There’s a certain type of investor who lights up when someone says “artificial intelligence,” “biotech breakthrough,” or “disruptive platform.” The room fills with phrases like total addressable market, exponential growth, paradigm shift. There are charts. There is optimism. There are hoodies. And then there are boring businesses. The companies that make industrial fasteners. The ones that distribute cleaning supplies. The regional waste haulers. The manufacturers of gaskets, insulation, gravel, warehouse shelving, pest control services, pipe fittings, asphalt sealant, porta-potties, funeral services, auto parts, and unglamorous replacement components that quietly keep civilization from collapsing. No one makes a Netflix docuseries about a regional concrete company. No one is lining up outside a conference center to hear a keynote on corrugated packaging margins. And yet, boring businesses often make very serious money. Not flashy money. Not headline money. Durable money. Let’s ...
If you want to understand why some industrial companies quietly compound wealth for decades while others burn through shareholder capital like it’s jet fuel, you have to start with one unglamorous concept: Capital intensity. Not brand awareness. Not “AI integration.” Not vibes. Capital intensity. Industrial businesses live and die by how much capital they require to generate revenue—and how well they convert that capital into durable competitive advantage. It’s not sexy. It’s not viral. It’s steel, concrete, tooling, plants, logistics networks, and depreciation schedules. But if you care about durable returns—especially if you write or invest in this space—you ignore capital intensity at your own peril. Let’s break this down properly. What Is Capital Intensity? Capital intensity refers to how much capital—fixed assets, working capital, infrastructure—is required to produce a dollar of revenue. In industrial businesses, that often means: Manufacturing plants Heavy mac...