It has been pointed out in various publications that manufacturers appear bent on reducing their costs by focusing on reducing workforce numbers, this despite the fact that the workforce is frequently the least costly component of the manufacturing equation. Well, here are the numbers from IndustryWeek's Best Plants winners and finalists over the past five years: As a percentage of costs of goods sold (COGS), labor costs average 13.5%. This compares with an overhead average of 23.9% and a material costs average of 62.5% of COGS.
| Labor cost (% of cost of goods sold): | | Year | Median | Average | Minimum | Maximum | | 2004 | 12.0 | 12.4 | 3.0 | 25.0 | | 2005 | 11.7 | 14.0 | 1.3 | 75.0 | | 2006 | 7.5 | 12.0 | 1.0 | 50.0 | | 2007 | 11.0 | 15.3 | 3.0 | 35.0 | | 2008 | 7.6 | 14.3 | 3.0 | 40.8 | | 2004-2008 | 11.2 | 13.5 | 1.0 | 75.0 |
Source: 2008 IW Best Plants Statistical Profile |
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