Manufacturing Sector Overview

Industry

• Branch of an economy focused on processing raw materials, goods, or services.

Industry Classifications

• Standardized systems for classifying industries based on their dominant revenue source.
• Examples include ISIC, GICS, NAICS, PSIC.

Economic Sectors

• Broader categorization of industries that may include companies across multiple sectors.

Types of Sectors:

• Primary: Extraction and production of raw materials.
• Secondary: Processing raw materials into finished goods.
• Tertiary: Providing services to consumers and businesses.

Manufacturing Sector

• The production of finished goods using equipment, labor, machines, tools, and chemical or biological processes.
• The core of the secondary sector of the economy.
• Relies on the primary sector for raw materials.

Factors in Establishing the Manufacturing Sector:

• Location:
  • Availability of suitable land at a desirable price.
  • Proximity to markets for efficient transportation.
  • Availability of adequate labor, power, and capital.
• Ownership:
  • Public sector: Government-owned and controlled at different levels.
  • Private sector: Owned, controlled, and managed exclusively by private entities.
  • Joint sector: Collaboration between government and private entities to own, control, and manage resources.
  • Cooperatives: Private, voluntary associations of individuals pursuing shared economic interests.
• Weight/Bulk of Raw Materials and Finished Products:
  • Light industry: Small-scale, localized operations on industrial estates.
  • Heavy industry: Large-scale plants covering significant land areas.
• Capital Investment:
  • Micro-scale enterprise: Small-scale investments, usually below a specific threshold.
  • Small-scale enterprise: Moderate investment, usually below a higher threshold.
  • Medium-scale enterprise: Requires substantial investment, exceeding the small-scale threshold.
  • Large-scale enterprise: Extensive capital investment, often requiring significant funding sources.

Industry

• An economic activity that involves processing related raw materials, goods, and/or services.

Industry Classifications

• Standardized systems used to categorize companies based on their primary revenue source.
• Examples include ISIC, GICS, NAICS, PSIC.

Economic Sectors

• Broader classifications that encompass industries; companies can operate in multiple sectors or industries.

Types of Sectors

• Primary: Extraction of raw materials like mining or agriculture.
• Secondary: Transformation of raw materials into finished goods like manufacturing.
• Tertiary: Providing services to consumers and businesses like retail or banking.

Manufacturing Sector

• Focuses on producing finished goods using equipment, labor, machines, tools, and chemical/biological processes.
• Core of the secondary sector which relies on the primary sector for raw materials.

Factors Influencing Manufacturing Sector Establishment

• Location: Availability of suitable land, proximity to markets, access to transportation, and labor, power, and capital.
• Ownership: Government ownership (public sector), private ownership (private sector), collaboration between government and private entities (joint sector), or voluntary, independent associations (cooperatives).
• Weight/Bulk of Products:
  • Light industry: Small-scale factories on industrial estates.
  • Heavy industry: Large plants covering extensive land areas.
• Capital Investment:
  • Micro-scale: Low investment, limited resources, often family-owned.
  • Small-scale: Medium investment, expanding operations, employing a few workers.
  • Medium-scale: Significant investment, established operations, employing a substantial workforce.
  • Large-scale: Extensive investment, large-scale operations, employing a significant workforce.