On Sat, 11 Jun 2005 17:50:18 GMT, james wrote:

On Wed, 08 Jun 2005 08:59:32 -0400, Dave Hall
wrote:

No, they were expensive because the cost to manufacture them was much
higher. Both advances in technology and in manufacturing as well as
finding cheaper sources of labor have resulted in price reductions.
*****

Having worked in consumer electronics manufactoring here in the US and
abroad, I would hardly believe that the material cost for the most
expensive CB radio to exceed $50.

At what point in time? Today, it's probably even less than that.

Labor another $10 per unit. Most
likely the material cost is between $20 and $40 and labor about $3 to
$4. Manufacturer's markup is more likely 300% to 500%. Considering
that marketing and shipping costs will equal the sum total of direct
material and direct labor costs.

And include any taxes or duties that might apply from the country of
origin.


The last consumer electronic product that I worked on had a material
cost of $26 and a US labor cost of $7 per unit. Foreign labor cost in
Mexico only reduced labor to about $5 per unit. We were doing about 1+
million units per year. In high volume, high automated manufacturing,
labor is not your major cost factor. It is overhead and variations.

No argument. Overhead,as well as direct labor,is cheaper in 3rd world
countries. My company moved a bunch of product lines from Taiwan to
Mexico, just to save a buck or two. When you make millions of items
that adds up to a substantial profit. There is no way that a U.S.
factory could compete under those cutthroat conditions.

One of our products had a BOM of $43. We sold it for $99. Even
considering shipping, R&D and other absorbed costs, that's a healthy
margin. But when we started a new advanced product, the BOM was
initially over $70 (due mostly to brand new VLSI chips) and market
research showed that we could only expect to sell it for $115 max.
When other costs were factored in, we were actually selling it at a
loss (In order to get market exposure). So we had to start an
aggressive cost reduction program to cut both material and labor costs
to bring our margins back in line. And we already manufactured
overseas. Such is the nature of high volume, low margin products.


Overhead in the US has gone ape in the past ten yrs. This includes
electricity, insurance, worker training and other items. Variation is
the changes in cost of piece parts due to volitility in shipping cost
due mainly to variations in oil prices.

Yes, this is very true. But shipping costs and the effects of oil
prices should be the same no matter where you make it. Those factors
are just as volatile here as there are in China.


Dave
"Sandbagger"