Heavy Industry

What is a 'Heavy Industry'

Relates to a type of business that typically carries a high capital cost (capital-intensive), high barriers to entry and low transportability. The term "heavy" refers to the fact that the items produced by "heavy industry" used to be products such as iron, coal, oil, ships, etc. Today the reference also refers industries that cause disruption to the environment in the form of pollution, deforestation, etc.

BREAKING DOWN 'Heavy Industry'

Industries that are typically considered heavy include:

1. Chemicals and plastics
2. Steel and oil refining, production
3. Mining
4. Industrial machinery
5. Mass transit (railways, airlines, shipbuilders)

Another trait of heavy industry is that it most often sells its goods to other industrial customers, rather than to the end consumer. Heavy industries tend to be a part of the supply chain of other products. As a result, their stocks will often rally at the beginning of an economic upturn and are often the first to benefit from an increase in demand.

RELATED TERMS
  1. Emerging Industry

    A group of companies in a line of business formed around a new ...
  2. Capital Intensive

    A business process or an industry that requires large amounts ...
  3. Heavy

    A market that is demonstrating difficulty in advancing and is ...
  4. Barriers To Entry

    The existence of high start-up costs or other obstacles that ...
  5. Growth Industry

    A sector of the economy experiencing a higher-than-average growth ...
  6. Industrial Production Index - IPI

    An economic indicator that is released monthly by the Federal ...
Related Articles
  1. Insights

    Capital Intensive Companies: What Are The Pros & Cons for Investors?

    Learn about the pros and cons of investing in capital-intensive industries. Find out how barriers to entry and mature industries impact investment outlook.
  2. Markets

    What Does Capital Intensive Mean?

    Capital intensive refers to a business or industry that requires a substantial amount of money or financial resources to engage in its specific business.
  3. Markets

    Great Company Or Growing Industry?

    Look at the big picture when choosing a company - what you see may really be a stage in its industry's growth.
  4. Markets

    Explaining Industry

    The term industry refers to a classification of companies that share similar business activities.
  5. Markets

    What are Barriers to Entry?

    A barrier to entry is any obstacle that restricts or impedes a company’s efforts to enter an industry.
  6. Markets

    A Primer On Coal

    With the right knowledge, investors can better understand coal and gain exposure with the investment vehicles available.
  7. Markets

    Companies Affected Most by Low Oil Prices

    Low oil prices have affected many companies. Some consumers and producers who rely on oil as a key input benefit, while others do not.
  8. Markets

    The 7 Biggest Chinese Mining Companies (1088-OL.HK, ACH)

    Read about the seven largest Chinese mining companies as measured by revenues, and learn more about the types of mineral resources they mine.
  9. Markets

    Why Coal Won't Go Away Anytime Soon

    Despite government regulation, more competition and higher production costs, coal remains a relatively cheap source of fuel for electricity.
  10. Markets

    Industrials Sector: Industries Snapshot (XLI, BA)

    Discover the 12 industries that comprise the industrials sector of the Standard and Poor's 500 Index, and learn which key companies could help your portfolio.
RELATED FAQS
  1. What country is the world's largest coal producer?

    Producing nearly 50% of the world's supply, China is the world's largest global coal producer and a large force in global ... Read Answer >>
  2. What is a heavy oil differential and how does it affect oil producers?

    Learn what the phrase "heavy oil differential" refers to and the significance of heavy oil differentials for oil production ... Read Answer >>
  3. What types of industries are the main consumers of the products of the chemicals ...

    Learn about industries that use products manufactured by chemical companies. Explore common materials used and produced by ... Read Answer >>
  4. How does the risk of investing in the industrial sector compare to the broader market?

    Discover how the risk of investing in the industrial sector compares to the broader market. The industrial sector is highly ... Read Answer >>
  5. What makes the chemicals sector attractive to value investors?

    Discover what makes the chemicals industry attractive to value investors. These investors seek to take advantage of wide ... Read Answer >>
  6. Which types of industries have the largest capital expenditures?

    Discover the significance of capital expenditures and learn what types of businesses or industries have the largest capital ... Read Answer >>
Hot Definitions
  1. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  2. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  3. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  4. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  5. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  6. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
Trading Center