What Is Heavy Industry?
Let me explain what heavy industry is. It's a type of business that usually demands a lot of capital investment, making it capital-intensive, with high barriers to entry and products that aren't easy to transport. The 'heavy' part originally came from producing things like iron, coal, oil, and ships. Nowadays, it also includes industries that harm the environment through pollution, deforestation, and similar issues.
Key Takeaways
You should know that heavy industry involves large-scale operations, massive equipment, extensive land use, high costs, and tough barriers to entry. This sets it apart from light industry, which is smaller in scale, can happen in factories or modest facilities, costs less, and is easier to get into. Heavy industry is often cyclical, gaining from economic upturns when investments flow into pricey, long-term projects like buildings, aerospace, and defense products. Typically, it sells to other industrial customers, not directly to end users, positioning it as a key part of other products' supply chains.
Understanding Heavy Industry
When I talk about heavy industry businesses, they usually deal with large, heavy products or equipment and facilities, like huge machine tools and massive buildings, or they involve complex and numerous processes. That's why heavy industry requires more capital than light industry. It's also more cyclical in terms of investment and jobs.
Fast Fact
Here's a quick note: products from heavy industry are generally large and not very transportable.
How Heavy Industry Works
Transportation and construction, plus their upstream manufacturing suppliers, made up most of heavy industry during the industrial age, along with some capital-heavy manufacturing. Think of traditional examples from the Industrial Revolution up to the early 20th century, such as steelmaking, artillery production, building locomotives, machine tools, and heavy mining. As the chemical and electrical industries grew, they mixed elements of heavy and light industry, and the same happened with automotive and aircraft sectors. Shipbuilding in heavy industry shifted to steel from wood in modern times. Large systems define heavy industry, like building skyscrapers and big dams after World War II, or making and deploying large rockets and giant wind turbines in the 21st century. Another key point is that heavy industry mostly sells to other industrial customers, not end consumers, so it's part of the supply chain for other products. That's why their stocks often rise at the start of an economic upturn, being among the first to see demand increases.
Heavy Industry in Asia
Many East Asian economies rely on heavy industry. Firms in Japan and Korea, for instance, include manufacturers of aerospace products and defense contractors, like Japan's Fuji Heavy Industries and Korea's Hyundai Rotem, which is a joint venture of Hyundai Heavy Industries and Daewoo Heavy Industries. In the 20th century, Asian communist states poured investments into heavy industry in their planned economies, driven by the need to match military strength with foreign powers. Take the Soviet Union's intense industrialization in the 1930s, emphasizing heavy industry to boost production of trucks, tanks, artillery, aircraft, and warships, aiming to become a great power.
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