Running on fewer wheels

[mudNmallards]

Thanks LarryW. Now there's a guy with more answers than questions. I'm going to go around with a little extra air and see how it goes. Beats shelling out for 25's when I don't have to.

On another note: It's funny how some claim piece parts are so cheap while our manufacturers fail to survive. To quote Homer's brother: "There's only about $50 worth of steel in those things (car)." A real bill of materials inculudes all the engineering, certifications, nuts/bolts, labor, equipment, advertising...

Respectfully, thats not quite correct. A BOM is just the aggregate costs of the parts of a unit. Engineering,set up, production facilities and machinery etc is factored in the mark up during the FEED (Front End Engineering and Design) and is considered a fixed expense over the life of a product. ( since its usually only done once). Labor, marketing etc is computed in the COGS (Cost of Goods Sold) on the back end and is constantly reviewed and adjusted for market and business considerations as those are usually dynamic.

The parts etc are factually a minor consideration in the cost of a unit because they are usually the cheapest part of the process. Manufacturing facilities lose money and go bankrupt in almost all cases not because of the BOM costs or a unit or a bad market- they go down because of all the losses due to quality problems, rework, ineffective methods, worn out equipment not operating at peak performance and human issues. ( thus the 7 major losses in TPM and six sigma) In the graph of the maintenance or process icebergs- these losses are the "bottom half" of the iceberg than nobody addresses until its usually too late because they are not above the water in plain view. This is why the japanese ( and not other countries) are eating our lunch- they are cheaper and better because their operating effeciencies are well above 90% compared to 40-60 for the average US firm.

[thebuggyman1]

MudNmallards, you missed a MAJOR cost.....liability, lawyers, insurrance. Perhaps you had it implied in the COGS. The last figures I heard, liability was the largest single cost of building an automobile (over $10k per unit)...where as the "union" labor cost per vehicle was under $2k (old figures). Why is it the "lazy union workers" get blamed so often for corporate losses? Published in the same article was toyota's labor costs, at approx 75% of GM's....a couple hundred bucks on a $30,000 car????

[mudNmallards]

MudNmallards, you missed a MAJOR cost.....liability, lawyers, insurrance. Perhaps you had it implied in the COGS. The last figures I heard, liability was the largest single cost of building an automobile (over $10k per unit)...where as the "union" labor cost per vehicle was under $2k (old figures). Why is it the "lazy union workers" get blamed so often for corporate losses? Published in the same article was toyota's labor costs, at approx 75% of GM's....a couple hundred bucks on a $30,000 car????

Oh no, I didnt miss it LOL. Thats a line item in COGS which is usually a fixed overhead cost under liabilities. On the process side of my work, thats the number one concern ( and highest single line cost) is when the risk assessment IAW LEEDS and ISO 14001 along with regulatory compliance and the highest cost factor of all of them. Right next comes product liability.

As far as labor- thats normally a small factor in manufacturing (contrary to the ever popular politically created lie) You are quite correct that the unions ( and non unions) simply get "blamed" for it but thats nothing more than a politically created lie that politicians use to keep the real truth out of the public eye. I say that because over 80% of my work is overseas and I set up and spec out the machines, work processes and train operators as well as do the business studies.

They pay these people cheaper wages because these new plants are generally state-of-the-art and run themselves. All they need are "operators" rather than experienced craftsmen to make the end product.

Plus, most countries do not have the crippling and expensive EPA and other litigation concerns and most that do have laws where the loser pays in a lawsuit and as such "frivolous lawsuits" with excessive judgements are almost non existant.

All one has to do to prove this to themselves is work overseas for a while and see the actual numbers or go back to the US in the 60's/70's when workers were the highest paid on average on the planet and the good were substantially cheaper then. The only change has been the liabilities associated with operating the business and the additional overhead.

The data from thousands of studies proves this time and again. You just dont see them highlighted because the finger of blame points squarely at politicians and now workers or business.

[Ken Hiltz]

Liability issues! Check out the lawsuits over rolled Rhinos. With the choice between the 80's Argo and 2000's Rhinos, I choose the slower Argo. There were rolled Rhinos all over the place.

[North Country Tough]

Hmmm liability issues I never gave that a thought as to the overall cost of a product,I guess Iam to old school I have fell off,rolled,endoed,high sided,flipped,and crashed almost every conceivable motorized vehicle on and off road,it was the only way to know the limitations of the vehicle and myself,never blamed anybody but my stupidity for any injury I incurred,generally got up brushed myself off and lesson learned.LOL NCT

[mudNmallards]

Hmmm liability issues I never gave that a thought as to the overall cost of a product,I guess Iam to old school I have fell off,rolled,endoed,high sided,flipped,and crashed almost every conceivable motorized vehicle on and off road,it was the only way to know the limitations of the vehicle and myself,never blamed anybody but my stupidity for any injury I incurred,generally got up brushed myself off and lesson learned.LOL NCT

Its not just the end liability of the product( even though thats what always makes the news), its workers comp, protective and safety devices, facility liability, environmental insurance, certifications for specialty devices such as cranes and a host of others. Thats a HUGE chunk of overhead.