The town's first industry, up to the middle of the 19th century, was agriculture with rough common land to the north and fairly good grade agricultural land to the east and south. Pencoed at this time consisted of four main settlements and numerous isolated farmsteads. The settlements were Penprysg to the north, Hendre to the west, Pencoed in the centre and Felindre to the east.
Three events were to change the situation in the middle of the 19th century. The discovery of rich coal seams (the South Crop) to the north of the village, the working of the red clay deposit in the centre and the coming of the railway.