I work in the plastics industry. Having said that, I can say for certain that the price of oil will not cause the price of a plastic car to raise that much. In fact, oil prices have fallen a bit lately. i am off from work for the next couple of weeks so I do not have access to the pricing information I otherwise would have. My best guess right now for material costs for this car is probably somewhere in the $3.00-$3.50 range. Yes, those decimal points are in the right place. This is for the styrene only and I could be a bit off on the high side. Granted there are tooling costs which need to amortized into this for each part also.I did a small breakdown of what might go into a freight car like this below based on how things are done where I work.
Design costs: Amortized over the projected sales life of the product. This is generaly accounted as a sunk cost to the company but is figured into the cost of the product in the markup multiplier.
Tooling cost: Amortized over the life of the tool or the projected sales of the product. Tooling can be one of the most significant costs in the manufacture of parts. There is no magic bullet for making tools. Tools are machined by skilled machinists using mills and cutters. Most cavities are EDM burned but the shear amount of work is what costs so much for these tools. Each part requires a mold block to be made and generaly they are at least two cavity molds. For the last few years tooling made in China was real cheap compared to here in the states. Usually what offset the difference was the rework after test shooting the mold. lately though, the tooling costs overseas has gone up considerably. The skill level to make these parts has finaly caught up with the chinese and the skilled workers are demanding more wages. This has come to our attention in our plant and we have actually brought parts back in house that we were once sourcing overseas as we can do the work cheaper here than they can now.
material costs. Everything that goes into making the part.
Assembly (build, paint, letter)This is a wage/benefit cost. In th plant where I work the average wage is $18.00/hr. The cost or labor and burden rate is closer to $50.00/hr. This is the cost to have someone in the plant working. This includes such things as wages, insurance, heat, lights, building maint, vacations, holidays. I don't know what the wages are in china these days but I know that they are not what most people think they are. (pennies/Hr)
Advertising: Another cost that has to be figured in. Web sites, magazine ads, Trade shows, etc are all costs that get applied to the final costs of a product.
Inventory, distribution, delivery: It costs money to inventory parts. All of the money spent to make the product to put into a wharehouse for shiments has to come frome somewhere. Hopefully the business is solvent enough to shoulder that burden. If not money has to be borrowed which has a cost associated with it. It also cost upfront money to get the parts here(USA). This also gets figured into the cost of the product.
Wages: The folks at Horrizon want to get paid too. Everyone from the co. president down to the people who ship the goods and everyone in between fall into this catagory.
Building costs: Warehouse and offices cost money. Taxes need to be paid, mortgages and maintenance costs are also figured in as a burden that needs to amortized against the product.
There are several other costs associated that I may have skipped over but for the most part these are the big ones. Not knowing the details of each of these I can't accuratly figure the gross cost to make one of these cars. I do know this though. They do not sell these things for cost. There is usually a markup to get to the MSRP. figuring for a 4x markup, that would put it at $12.25 for costs. Not too far off of what it might cost to make that car here in the states provided we could get a good Pcs/hr rate from the workers.
Something to think about when we complain about the costs for these toys we play with. A while back there was an article about the profit margin that Ford makes on the Lincoln Navigator. The number was an astonishing 70%. since this vehicle is based on the ford truck chassis one can see that since the truck has less parts than a SUV there has to be some considerable profit margin in them as well. Take this one step further and figure this across all big three auto makers...
Oh, and yes, I think $49.00 is a bit over the top
