Our world is getting more and more complex every single day. Because of that, it’s very rare for a company to do all the work themselves. Most of the time, they need a third party to do at least a small part of the work for them. That’s where capital goods field comes from.
What even are capital goods?
Simply put: capital goods are the tools that allow companies to do what they need to do. These are often purchased/rented from somewhere else, because they usually need a different focus than the companies main work process. To make it easier to understand, here are some things that count as capital goods:
- Tools – Probably the simplest example of capital goods are tools. Mostly used by workers and artisans, these are the capital goods that are the literal tools to create the thing the person want to make.
- Vehicles – Most of modern businesses need vehicles of some kind. Whether it’s for delivering their goods to customers, or commuting your workers around. Even though most companies need vehicles, only a few of them even have the capabilities to make them themselves.
- Machinery – This form of capital goods is usually used by manufacturing businesses. But machinery doesn’t mean just conveyor belts or other electrical things. By machinery, we could also mean for example the ovens a restaurant uses to bake their food.
- Buildings – Every business needs some form of real estate. It could be the building of a restaurant, the headquarter, or even the warehouse. Some restaurants (McDonald’s in particular) are sometimes marked as real estate companies, since the selling/renting of real estate makes up a sizable portion of their profits.
- Chemicals – Be it cement for the construction company, or flavored sirup for the soda manufacturer, there are a lot of chemicals in use today. Most of these chemicals have to be made in an environment that most companies just can’t replicate.
Now that we established what counts as a capital good, let’s take a look at some of the companies that work in the capital goods field.
Union Pacific Company focuses on railroad transportation. And they have been doing that job for a pretty long time. Founded in 1862, this company was approved by president Lincoln himself. Union Pacific mainly grew it’s operation during and after the american civil war. Thanks to skilled Irish labor, they were able to expand westward of the Missouri river. They grew fairly rapidly and their railroads quickly spread all the way to the Pacific.
The history of Union Pacific is fairly complicated, because of the Union Pacific Railroad company, which was it’s own different thing, but then the two companies merged. Then Union Pacific Railroad Company declared bankruptcy, so it was bought up by the original UPC. And now, both companies still exist, but UPC owns UPRC. As i said, fairly complicated.
While Union Pacific focuses on ground transport, Boeing covers the air. Not only is Boeing maybe the largest aerospace company in the world, it’s also world’s third largest defense contractor. Basically, wherever there are planes, there’s Boeing. What helped its popularity was the fact that it was founded only 13 years after the Wright brothers first took off, meaning that it was among the first companies in this field.
Even though it is one of the biggest companies in the world, Boeing also had its fair share of scandals. The most impactful one actually happened fairly recently, twice, in late 2018 and early 2019 when two of Boeing’s newest-model planes crashed due to a faulty navigation system. And because, only a year after this, the whole world got hit by a pandemic, Boeing reported a fairly great loss in the past few years. But with it’s size, we can be sure it will manage to get back up from the ground.
General Electric was founded in 1892 by Charles A. Coffin, J. P. Morgan and Thomas Edison. In the beginning, GE was more of a “group” of three companies, each one under control of one of the founders. Together, they focused on electric motors manufacturing, light fixtures, and other electrical equipment. And, unlike many other companies we’ve talked about in the past, they pretty much stayed that way. Even today, GE’s main focus is electrical equipment.
Although GE is currently going through many massive changes, where it’s dividing itself into three smaller companies. One off-shoot, GE Medical, is going to focus on development and manufacturing of medical equipment. The other offshoot, GE Vernova, is going to more closely follow in GE’s main goal of making electrical equipment. And the “legally main brach” of GE, GE Aerospace, will set it’s sights on aviation engineering. These changes were first unveiled in 2020, but because of the global issues of that time, they are planing to finish this division sometime in 2024.
One thing that separates GE from other companies is the fact that two of their employees have won a Nobel Prize – Irving Langmuir i chemistry in 1932 and Ivar Giaever in physics in 1974. Ivar Giaever even still works for General Electric.
fun fact: I have already talked about this company in this article
I’m pretty sure most of you have seen, or at least heard about Caterpillar Inc. (often shortened to just CAT). Whenever you want to buy any kind of construction equipment, there aren’t that many options besides Caterpillar. It was created in 1925 by merging the companies of Benjamin Holt (the creator of the first tread-tractor) and Clarence Leo Best (founder of a tractor manufacturing company). Although it was founded in Wisconsin, they relocated to Peoria, Illinois in 2017.
Caterpillar doesn’t only make construction vehicles though. They also have their own brand of clothing and work-wear. They even have their own phone brand – Cat phone. Overall, when you pass by any construction site, you can be sure you’ll see the iconic “Caterpillar yellow” design with the recognizable logo.
3M (originally Minnesota Mining and Manufacturing Company) focuses on the “chemicals” part of our list above the most out of all the companies in this article. Whether you want glues, soaps for car-cleaning, or even fire-protection films, 3M most likely has what you want. They are a conglomerate selling over 60,000 different products under several brands. It’s also very multinational, operating in around 70 countries. It even has official subsidiaries, like 3M India, 3M Japan or 3M Canada.
3M was founded in 1902 as a mining venture (as implied by the name). 3M’s first syears were fairly rough. At first, they wanted to focus on mining gems from a nearby mine, but later found that the mine was filled with commercially worthless Anorthosite. Because of that, 3M got into a fairly big debt, which it finally managed to pay in 1916. After that, they mostly focused on making sandpaper and similar accessories. It’s big boom started fairly recently, in the early 2000s, during which 3M grew into the conglomerate it is today.
Similar to Boeing, Lockheed Martin also focuses on aerospace engineering, but LM leans much more into the “military” branch of aerospace. They also focus more on researching, rather than just manufacturing. It currently operates in 4 sectors – Aeronautics, Missiles/fire control, Rotary and mission systems and space development. It has already won 6 Collier trophies for “the greatest achievement in aeronautics or astronautics in America”
Lockheed Martin was founded fairly recently (compared to other companies on this list) in 1995. Because of this, their goal stayed practically the same the whole time – develop new stuff for the military. It’s fairly easy to stay in business when the “company” that buys your capital goods is the best payed organisation in the USA.
There are many things that a company can do, simply to make another company’s job easier. And there is a lot of companies focusing specifically on this. If you are interested in the topic of economical fields, I have written several articles similar to this one.