All objects that require the strength of iron are made here. As money is spent to build hotter forges and mine for better metals, the quality and deadliness of the axes and shields that are produced will increase. Metal is also a vital component in the construction of some Orc's buildings and materials, and to create a site for them will be impossible without the aid of the Blacksmith.
The Warcraft: Orcs & Humans Insider's Guide correctly specifies that Shield upgrades apply to all units and buildings, but incorrectly claims that Axe upgrades provide bonuses only to Grunts and Raiders, when they in fact apply to all your attack-capable units except Spearmen and Catapults. It also incorrectly states that Axe upgrades increase Minimum (Piercing) damage, when they do not.
The computer never researches weapon or armor upgrades. The only exception are computer-controlled units in the missions Medivh and Northshire Abbey, which begin the game with full upgrades.