Labour Intensive
- Food processing
- Hotels and restaurants
- Fruit farming
- Hairdressing
- Coal mining Labour costs are higher than capital costs Costs are mainly variable = lower breakeven output Firms benefit from access to source of low-cost labour
Capital intensive
- Oil extraction and refining
- Car manufacturing
- Web hosting
- Intensive arable farming
- Transport infrastructure Capital costs are higher than labour costs Costs are mainly fixed = higher breakeven output
Capital Intensity
Benefits
- Greater opportunities for economies of scale
- Potential for significantly better productivity
- Better quality & speed (depending on product)
- Low labour costs
Drawbacks
- Significant investment
- Potential for loss competitiveness due to obsolescence
- May generate resistance to change from labour force
Luddite: A term used for workers afraid that technology and automation will take their jobs.
Labour Intensity
Benefits
- Unit costs may still be low in low-wage locations
- Labour is a flexible resource—through multi-skilling and training
- Labour at the heart of the production process—can help continuous improvement
Drawbacks
- Greater risk of problems with employee/employer relationship
- Potentially high costs of labour turnover
- Need for continuous investment in training