Categories of Industry
Chapter Objectives
1. To identify and illustrate the 4 Factors of Production 2. To identify and explain the main Categories of Industry in Ireland 3. To illustrate the types of business within each category 4. To evaluate the contribution made by each sector to our economy. 5. To investigate recent trends in these industry categories
Factors of Production
1. Land This refers to all the natural materials used in production such as land itself, mineral wealth, water, timber, coal, natural gas. Extractive industries mine, fish, grow and harvest the output of the land to produce basic raw materials that are sold to consumers and manufacturers
2. Labour This is the human element in the production process. It is vital for business to have sufficient personnel with the correct level of skills in all departments.
3. Capital This is anything man made that helps to produce goods and services Capital investment refers to the purchase of new machinery, equipment and the building of new premises. Businesses finance their capital investment by using retained earnings, bank borrowings or selling shares
4. Enterprise An entrepreneur taking initiative and risk in setting up a new business to make profit Regarded as the most important factor of production because without it there can be no business start-up. Each entrepreneur tries to use as few factors as possible to produce as much as possible. In this way costs are kept low and prices competitive.
i Agriculture
Produces meat, milk, cereals and horticultural output. Employment in farming has been in decline for many years now. Small farms are no longer viable to run. Unpredictable climate Good weather can result in surplus production - fines Bad weather destroys crops Disease: BSE Bird Flu etc CAP: Farmers forced to dump their surpluses resulting in a drop in incomes.
ii Fishing
Small industry and is centred on a small number of fishing ports round the country. eg.: Killybegs, Dunmore East, Kilmore Quay. Employment in this sector is small.
iii Mining
Irelands mining industry is small. A large gas reserve off the coast of Kinsale supplies much of the country with natural gas through a pipeline network. There are large areas of bog, particularly in the midlands, harvested by Bord na Mona.
iv Forestry
The forestry industry is run by the state agency, Coillte. The government provides grants for the planting of trees in order to develop the industry in Ireland. This sector has been increasing steadily in recent years.
3.
i Indigenous Firms These are firms that are set up, owned and run by Irish people.
Benefits of Indigenous Firms They have a loyalty to the area and the country They provide employment in the local area Creates spin-off business for suppliers etc They reinvest their profits in Ireland. Employees spending supports other business
1. 2. 3. 4. 5.
1. 2. 3. 4.
Problems of Indigenous Firms Exposed to transnationals Harder to attract employees Harder to advertise When they export they are exposed to competition from larger and more efficient manufacturing units abroad.
ii) Transnationals These are firms with headquarters in one country and branches in many other countries. They may even send their profits back to that office They set up branches in other countries because it is profitable for them to do so. Example Sony, Shell, Coca Cola and Microsoft IDA Ireland (Industrial Development Authority) is responsible for attracting such companies to Ireland.
iii Agribusiness These are firms that are connected with agriculture. The range of goods produced includes cheese, butter, yoghurt, ice cream, meat etc Glanbia, Kerry Group and Golden Vale This is an important sector in the Irish economy and produces output for both the Irish and export markets.
Supermarket Multiples
These firms have enormous buying power and dictate their terms to manufacturers. They try to drive down prices and have the power to do so.
Manufacturers in the agribusiness sector face tough competition from foreign agencies due to the open nature of the EU market.
iv Construction Traditionally provides a lot of employment. Most construction firms are indigenous which results in their profits being retained in Ireland. Problems Created economic bubble Huge downturn - unemployment Poor image
Trends in the Secondary Sector Many of the traditional manufacturing firms have closed due to competition from low-wage economies. Eg DELL Employment has fallen dramatically as a result. Irish exports increasing as world economy recovers Example Intel is a major employer in Leixlip, Co. Kildare
The Importance of the Tertiary Sector to the Economy Between 60 and 70 per cent of the Irish labour force were employed in the tertiary sector. More than 80 per cent of small businesses in Ireland are in the services sector. This contributes huge amounts of tax revenue to the government. Example: PAYE of workers, VAT and corporation tax Irish service companies now deal in export markets as well as home markets. Example: Irish firms can now tender for contracts in other EU countries
Development of the Economy 1. Technology improves yields, jobs in agriculture decline. 2. Population migrates to urban areas and works in the construction/manufacturing industries 3. As the Construction/Manufacturing Industry develops, the service sector provides services in urban areas. 4. Developments in I.T. result in the globalisation of services.
Contribution of the Three Sectors to the Economy Goods and services are produced to sell at home and abroad. Employment is created both directly and indirectly They generate tax revenue The primary sector provides the materials for agribusiness The secondary sector encourages the development of indigenous firms The tertiary sector encourages new developments in I.T. and telecommunications and provides vital supports to businesses.