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timerover51 August 19th, 2017 01:52 AM

Cost of M-113
 
In 1977, a batch of 1200 M-113A1 cost the U.S Army $73,250 per unit. As the value of the U.S. Dollar and the Imperial Credit at the time were the same, that would put the price of one of those M-113A1 at 73,250 Credits.

I have not yet located the price of the first batch of 32 M-113 delivered in 1960, but I can make an educated estimate. The inflation factor from 1960 to 1977 is exactly 2. Given the very large number made by 1977, including license production overseas, the cost per unit for volume production should have dropped considerably. Richard Ogorkiewisc in his book Armoured Forces gives the reduction in cost for a production run of 2,000 vehicles of a factor between 3 and 4. As by 1979, somewhere in excess of 70,000 M-113s and variants had been produced, volume production should have dropped the per unit cost by at least a factor of 4, and possibly 5 compared to the initial per unit cost. The first vehicle run also use gasoline verses Diesel engines, which also would have reduced costs. So, taking the $73,250 per unit is 1977, dividing by 2 and multiplying by 5, one gets $183,125 per unit for the first units.

For the current cost, there is a range of values. The inflation rate from January of 1977 to January of 2017 is a factor of 4.15 from the Bureau of Labor Statistics.. The would make the M-113 cost $303,987.50.

If you use Ogorkiewisc rule of thumb for WW2 armored vehicles at costing about a Dollar per pound, and the inflation factor from 1944 to 2017 at almost exactly 14, that would make the initial 19,755 pound vehicle cost about $276,570. Hmm, not too far from the above figure, but both are based on the inflation factor, so not truly independent.

If I use the price of gold circa 1978 at about $200 per ounces, close to the yearly average, with the price of an ounce of gold in Imperial Credits also being 200, verses the $1200 per ounce gold as been sitting around of late, then the price would increase by 6 over the $73,250 or $439,500. That seems a bit high, but if you plug in the Imperial Credit being worth 2 Dollars, that would drop it it 219,750 Credits. That feels a bit more accurate with volume production.

Now, if you were going to produce a small number of the vehicles, then the $439,500 might not be too far off of the mark, as the 1977 value was for a very large number of vehicles. Then it might be best to use a straight Credit per Dollar exchange rate, and price the vehicle at 439,500 Credits. A one-off custom-built vehicle should run at least twice that.

There are a couple of other ways of looking at possible costs that I can think of, but those are a tad esoteric. I was looking for a fairly simple way to assess costs. It looks like, depending on the volume of production, either the cost per pound would work for not fully known costs or plugging in the inflation factor where the cost is known. For lower production rates, the change in value in gold might work best.

savage August 19th, 2017 11:10 PM

Quote:

Originally Posted by timerover51 (Post 572001)
Now, if you were going to produce a small number of the vehicles, then the $439,500 might not be too far off of the mark, as the 1977 value was for a very large number of vehicles. Then it might be best to use a straight Credit per Dollar exchange rate, and price the vehicle at 439,500 Credits. A one-off custom-built vehicle should run at least twice that.

There are a couple of other ways of looking at possible costs that I can think of, but those are a tad esoteric. I was looking for a fairly simple way to assess costs. It looks like, depending on the volume of production, either the cost per pound would work for not fully known costs or plugging in the inflation factor where the cost is known. For lower production rates, the change in value in gold might work best.

Small production could be an issue if all parts are produced locally. A short run or slow run of commonly available parts may not drive up cost that much.

Ishmael August 20th, 2017 01:01 AM

I think that there are 2 separate things to consider here; production costs and sales price.

Sales price is proportional to production cost, profit margin and demand/supply ratios.
Production cost is proportional to labor cost and materials costs ( which involve materials that must be purchased and thus have their own sales prices which are proportional to production cost, profit margin and demand/supply ratios of their own, recursively ).

timerover51 August 21st, 2017 01:21 AM

Quote:

Originally Posted by Ishmael (Post 572066)
I think that there are 2 separate things to consider here; production costs and sales price.

Sales price is proportional to production cost, profit margin and demand/supply ratios.
Production cost is proportional to labor cost and materials costs ( which involve materials that must be purchased and thus have their own sales prices which are proportional to production cost, profit margin and demand/supply ratios of their own, recursively ).

The 1977 price is what the U.S government paid Food Machinery Company to produce 1200 M-113A1 armored personnel carriers, and would include the company profit.

For comparison, in 1917, the U.S. Army was unable to produce sufficient 1903 Springfield rifles in government arsenals, and had to turn to civilian gunmakers for production. Three companies had been producing the Enfield for the British government, in .303 rimmed caliber. The U.S. decided to convert the .303 rimmed Enfield to the .30-06 rimless cartridge, and produce them to equip the Army. The British had been paying approximately $42 per rifle to the private American manufacturers. When the U.S. began purchasing the modified rifle, the price as approximately $26 per rifle. There would have been a slight amount of raw material price increases in 1917, however, the two different caliber rifles would have required about the same amount of raw materials. The was some cost in converting the production machinery over to the new rifle. The $16 difference in price to the British government represents the fact that the British government was desperately short of rifles in the early years of the war, and there was a limited number of manufacturers that could supply them. The production cost of the .303 Enfield rifles was very likely less than the $26 paid by the U.S. for .30-06 versions of the rifles, which probably had only a 5% profit markup. Basically, the difference between a likely production cost of circa $24 per .303 Enfield and the $42 paid represents the supply/demand side of the equation.

The information on the rifles comes from Benedict Crowell, The Assistant Secretary of War, Director of Munitions, U. S. War Department, book America's Munitions 1919-1918. This is viewed as a primary source on American munitions production in World War One, and an excellent copy may be downloaded here: https://archive.org/details/cu31924030744068


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