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URL:  http://boards.fool.com/very-good-discussion-problem-here-as-i-see-it-16729484.aspx

Subject:  Re: Unions in the 21st Centery Date:  2/15/2002  8:27 AM
Author:  jvancil Number:  7548 of 18117

Very good discussion!

Problem here (as I see it) is that we are working on supposition and guess! We would really need access to a lot of information from Ford in order to come up with the answer. Let me speak to something I do understand, though. I am with a manufacturing concern, and our direct labor as a percent of SALES (shipments) was ~ 14% last year. Indirect labor was ~ 4%. At $30,000 per car, applied to Ford that would be $4200 for direct and $1200 for indirect. And keep in mind that this is before any of the SG&A...

Our net profit goal is about 7%... I do not know what Ford's is... or what their actual net was... but I can tell you that they are probably a good deal more efficient than we ar with regards to labor... but they have huge technology and machinery costs to replace that labor efficiency. I would not be suprised to find out that Ford was working on about a 5 - 8 % net on each car (on average) which would put it closer to the $1500 to $2000 per car. Of course the other thing we do not take into account is this... is it $30,000 to the Dealer or to the end user Customer? (Me...) Whcih makes a difference as well. I have heard some opine that a dealer makes about $100 per car, and that is (IMHO) ridiculous. Not nearly enough to make it worth their time...

So I think I will continue to make guesses and say that Ford is probably running Direct Labor at somewhere around 11%. Indirect... probably higher than 4% because they seem to be top loaded on supervisors, etc.


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