I crunched the numbers on the six-month delay in product introduction from an earlier post and can now quantify the impact.
The base premise was that this industry had a 40:20:40 cost structure for Fixed costs:Controllable Variable costs (direct production labor):Purchased Inputs
Six month delay (12.5% of anticipated production/sales time horizon) ===> 1.4% net profit margin instead of 10%
25% increase in the cost of labor ===> 5.5% net profit margin instead of 10%
10% increase in the cost of parts ===> 6.5% net profit margin instead of 10%
Net Profit Margins by Selected Industries (source, copyright 2024)
Auto Manufacturer 3.8%
Beverage Manufacturer, non-alcoholic 15.3%
Broadcasting -2.6%
Chemicals 5.1%
Credit Services 19.4%
Department Stores 2.9%
Drug Manufacturers, General 13.1%
Footwear and Accessories 6.8%
Grocery Stores 2.4%
Lodging 7.2%
Medical Care Facilities -5.9%
Mortgage Finance 8.4%
Gas and Oil Refining and Distribution 0.7%
Packaged foods 4.9%
Pharmaceutical Retailers -13.4%
Rental and Leasing Services 8.5%
Restaurants 4.6%
Solar -6.9%
Specialty Retail 1.9%
Trucking 3.9%
I can believe the broadcasting numbers. The station's general manager and the sales manager were the only big dollar positions. The rest of the staff only got a raise when we moved to another station. However we did get all the free tee shirts you care to eat.
ReplyDeleteThanks for the table, ERJ. That seems to track with how industries are doing in this economy.
ReplyDeleteOf interest, Drug Manufacturers (Specific and Generic) from the table have a -63.5% net profit. Add that to the overall industry and you are at - 50% or net profit. Part of that is all the products that fail in clinical trial and thus the investment is gone, part all the companies that get started and then run out of money before anything comes to fruition.
I'm sure glad we sold our business and retired. I would not want to be in any business anymore.---ken
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