We call “industry” a defined set of processes that combines machines, labor, material and energy in a systematic way for the creation of something of value for the Customer.
Some industries need to invest a far bigger part of their assets – if compared with the other parts - in production lines and machines to create value. Examples of these industries are a steel manufacturer, a cement factory or a dyeing plant for fabric. These industries are very roughly characterized by a substitution value which is higher than the total transformation cost of one year. We call these industries “CAPITAL INTENSIVE”.
In some other industries, by contrast, the labor cost far exceeds the other parts needed to create value. Examples of these industries are a plant that sews shirts or assembles sunglasses. We call these industries “LABOR INTENSIVE”.
Many industries are both CAPITAL and LABOR INTENSIVE, especially in these last years when the complexity of the final products and the need to concentrate most of the operations in one location increased. There are still some more additional specific categories for other industries, like those related with aluminum where the energy part far prevails, and the jewelry where the material part far prevails the rest, but the two main categories of Capital and Labor encompass the major part of World industries.