Manufacturing cost

“ The economy which leads to this lies altogether in the greater cheapness of the manufacturing. The difference between the cost of fashioning materials in the home and that of doing it in the mill is so large that it would have brought about the building of mills and the creation of manufacturing centers, with the carrying which it involves, if neither railroads nor steamboats had come into being. ”

“ A suddenly enforced increase of even one hundred per cent in the haulage and delivery cost of product would put hundreds of our most serviceable industries on the financial rocks.
2. A business man or a business industry that has been giving us thirty cents in manufacturing cost for our fifteen cents in cash is certainly deserving not only of a hearing but of a vigorous, robust, militant support. ”

“ The only further step required is to throw overboard the idea of pricing on what the traffic will bear and instead go to the common-sense basis of pricing on what it costs to manufacture and then reducing the cost of manufacture. If the design of the product has been sufficiently studied, then changes in it will come very slowly. But changes in manufacturing processes will come very rapidly and wholly naturally. ”

“ Materials used in getting ready or seasoning the raw material, i.e., auxiliary material, such as paint, putty, etc., the quantity of which used on each piece of product cannot be measured with exactitude and must therefore be spread over the entire product—these and similar items constitute manufacturing supplies. They are usually treated as a part of factory expense rather than as belonging to prime cost. ”

“ For a manufacturing concern which sells only its own product, the first deduction from sales is the cost of the goods manufactured and sold. As stated in Chapter III, the elements of the cost of manufacture are: (1) material, (2) labor, and (3) factory expense. The cost of goods manufactured must be combined with any unsold output at the beginning of the period and a similar output at the end of the period, in order to determine the cost of the goods sold. Cost of manufacture corresponds roughly to the net purchases of a trading business. ”

“ That by uniting the knowledge, experience, and skill, and by building manufactories on a more perfect and extensive scale, with approved machinery and appliances, they have been enabled to and do manufacture a better quality of illuminating oil at less cost, the actual cost of manufacturing having been thereby reduced about 66 per cent. ”

“ Manufacturers recognize the necessity for comprehensive statistics in the manufacturing branch; they realize that they must know what their goods cost to manufacture; but in comparatively few enterprises is the importance of commercial costs recognized.
In the factory, costs are figured down to the most minute detail; what it costs to perform each operation on every part of the completed whole is known; the efficiency of every man—what he costs in wages, in power, and general expense, and the cost of every bit of material he uses—all of this is told by the cost accounting system. ”

“ It is furthermore contended that the cost of carrying the inventories for which the purchasing, stores, and planning departments of a manufacturing concern are responsible, should be shown with interest on the money invested in them taken into consideration—this for the purpose of providing a check on the efficiency of these departments. Where also both old and new machinery is used side by side and it is desirable to compare their costs of production, the element of interest should be considered. ”

“ Such is the cost of materials and labour at the present period; it is true that the above scale is drawn from "credit prices;" but let every part of a manufacturing concern be carried on for money only, which is rarely the case, still the deduction from the whole cannot be more than 71⁄2 per cent. ”

“ How Cost of Production and Cost of Acquisition are Equalized.—The costs of moving goods from place to place—including in these costs commercial charges and duties imposed by governments—are the cause of most of the manufacturing that is done in the region represented by the left side of the diagram, except the production of such articles for immediate or local consumption as are necessarily made at or near the places where they are used. ”

“ The area over which it could be performed was greatly enlarged, the cost of materials was reduced through cheaper transportation, new devices and processes were developed as a result of the competition, cheaper raw material was obtained from countries where plentiful supplies and cheap labor give low prices, and the opportunity of locating the factory near the place of production or at some convenient meeting point between the various places of production—all these contributed to reduction of cost and increase of supplies of material of manufacture. ”

“ Machinery always lessens the cost of a given amount of production, otherwise there would be no motive for its introduction. But, other things being equal, the lessened cost of a commodity broadens the market for its sale. The cheaper a useful commodity is offered, the more the buyers of it the world over. The more and the better the machinery brought in, the more and the cheaper the commodities produced and the broader and better the markets to be supplied; and, therefore, the more and the more skilful the hands needed to tend the machinery and to market the products. ”

“ Manufactures are vastly more susceptible than agriculture of mechanical improvements and contrivances for saving labor. In manufactures, accordingly, the causes tending to increase the productiveness of industry preponderate greatly over the one cause which tends to diminish it; and the increase of production, called forth by the progress of society, takes place, not at an increasing, but at a continually diminishing proportional cost. This fact has manifested itself in the progressive fall of the prices and values of almost every kind of manufactured goods during two centuries past ”

“ The cost of the raw material is usually less difficult to determine; but cases occasionally arise in which it becomes important to examine whether the supply, at the given price, can be depended upon: for, in the case of a small consumption, the additional demand arising from a factory may produce a considerable temporary rise, though it may ultimately reduce the price. ”

“ It is therefore obvious, that the great advantage of cheap raw material is in the rude stages of manufactures, or when our skill in production is not inferior to that possessed by our neighbours. In a manufacture in which the cost of the finished article is several hundred times the price of the materials used to make it, it is skill, and not the original cost of the material, that determines successful competition. ”

“ I think we have been protecting the machinists, engine-builders, and ship-owners of Great Britain, and retarding the progress of our own, by keeping up a disparity in the price of the materials which form the chief element of cost from fifty to a hundred per cent higher in this country than they have been there. How can we expect to keep the control of the home market on machinery when the duty on the materials is fifty to a hundred per cent higher than on the machine itself? ”

“ On the other hand, when machinery is intelligently applied for the conversion or elaboration of comparatively cheap crude materials—coal, ores, metals, fibers, wood, and the like—a very little manual labor goes a great way, and production (as in the United States) is necessarily large. This being sold in the great commerce of the world, gives large returns, and the wages represented in such production will be high, because the cost of the product measured in terms of labor is low, and the employer is thereby enabled to pay liberally ”

“ As we advance from the smaller chain, the proportionate value of the work to the worth of the material becomes less and less, until at the numbers 2 and 3, these two elements of cost balance each other: after which, the difficulty of the work decreases, and the value of the material increases. ”

“ No business can be run unless it is able to make enough on its products to pay a decent wage. The cost of production, including the cost of materials, a fair price for the superintendent, and a proportion of the general overhead cost of the factory must be charged against each garment, together with a proportion of the interest on the investment and the approximate cost of the wear and tear on the machinery. ”

“ There are grounds to conclude that undertakers of manufactures in this country can at this time afford to pay higher wages to the workmen they may employ than are paid to similar workmen in Europe. The prices of foreign fabrics in the markets of the United States, which will for a long time regulate the prices of the domestic ones, may be considered as compounded by the following ingredients: The first cost of materials, including the taxes, if any, which are paid upon them where they are made ”

“ A similar effect would be produced by the introduction of new machinery, and a more judicious division of labour in manufactures. It almost always happens in this case, not only that the quantity of manufactures is very greatly increased, but that the value of the whole mass is augmented, from the great extension of the demand for them, occasioned by their cheapness. We see, in consequence, that in all rich manufacturing and commercial countries, the value of manufactured and commercial products bears a very high proportion to the raw products ”

“ It has been of undoubted benefit to both, though it may oftentimes retard the growth of new industries by a system of rates so preferential as to enable the manufacturer a long distance from the field of production of raw material to ship the raw material to his mills, manufacture it and return the manufactured goods cheaper than the local manufacturer could afford to make it, and thus, while building up the centres of manufacture, have retarded the growth of manufacturing in the centres where the raw material is produced. ”

“ It is evident that the average price of those things which are consumed in the act of using them, can never be less than that of the labour of bringing them to market. They may for a short time be sold for less, but under such circumstances their production must soon cease altogether. On the other hand, if an article never wears out, its price may continue permanently below the cost of the labour expended in producing it ”

“ Prices of everything to do with manufacturing had increased—prices of copper and steel, of machinery, of wages, in addition to the larger number of hands employed, and the rent of the additional floor. It was always necessary for one's peace of mind to go back to the value of the material stock and the assets to be counted on in the future. ”

“ A manufacturer in this country may be in a position to do firm business with a foreign buyer at a given rate of exchange which is just sufficient to ensure a small percentage of profit; a violent fluctuation in the exchange at the time payment is effected may entirely eliminate all profit and possibly convert it into a serious loss. Then again, the high cost of production in this country, especially of manufactured commodities where the wages of labour form 60-85 per cent. ”

“ They show that mill efficiency depends more on a liberal use of the most improved machinery than on low wages. Thoughtful planning in arranging the machinery to save unnecessary steps to the employees, careful buying of raw materials, the efficient organization and utilization of the labor force in the mill, systematic watching of the thousands of details, each affecting the cost of manufacture, will reduce costs to an astonishing degree. ”

“ The cost of production, prompt information as to the cost of transprotation, are legitimate subjects of inquiry and knowledge in any industry. So likewise is the production of the commodity in that industry, the aggregate surplus stock, and the prices at which the commodity has actually been sold in the usual course of business. ”

“ Accepting, as will some sections of Labour, that their demands cannot be met out of employers’ profits on present output, the alternative is, they say, that the manufacturer must raise his selling price by an amount sufficient to cover the extra cost. In this it is assumed, of course, that the rate of production remains the same. It is a fixed idea that every manufacturer and the owners in every industry can raise prices without any difficulty whatsoever. ”

“ When the board, therefore, states that the labor cost of production in this country is on the average, about double that in foreign countries, we must bear in mind the difference in costs in our own country, and the causes to which high costs are due. The fact is that the woolen industry, being one of the best, if not the best, protected industry in the country, shows an exceptional disposition to cling to old methods and to use machinery which long ago should have been consigned to the scrap-heap. ”

“ For the purpose of examining this question, let us consider the case of two manufacturers of the same article, one situated in a country in which labour is very cheap, the machinery bad, and the modes of transport slow and expensive; the other engaged in manufacturing in a country in which the price of labour is very high, the machinery excellent, and the means of transport expeditious and economical. Let them both send their produce to the same market, and let each receive such a price as shall give to him the profit ordinarily produced by capital in his own country. ”