Dear David and Crispin,
And where the wages are less than $100 per month (and some of that money
is for a reasonable meal during the work day), the labor component is
almost negligible compared to the costs of new (not scrap) sheet metal.
When the stove is ceramic/fired clay, the clay can be cheap but there
are the costs of firing it and then transporting it. So the labor
still adds only a relatively low amount to the stove.
Can these low-income workers (yes, they have a job and they are better
off than those without any work) afford a $25 stove? That would be a
week of wages.
Would any of us who live in the affluent societies pay one week of wages
for a stove? That might depend on your income!!! And we have
discretionary money far above the money needed for food and lodging.
Paul
Paul S. Anderson, PhD aka "Dr TLUD"
Email: [email protected] Skype: paultlud Phone: +1-309-452-7072
Website: www.drtlud.com
On 11/9/2012 2:09 AM, Crispin P-P wrote:
Dear David
Typical worker wages in many poor countries are $200-300 a month.
Informal sector pays less. Industrial production would make a single
pot metal stove in 8-10 minutes including boxing.
Labour is thus an insignificant cost, it is material that is the major
expense.
In volume you can assume materials to be about 2/3 the marginal cost
of production and the retail price to be between 2 and 6 times the
marginal cost. Labour-intensive production can be very good if they
have exactly the right tools (which is often not the case.).
Anything you buy in North America at a store sells for about 10 times
the marginal production cost, just to give you an idea what consumer
societies pay.
Regards
Crispin
I notices a post here, where a facility employing 6-10 people coulf
produce 500 stoves per month. This means that each person can produce
50-80 stoves per month. Assuming a 40 hour work week (which may be
too low), that means 170 hours per month or 2-3.5 hours per stove.
Assuming normal G&A expense, (things like cost of the building and
tools) and some component cost for the stove (sheet metal costs
money), would the stove not cost over 2-3.5 hours of a worker's time?
What does this say about the cost of a stove?
If a stove must sell for $X, does this imply the worker's income must
be well below $X/2 per hour since there are G&A and material costs
involved?
If my analysis is incorrect, please tell me how the business can
survive with less income than expenses. Can the worker survive with
less income than it costs him to survive?
Dave 8{)
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