Arizona republican., 1916-10-01

9O% are assemblers and only l0% manufac- turers in the true sense of the term. This means that consumers are paying 23% premium to 90% of the automobile concerns in the coun- try, over and above what they could buy the same cars for, and in fact, much better cars, from the large manufacturers.
 Quantity Production of Automobiles
 Vague statements are frequently made con cerning the effect of quantity production in re- ducing manufacturing costs To illustrate this truth to uniformed persons, it is necessary to state the clements that enter into costs and selling prices of automobiles. Many people will be astonished at the number of these ele- ments. Primarily, the basic cost of an auto- mobile is:
 CD The raw material contained init
 (2) The wages of the workmen who fashion the material into finished car. The 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.
 (3) Factory overhead expenses should De included providing the manufacturing methods are simple, direct and economical
 Factory overhead expenses include SUD- plies, supervision and factory organization ex- penses which. according to the intelligence of the personnel determine whether the output of the manufacturer Is large or small, whether the proper material is purchased and at the Il Il correct and the manufacturing methods simple and effective. Hence, we may say that factory overhead expenses are legitimate part of tie actual car value received by the customer, and if we admit this, these three items, representing manufacturing cost, are all the actual car value the customer receives. In making up the sell ing price, however other items are added as follows:
 (4) Administrative, advertising and sell ing ard general expenses
 (5) Discount allowed automobile dealers who sell the customer and give him service afterwards.
 (6) Manufacturers or assembler's profit
 Quantity Production Distributes Expense
 The total of these six items comprises the selling price. It may be astonishing, but 1t is true that every one of these six items must and does vary with production. Every, small pro- ducer, whether he IS manufacturer or an as- se-rbler, necessarily suffers an increase in every one of these six items, and must therefore charge more for his car than the large producer
 Illustrating this, we will take the cars of manufacturer (A) producing 5 ,000 cars per annum, and either small manufacturer or the usual assembler (B) producing 10000 cars.
 Commencing with item CD, 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 arc seven and half times greater.
 In item CD, labor, it is obvious that (A) can employ skilled mechanics in specialized single operations to greater extent than (B), and consequently obtain better work and more work from the same men.
 In item (3), factory overhead expenses, it is obvious that (A), owning the highest priced most modern labor-saving machinery, can elm- mate excessive labor and supervision; that ex- penses of non-productive departments, such as experimental, engineering, laboratory, pur- rs in 1914 to 45,OOO in 1915 and from 45, 900 rice of the Six was $I575; in 1915, $I385 car Uas better than the preceding year. The ble only by the increase in production. Iuced and sold more seUen-passenger SYKES q,