Capital Intensive Industries

Some industries face more intensive costs than others. These capital intensive industries face major costs from investments in machinery, equipment and other costly assets. Beyond that, though, these industries play a role in helping to improve billions of lives across the globe. Electricity, clean water sanitation systems, better communication tools and accessibility and so much more – our standards of living have increased with the advancement in these industries.

In fact, in just over a year, the life science and pharmaceutical industries came together to develop, manufacture and streamline vaccines all around the world. Capital intensive industries in their own right, we see what industrial digital transformation is doing for organizational success and technological innovation. 

Unfortunately, asset intensive industries suffer from low profit margins. As giving to the world as they are, this leaves the high likelihood that a company in these industries will face low returns on their investments. This is largely due to the sudden superabundance the globe experienced in supply for many of these sectors.

On the bright side, there are always reliable solutions thanks to this age of digital transformation. In fact, those in charge of finances for businesses and companies in an asset-focused sector can learn what strategies can be used to increase return on capital. Even in markets where supply swamps demand, it just takes understanding what most companies overlook to ensure you’re improving performance and realizing an increase in profit.

Improving Returns for Capital Intensive Industries

We briefly mentioned this new age of digital transformation, but that’s because we are rapidly moving into industry 4.0. The fourth industrial revolution, the Internet of Things (IoT) is being integrated into manufacturing for an industrial digital transformation across most sectors, businesses, and companies.

When looking at modern solutions for capital intensive industries, digitalization always plays a central role. In this technologically advanced landscape, how can these brands improve their returns? Industrial AI and machine learning is certainly the first step, and it’s helping to accelerate profitability, reliability and sustainability for cost intensive industries.

Currently, however, about 76% of organization executives know they’re struggling to scale a tangible AI strategy across their enterprise. 84% of executives understand that in order to achieve growth objectives as we propel into this digital future, AI absolutely must be leveraged. Without a reliable strategy to integrate artificial intelligence, though, many companies may come up short.

This is where tailored AI comes into play.

The Power of AI for Capital Intensive Industries

Companies that want to feel prepared and empowered as we enter this new digital era will want to take advantage of key trends. AI allows a business to drive organizational alignment to the forefront. It leverages more advanced operational insights and can accelerate decision making, as well as capture and share expert knowledge.

In a new generation of solutions, we see answers to age-old problems for capital intensive industries. Now, though, a company can become self-optimizing with the right software. Self-optimization for a business can result in that business becoming more profitable, more reliable, safer to operate, overall, with reduced emissions. Automation brings with it the ability to provide guidance and build knowledge bases for a brand that never stops optimizing itself.

A project cost estimator can play a role in this tech’s success. Using estimator software, one can narrow in on the capital cost of a project earlier in the project’s design. You can make better, more efficient decisions earlier, accelerate your project’s execution and increase the predictability of your estimates seamlessly.

Over time, it also helps to improve the speed, accuracy and overall quality of those estimates. With constant machine learning strategies, every new estimate is more accurate than the last. This can considerably lower overall capital cost and significantly increase returns when implemented appropriately.

Digital Matters

It was only a matter of time before artificial intelligence became viable enough to be a better option than more traditional tech. Now, companies in capital intensive industries are starting to leverage these new technologies and embrace digitalization. Running industrial data through machine learning tools and AI technology can help companies attract fresh talent, improve both environmental and personnel safety, increase their production operations’ efficiencies and more.

The pandemic left brands and customers alike with a taste of virtual reality solutions that can evolve into so much more. It also brought to light just how many companies either didn’t have proper data capabilities, hadn’t yet implemented some form of digitalization – or both.

Back in 2019, before the pandemic, a significant number of companies didn’t yet have a digital transformation strategy or even an initiative. A massive 59% of companies didn’t have a strategy or didn’t have one drafted yet.

In a post-pandemic world, a whopping 95% of companies across most industries seek more effective ways to communicate with their consumers. The gaps in customer engagement were spotlighted during the COVID crisis, and there’s a lot of room for improvement before those gaps are closed.

FAQs

What businesses are capital intensive?

Capital intensive businesses are those that require a large amount of capital to start or run. They are similar to asset intensive industries, which are also industries that require a large amount of capital to start and operate.

Which industry is the most capital intensive?

The most capital-intensive industry is the petroleum industry. However, the most expensive industries are the oil and gas industry, the pharmaceutical industry and the computer industry.

What are the least capital intensive industries?

The least capital intensive industries are the service industries.