We explain what an industrial company is, its characteristics and types. Also, examples of industrial companies from around the world.
What is an industrial company?
An industrial company is a type of for-profit organization whose productive activity focuses on the activities of obtaining, processing and transforming raw materials into goods finished goods (which go directly to the consumer) or intermediate goods (which serve as input to other companies in the sector). Industrial companies are part of the secondary sector of the economy, the manufacturing sector.
However, industrial companies are distinguished from other manufacturing companies in that their work involves the profound transformation of raw materials, in highly mechanized and/or automated facilities in which more or less specialized workers work. The work of the industry is precisely to produce, through work and technology, different goods with added value.
Industrial companies emerged with the Industrial Revolution, in 18th century Europe, and since then They have been a fundamental economic actor in the capitalist world without which the modern way of life would not have been possible to achieve. The transformation of the peasantry into the working class, the mass production of goods and the construction of a consumer society were only possible thanks to the success of industry.
Characteristics of an industrial company
An industrial company is broadly characterized by the following:
- It is dedicated to the production of manufactured or semi-finished goods from raw materials extracted from nature (or also processed by other industries). Its production can be on a large scale, or on a minority basis.
- are for-profit organizations which produce goods with added value, that is, whose commercial value is greater than the total value of its components separately.
- Since their appearance in the 18th century, industrial companies have been among the largest employers of the contemporary world.
- are usually located in large spaces that house the machinery and labor necessary to produce. For production, they also require investment capital, raw materials and energy.
Types of industrial companies
Industrial companies can be, fundamentally, of two types:
- Extractive companies. They are companies that are dedicated to obtaining raw materials and handling them so that they serve as input to other secondary companies. These companies normally have a permit or tender from the State (owner of a country's natural reserves) to exploit the resources available in the soil or subsoil. For example: mining companies that extract lithium, copper and/or precious metals from the subsoil.
- Manufacturing companies. They are companies that are dedicated to the transformation of raw materials and the production of finished or semi-finished goods. For this they often require raw materials extracted by other companies. For example: companies that receive iron sheets from an extractive company and produce nails and screws with them. Some of them will go for direct sale to the public, and others will go to other manufacturing industries that will use them to produce furniture.
However, manufacturing companies can be, in turn, of two types:
- Light production companies. They are companies that produce consumer goods or poorly processed intermediate goods. For this they use little energy and require light machinery. For example: an agricultural company that harvests barley.
- Heavy production companies. They are companies that produce capital goods (equipment and machinery) or complex goods. For this they use a lot of energy and heavy machinery. For example: an auto parts factory.
Examples of industrial companies
Some examples of industrial companies are:
- Nokia. Multinational company of Finnish origin dedicated to the field of technology and telecommunications, that is, to manufacture electronic devices.
- PDVSA. Venezuelan state company dedicated to the field of oil extraction and crude oil refining to obtain important derivatives.
- General Motors. American company created in 1908, dedicated to the manufacture of automobiles and automobile parts.
- Boeing. Multinational company of American origin dedicated to the production of aircraft (planes), satellites and weapons goods.
- Arcelormittal. Multinational company considered the largest steel company on the planet and leader in steel production.
- International Business Machines Corporation (IBM). Multinational company of American origin dedicated to the manufacturing of electronic and computer equipment.
- IKEA. Multinational company based in the Netherlands, dedicated to the manufacture and sale of furniture, mattresses and other household supplies.
- Tramontina. Brazilian company of international renown, dedicated to the field of supplies for the kitchen and dining room.
- LEGO. Danish children's toy company, famous for its plastic building blocks.
- Bayer. Chemical-pharmaceutical company of German origin, pioneer in the world of aspirin, recognized for the quality of its vaccines and medicines.
- Huawei. Multinational company of Chinese origin, dedicated to the field of technology and telecommunications, especially the manufacture of smartphones.
- Ford Motor Company. American company specialized in the production of automotive goods, whose name is due to its founder, the legendary Henry Ford.
- Penguin Random House. Multinational company dedicated to the publishing sector, that is, to the printing of books, arising from the merger of Penguin Books and Random House.
- ExxonMobil Corporation. American oil company founded in 1870 under the name Standard Oil Company.
- Procter & Gamble (P&G). Multinational company of American origin, dedicated to the production of personal hygiene consumer goods.
- Heyi Wood Industry Co. Chinese timber company, which produces intermediate goods for construction and furniture manufacturing.
- Compagnie Générale des Établissements Michelin. French company dedicated to the manufacture and sale of tires for cars and motorcycles.
- Volkswagen. Multinational company of German origin, dedicated to the manufacture of automobiles and spare parts.
- panasonic. Multinational company of Japanese origin founded in 1918, which is among the main manufacturers in the technology and electronics sector in the world.
- SanCor. Argentine company dedicated to the production and marketing of milk and dairy derivatives.
Benefits of the industrial plant
Specialized locations for industry are called industrial plants that is, to locations dedicated to industrial work. Industrial plants are usually located on the outskirts of cities, so that they do not negatively affect the quality of life of residents. Among the virtues of this type of location are:
- They have the infrastructure suitable for productive work.
- They have basic services (such as electricity, gas and water) exclusively dedicated to industry.
- They provide greater industrial, physical and legal security to investors.
- They allow the organization of productive work in suitable spaces, which has an impact on a better work environment.
- They toast lower operating costs by centralizing everything in the same space.
- They often have tax exemptions.
Difference between company and industry
The terms “company” and “industry” often go hand in hand today, but that does not mean that they are synonymous or interchangeable. A company is a human organization with productive and profit purposes that is, a legal form of organization of people that allows them to invest money in the development of a profitable activity.
Companies can be of many different types – industrial, for example – depending on the type of activity they carry out. For example, an importing company is one that buys goods abroad and then sells them within its country.
Instead, “industry” is a much more specific term, which has to do with the transformation of matter into consumer goods using work, machinery and energy to do so. It is a modern economic activity, typical of the world of capitalism, whose appearance transformed humanity forever.
In fact, we associate this work with companies because the industry emerged, precisely, in the private sector of 17th century Europe, more specifically in the large textile factories of England. However, as has been seen recently, not all companies are dedicated to industry, but within the capitalist model of production, all industries necessarily make up a company, whether public or private, dedicated to the industrial exploitation of a specific sector.
Continue with: Light industry
References
- “Industry” on Wikipedia.
- “What is an industrial company?” at Gedesco.
- “Industrial companies, general concepts and types to highlight” at OBS Business School.
