Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1916-10-08

AS stated above, out of hundred automobile
concerns selling in this country, about 80 per
cent are assemblers and only 10 per cent. manufac
t1rers in the true sense of the term. This means
that consumers are paying % per cent. premium to
80 per cent. of the automobile concerns in the
try, over and above what they could buy the same
cars for, and in fact much better cars, from the
large manufacturers. u 25h o>saS x
QUANTITY PRODUCTION OF AuTomoBl1Es
Vague statements are frequently made concern.
ing the effect Of quantity production in reducing
manufacturing costs To illustrate this truth to un
informed persons, it is necessary to state the
elements that enter into cost and selling prices Of
automobiles. Many people will be astonished at the
number Of these elements Primarily, the basic cost
Of an automobile is: T" "
~ The raw material contained in it.
~ The wages Of the wor]zmen who fashion the
material into finished car TIL sum of these two,
items is the prime cost and the actual car value the
customer receives. All costs and expenses beyond
these are Of little, if any, value to him. ...rA
(3) Factory overhead expenses should be in
Guided providing the manufacturing methods are
simple, direct and economical q.
Fatory overhead expenses include supplies, su-
pervison and factory organization expenses which,
according to the intelligence of the personnel de-
termine whether the output of the manufactures is
large o. small, whether the proper material is pur
chased and at the right prices, whether the design
Of the car is correct and the manufacturing methods
simple and effective. Hence, we may say that fac-
tory overhead expenses are legitimate part of the
actual car value received by the customer, and if
we admit this these three items, representing
manufacturing cost are all actual or valus the Gus
toner receives. In making up the selling price,
however, other items are added, as follows:
a. Administrative, advertising and selling and
general expenses. r@otaa 44st
H&8l5) Discount allowed automobile dealers who
ssNthe customer and give him service afterwards
s3f Manufacturer or assember's profit
sQUANT1TY PRODUCTION DBTR1BUTEs
EXPENSE .a
The total Of these six items comprises the selling
price. 1t may be astonishing, but it is true that
every one of these six items must and does vary
with production. Every mall producer, whether hs
Is . manufacturer or an assembler, necessarily suf
fers an increase in every one Of these six items and
must therefore charge more for his car than tho
large producer. -.-' .,....
Illustrating this, we will take the cars Of manu-.
faucturer CAY producing $4,000 cars par annum
and either small manufacturer or the usual A.
sembler (B) producing 10000 cars.
Commencing with item ~, raw MATERIAL it
should be obvious that (A) can obtain much lower
prices than (B) for the same material because his
buying power and purchases are seven and q half
times greater
In item (2), labor, it is obvious that (A) can en-
ploy skilled mechanics in specialized single opera
tions to greater extent than (B) and consequent
ly obtain better work and more work from the
same men. "A ."@.'...
In item (3), factory overhead expenses, it is OBJ
vious that CAY, owning the highest priced, most
modern labor-saving machinery, can eliminate ex-
cessive labor and supervison that expenses Of non
dustry.