Capital Intensive

Capital intensive can refer to industries or business processes that require a lot of investment to produce a good or service. In other words, they spend a lot just to get started making something, putting a lot of money toward heavy equipment and large facilities. (Think: auto makers.)

Because they have so much large, expensive equipment, and equipment tends to depreciate (lose value with age and wear/tear), these companies see a lot of depreciation overall. The other problem these companies have is that they have a lot of fixed expenses, like a large (often unionized) workforce, the need for large facilities to store and use the equipment, the cost of the equipment itself and big bills for supplies and raw materials.

The companies are stuck with these expenses no matter what...when business goes bad (like in a recession), they still have expensive bills to pay. In these cases, it's easy for the capital intensive companies to start losing money.