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Industry is required to build ships. Since ships are the military muscle of the game, this is what your industry is likely to spend most of its time building. However, industry can also be used to build more industry, raise the population limit of a world, or migrate population to a neighboring world. A Positronix can also use industry to build robots.
In order to build with the industry on a world, you must first own the world. Also, you must have enough metal on that world to provide the raw materials to build with, and there must be enough population to work the factories. To put it precisely, your usable industry is the smallest of your industry, metal, and population.
When you build with industry, of course, the metal you use is consumed, and must be replenished to build more on subsequent turns. Note that you cannot unload metal and build with it in the same turn; the metal that you unload on a world cannot be used for building until next turn.
If there are enemy fleets at your world, your population may be reluctant to build--they will be hiding in bomb shelters. Specifically, for each enemy ship at a world that outnumbers your own ships and your ally's ships, one industry will not build. For this purpose, and this purpose only, I-Ships count double: their presence in defense of industry is particularly reassuring to your home population. P-Ships count only once, and fleets declared At Peace don't count at all.
Also, a world that is still recovering from a recent plunder will not be able to build.
If your world meets the requirements for its industry to build, it will always build; you can't order it not to. You can't prevent it from building by loading the metal onto a fleet (it will build with the metal before you can load it). If you don't give your industry any particular orders, it will build I-Ships.
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