Industrial Transformation: Raw Materials to Finished Goods

Industry Defined

Industry involves the activities necessary to transform raw materials into products for industrial consumption. These activities transform raw materials into finished goods.

Semi-finished Products

These products are built to be part of the elaboration of others.

Artisan Work

The manual process was expensive; each product was unique.

Beginnings of Industrialization

Starts mid-18th century, increased productivity in factories with machines.

Current Industry

Characterized by automation, sophistication, computing, robotics. Reduction in manual work, manufacturing more diverse products.

Types of Industries

Industries of Production (Real)

Produce semi-finished goods.

Heavy Industry

Makes large-dimension products, requires much manual work and significant capital investment. Examples: steel, cement fabrication.

Industries of Use and Consumption (Real)

Serve the market with articles for consumers.

Light Industry

Smaller facilities, less manual work and capital.

Advanced Industry (Tip)

Utilizes advanced technologies, highly trained staff, research equipment, and invests much capital.

Company Structure

By Size

• Small Companies: Up to 50 employees.
• Medium Companies: 50 to 250 employees.
• Large Companies: Over 250 employees.

By Organization

• S.L. (Sociedades Limitadas): One or more proprietors.
• S.A. (Sociedades Anónimas): Property divided into shares (acciones).

By Capital Source

• Public: Capital and management by the state.
• Private: Capital and management by private entities.

Company Concentration

Company concentration can be:

• Horizontal: Joining several companies in the same sector.
• Vertical: Firms grouped in the same sector manufacture different products in order to reduce costs, advertising, or maintenance.

Elements of the Industrial Process

Raw Materials and Sources

Resources from nature with which intermediate products are transformed into industrial products.

Work Force

The activity people perform for production.

Capital

Pouring money into facilities and manufacturing. Products must be sold to generate benefits.

Technology

Set of machinery, techniques, and materials for production.

Company Organization

Organization and efficiency are required to obtain quality products sold at a reasonable market price. Competition is based on quality and price against other companies. The difference between costs and prices may result in benefits.

Division of Technical and Social Work

Industry requires obtaining the final product individually or as a team. Coordinated industrial action requires all workers, as well as the machines involved. Social division of work establishes hierarchies of command where some respect others.

Location Factors

A company chooses its location to compete for profit, aiming for the most adequate cost-price ratio.

Current Location Trends

Companies choose locations with good infrastructures, cheap labor, and specialized technology, often installing operations in countries with specialized labor.

Industrial Regions

Examples include Europe, the USA, and Japan. Taxes are also a factor.