Capital goods, usually referred to as the means of production, are movable items that are employed in the manufacture or production of other commodities and services. This can include tools, computers, automobiles, buildings, machinery, and other industrial gear. IS CAPITAL GOODS A GOOD CAREER PATH? Let’s look into it…
The market for capital goods is enormous. Here is a list of different capital goods broken down by category:
Hand tools, machine tools, robots, oil rigs, wind turbines, even hair clippers for hair salons and kitchen utensils at a restaurant are all examples of industrial equipment.
Dump trucks, cement trucks, and commercial aircraft flights are examples of construction equipment.
Battery technology and solar panels
parts of the data infrastructure, such as data centers and semiconductor manufacturing facilities
Business and industrial software, including apps and software for productivity and accountancy
cameras used by a film crew are electronic devices.
Technical innovation is significantly influenced by capital commodities. For instance, capital goods companies may devise ways to use energy more effectively in their machinery in an effort to lower manufacturing costs. Innovation frequently has an increase in labor productivity as its ultimate goal.
The industrial industry has historically been altered by new technology like analytics, robotics, and AI. In 1959, General Motors installed the first industrial robot. Robots now do tasks that humans find distasteful throughout the manufacturing sector.
As an illustration of how technological innovation is still occurring today, General Electric (GE) started 3D printing LEAP-1A engines for the Airbus A320neo passenger aircraft in 2016.
Capital goods boost labor productivity, which improves business efficiency and speeds the production of additional items. This typically raises a company’s profitability, spurring economic expansion across the board and an increase in the GDP (GDP).
The 2021–2022 semiconductor shortage is an illustration of the link between capital goods producers and the state of the economy as a whole.
A global scarcity of semiconductors was caused by a combination of rising demand for gadgets like laptops, tablets, and gaming consoles and the pandemic’s effects on semiconductor supply chains.
The CHIPS Act, which will allocate $52 billion to domestic semiconductor production, was enacted by the Senate in July 2022. President Biden referred to semiconductor chips, a capital good, as “the building blocks of the contemporary economy.”
CAPITAL GOODS VS. CONSUMER GOODS
Consumer goods are the finished products that a person or company buys for their own personal use or consumption. Capital goods are materials utilized in the production of other goods.
For instance, a piece of clothes is a consumer product, whereas the equipment required to make it is a capital good. Some things have the potential to be both capital and consumer products.
For instance, sugar is a capital good if a bakery purchases it to make pies. However, if you buy sugar for personal use and use it at home, it qualifies as a consumer good.
How many jobs are there in capital goods? may be a question you have if you are considering a career that mixes economics with industrial operations.
The good news is that there are numerous career options accessible because the business is so diverse. Almost 6 million individuals are employed in the capital goods sector, or 13% of all American jobs.
According to the U.S. Bureau of Labor Statistics, capital goods will grow by 6% before 2026. For comparison, it is anticipated that overall employment will rise by 0.7 percent yearly.
Companies spent a record amount of money on capital goods in 2021. The Great Recession saw a decline in capital goods investments, which is a trend that has subsequently reversed. Capital goods spending has now fully recovered from the recession.
With the exception of the aircraft industry, that is. For the labor market, this increasing investment in technology and expansion has significant consequences.
There are 10.5 million vacant positions nationwide, with manufacturing jobs accounting for 858,000 of those positions.
The productivity of businesses that invest in capital goods will rise, but overall productivity will be constrained by a labor shortage.
This increases the need for “new collar” workers, who possess greater technical skill sets than traditional white-collar or blue-collar workers and are skilled in analytics and automation. Workers will need to be skilled in robots, analytics, and machines in this setting.
A rare opportunity arises for young job searchers who are prepared to acquire specialized, technical skill sets in order to pursue a career in capital goods due to the talent shortage caused by developing technology.
WHAT COMPANIES ARE IN THE CAPITAL GOODS FIELD?
Consider Union Pacific, which has over 10,000 employees and generates over $10 billion in revenue annually. The railroad corporation Union Pacific produces coal, chemicals, supplies for the automobile industry, and other things.
Benefits include comprehensive health insurance, retirement programs, and tuition reimbursement are available to Union Pacific employees.
General Electric, another business in the capital goods industry, with over 10,000 employees and generates annual sales of over $10 billion. Weapons, wind turbines, electric motors, and other capital goods are produced by GE in a variety of industries, including aviation, electricity, and energy.
Lockheed Martin, a well-known firm with over 10,000 employees and annual revenue of over $65 billion, is another player in the capital goods market. Defense weaponry is produced by Lockheed Martin for the aerospace, military, security, and technology sectors.
Northrop Grumman, an aerospace and military firm with over 90,000 employees and annual sales of around $30 billion, is an analogous business.
The largest aerospace corporation in the world, Boeing, is one firm in the capital goods industry that you may be familiar with. Boeing is a manufacturer of commercial aircraft.
Another firm in the capital goods industry is 3M, which furthermore creates capital goods including dental and orthodontic devices, electronics components, and medical software in addition to consumer goods like adhesives and laminates.
Over 93,000 individuals work for 3M in 87 different countries, and the company makes over 60,000 different products.
All of these organizations offer competitive pay and excellent benefits, such as retirement plans and health insurance, to its employees.
WHAT ARE THE BEST PAYING JOBS IN CAPITAL GOODS?
Working in the capital goods industry can pay up to $100,000 per year if you have the necessary training and expertise. Project Manager, Sales Manager, Marketing Manager, Software Developer, and Engineering Manager are some of the highest-paying positions in capital goods.
The median compensation for project managers is $77,420, and the top ten percent make an average of $135,220. In order to achieve efficiency and quality standards, project managers in the capital goods sector supervise and manage projects. (All data are from projections released in May 2021 by the U.S. Bureau of Labor Statistics.)
On average, software developers make $110,140 a year. Software development is also expected to increase by 22% during the following ten years. This is as a result of increased automation in manufacturing.
Although some businesses permit a Bachelor’s in computer science or computer programming, software developer employment normally require a Bachelor’s degree in software development.
As a software developer in the capital goods sector, you will create applications and programs that boost business productivity.
Engineering Managers make an average of $149,530 year. Engineering projects, such as those involving aircraft engineering, will be planned and coordinated by an engineering manager. An engineering undergraduate degree and years of work experience are required for this post.
While a marketing manager makes, on average, $141,490 annually. Businesses in the capital goods sector frequently use business-to-business (B2B) marketing tactics to promote their capital goods. B2B initiatives demand in-depth targeting and analysis.
Consequently, a Bachelor’s degree and relevant professional experience, or possibly a Master’s or PhD, are often required for this post.
Sales managers typically make $132,290 a year. You will oversee a group of sales representatives as a sales manager with the objective of promoting the company’s goods.
Sales of capital goods are dependent on B2B techniques, just like in marketing. Typically, candidates for sales manager positions need a bachelor’s degree in economics, business, or a closely related discipline.