Categories of IndustryUnit 6

Categories of Industry

•Primary sector▫Extractive industries

•Secondary sector▫Manufacturing and construction

•Tertiary sector▫Service industry

Primary Industries•Agriculture•Forestry•Fishing •Mining•Power generation

▫Wind power▫Solar▫Gas▫biofuels

Definition:

Industry is all companies that make up full output

of a produce or service

• Economy is formed of different industries

▫ Primary or extractive: natural resources

▫ Secondary: construction and manufacturing

▫ Tertiary or service

(e.g. hotels, government & professional services)

What is industry?

The Primary Sector•The importance of the primary sector to

the economy▫In 2011, almost 150,000 people were

directly employed.▫These employees pay tax on their wages

and VAT on purchases.▫Raw materials for industry. E.g. Coillte▫Exports from agriculture are high, which

impacts the balance of trade and payments.▫Food products produced cut down on

imports from abroad.

Primary industries

• Products extracted from natural resources (farming, fishing,

forestry & mining)

• In 2011, employed about 8% of the workforce

• Good for balance of trade and balance of payments

(reduce imports & increase exports)

• Receive financial support from EU to help with competitiveness

• Agriculture/Agri-business▫ Volume of exports, major employer in Ireland

• Forestry▫ Timber, Coillte, Bord na Móna, Bio-Energy Ireland

• Fishing▫ Reduced size of industry in Ireland, leading Irish ports include

Killybegs & Howth

Changing trends in the Primary Sector•Declining numbers employed in

agriculture.•EU quotas on food production.•Increase in demand for organic and

artisan food products.•Diversification of land towards

sustainable energy or forestry.•Decline in EU grants – Common

Agricultural Policy.

• The secondary sector involves taking the raw materials from the primary sector and processing them into finished products.

• Involves:• Manufacturing sector

• Indigenous firms• Transnational firms• Agri-business

• Construction sector.

• The secondary sector involves taking the raw materials from the primary sector and processing them into finished products.

• Involves:• Manufacturing sector

• Indigenous firms• Transnational firms• Agri-business

• Construction sector.

Secondary industries

• Construction industry▫ Building roads, bridges, schools and hospitals▫ Barometer of economy, badly affected by recession▫ In 2011, 74,000 jobs in construction

• Manufacturing industry▫ Finished products from raw materials

(e.g. computers, clothing and pharmaceuticals)▫ High-tech industry that is globally competitive

• Jobs in secondary sector down 20% since 2009

• Sales of Irish goods under threat as cheaper imports become available

• Wage levels in Ireland resulted in some firms moving to countries with lower costs

The Secondary Sector

•The secondary sector involves taking the raw materials from the primary sector and processing them into finished products.

•Involves:▫Manufacturing sector

Indigenous firms Transnational firms Agri-business

▫Construction sector.

Importance of the Construction Industry in Ireland

•Employment ▫Construction industry employs a large number

of workers. These workers contribute tax revenue to the government.

•Uses Irish raw materials.▫Raw materials from the primary sector are used

in this stage which decreases reliance of imports.

•Exports▫Much of what is produced is exported, which

contributes to the balance of payments.

Changing trends in the secondary sector

•Fall in employment▫Massive increase in factory closures and

job losses in recent years.•Increased competition.

▫EU competition rules have encouraged new entrants into the markets.

•Increased wages▫Wage increases over the past decade have

made Irish workers expensive in relation to the rest of the world.

Tertiary Sector

The Tertiary sector (or services sector) provides services to individuals and to other businesses

• Service industries and services sector▫ Employs almost 70% of people in Irish economy▫ Examples: banks, accountants, doctors,

train drivers and government services

• 90% of Irish businesses are in the service industry

Importance of the Tertiary sector

• Employment▫ The sector is labour intensive and creates many jobs

• Support services▫ The sector provides support services for the efficient

running of all other sectors of the economy

• Tax revenue▫ Many small, indigenous businesses are involved in

providing services, contributing large amounts of tax to the government through PAYE, VAT and corporation tax.

• Tourism▫ Tourism is a very important service industry and a big

employer. Tourists spend large amounts of money in Ireland

Trends in the Tertiary sector

• Exporter of services▫ Ireland is one of the world’s leading exporters of

software-related goods and services. This brings money into the country.

• E-Commerce▫ In relation to information communication technology

(ICT) infrastructure – firms in Ireland generate almost one-third of their turnover from e-commerce.

• Job losses▫ Banks and financial institutions have reduced the

number of staff they need. Mergers and acquisitions are common in this industry now.

• ICT▫ Massive expansion due to developments in ICT

Factors of production

• Four factors of production: The resources available to produce consumer

goods Together they govern the standard of living

• Land Fixed supply, includes mineral resources

• Labour Size and age of population, skilled or unskilled

• Capital Finance, machinery and equipment used in

business

• Enterprise Ideas, money and ability for new businesses