Basic Industries Advantages of Shares

Basic Industries Advantages of Shares

Basic industries Advantages of shares in the basic industries

(i) The outstanding advantage is that the 'basics' supply all other industries. The perpetual demand for their products is assured.

(ii) British companies in basic industries are advantageously placed, as against their overseas competitors, in the geographically strategic position of many of their sources of supply of materials. This advantage they owe, more than anything else, to the adventurous, pioneering and farsighted exertions of those Empire builders it is now so fashionable to disown and decry in certain political camps. These basic materials are supplied to all parts of the world, and the basic industries' profits come, not only from exports and home sales, but also from their extensive production overseas. This section of the market is the biggest earner abroad; for instance, the oil companies' earnings are almost entirely from their overseas production, Bowater Paper Corporation's two-thirds and LC.L one-third.

(iii)The continued discovery of new synthetic materials such as man-made fibres, synthetic rubbers and plastics, has led not only to the creation of new markets but also to the emergence of the modem high-powered companies as a result of mergers (oil-chemicals-textiles). These large-scale concerns, with their multiple activities, by reducing competition have acquired a strength, at home and abroad, which has rendered them supreme from an investment standpoint.

(iv)Enormous quantities of steel are used for consumer goods, including motor can and domestic appliances (washing machines, refrigerators, etc.), and industrial containers, drums and tanks. The capital goods industry also makes use of huge amounts of steel for beams and tubes for building, plates for railways and ships, sections for factories and machine tools and pipes for oil installations.

(v)The new selling techniques (processed foods, canning both food and drink, self-service and supermarkets) have led to added demand for packaging whether in paper or metal.

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