No, Material cost and labor cost are two different entities in manufacturing and budgeting.
As for your steel example cost depend on lost of factor like specification of steel, brand name, QC/QA analysis, etc. You can't compare apple to oranges.
Irrelevant to the purchaser. If you are selling steel at 1 dollar a tonne, making 5% profit and 50% of your cost input is the steel mill workers then your labour costs 50%. Its just that simple.
No business dealing in hardware will succeed if labor cost is 50-60% of the final price.
Generally manufacturing costing goes the following way
- Infrastructure Cost : 30-40%
- Material Cost : 40-50%
- Labor Cost : 10-20%
- Warehousing Cost : 5-10%
And every single one of the three have labour costs - fyi many years ago my company worked subcontracting for BCLDB - they are a massive warehouse & retail entity, who's 40% of the budget was dedicted at - you guessed it- labour cost.
You have to look at every level of the industry- and the more layers you add, the more layers of labour processing you add. All of which are at 3000% rate of Russia or India.
Factually incorrect statement. Depends on type of material as we are talking about defense production we are talking about niche segment. Here the infrastructure cost is the greatest during production followed by material cost.
See above. Your material cost as the final purchaser ( lockheed martin) has about 5 steps of built in labour cost- from harvesting the ore, to processing the metal, to shipping, handling, to making a component, more shipping & handling, then to build your radar at rayethon, then more shipping and handling to you- LM. You see it as 'i bought a million dollar radar that 4 guys i pay 100K a year will install in 2 weeks, so my labour cost is under 20K and thus, 2% of my price tag, while ignoring the fact that your million dollar radar unit, has an in built labour cost of 30-40% to begin with.
