[Stoves] Cost of stoves

Paul Anderson psanders at ilstu.edu
Fri Nov 9 07:52:53 CST 2012


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:  psanders at ilstu.edu   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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