4 ms·

Don't try to run the math, it will show that it's not that much for the business in the long run, especially since their labor cost are probably a small fractio

Don't try to run the math, it will show that it's not that much for the business in the long run, especially since their labor cost are probably a small fraction of their costs.

ams6110 10y ago
Labor is almost certainly the largest controllable cost for a business like this one (hand-sewn garment assembly).
- czep 10y ago
  Then labor should also receive most of the profits from said business.
- VLM 10y ago
  I've been informed repeatedly that the cost of real estate and prop tax and rent is so staggering that losing a large percentage of productivity via open offices is still cheaper than providing civilized working conditions for people getting $150K+. That seems to be implying that its better to lose say, $20/hr in productivity than to double rent costs, so rent in CA must be more than $40/hr for a couple sq feet, lets say rent is $4/sq ft in CA, or annually about $8K/sq ft. Some google real estate results for sand hill road indicates that $2000/sq ft per year is somewhat high but not unrealistic... For averaging purposes at a non-24x7 operation rent in CA is going to cost about $30/hr/employee no matter how much or how little you pay the employee. Some garment tasks inherently taking a lot of space to lay out cloth for cutting or sewing imply garment companies are paying maybe twice as much for a garment worker's space than for a software dev's space, an extremely large multiple of employee income is paid in rent, and moving away from CA would result in enormous savings in rent. Clearly moving production anywhere other than CA would save an enormous about of money in rent. In rural nowhere you can get industrial zoned buildings for about $4/sq/yr or about 500 times less than CA office space, at which point you have to start looking in more detail at costs of utilities and other expenses that were noise at higher rents but are now significant relative to the cheaper rent.

Don't try to run the math, it will show that it's not that much for the business in the long run, especially since their labor cost are probably a small fraction of their costs.

ams6110 10y ago

Labor is almost certainly the largest controllable cost for a business like this one (hand-sewn garment assembly).

czep 10y ago
Then labor should also receive most of the profits from said business.
VLM 10y ago
I've been informed repeatedly that the cost of real estate and prop tax and rent is so staggering that losing a large percentage of productivity via open offices is still cheaper than providing civilized working conditions for people getting $150K+. That seems to be implying that its better to lose say, $20/hr in productivity than to double rent costs, so rent in CA must be more than $40/hr for a couple sq feet, lets say rent is $4/sq ft in CA, or annually about $8K/sq ft. Some google real estate results for sand hill road indicates that $2000/sq ft per year is somewhat high but not unrealistic... For averaging purposes at a non-24x7 operation rent in CA is going to cost about $30/hr/employee no matter how much or how little you pay the employee. Some garment tasks inherently taking a lot of space to lay out cloth for cutting or sewing imply garment companies are paying maybe twice as much for a garment worker's space than for a software dev's space, an extremely large multiple of employee income is paid in rent, and moving away from CA would result in enormous savings in rent. Clearly moving production anywhere other than CA would save an enormous about of money in rent. In rural nowhere you can get industrial zoned buildings for about $4/sq/yr or about 500 times less than CA office space, at which point you have to start looking in more detail at costs of utilities and other expenses that were noise at higher rents but are now significant relative to the cheaper rent.