to local bottling plants where water is added to the syrup.