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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Tenchusatsu who wrote (446232)	1/8/2009 10:51:14 PM
From: TopCat	Respond to of 1578228

"....but he considered labor to be a fixed cost." That's interesting...I've never seen direct labor considered to be a fixed cost but under the circumstances it might as well be.

To: Tenchusatsu who wrote (446232)	1/9/2009 1:28:30 AM
From: i-node	Read Replies (1) \| Respond to of 1578228

I wasn't able to press him on the details, but he considered labor to be a fixed cost. This is because you can't really send workers home when production needs to be slowed, except when you do plant shutdowns. You make a reasonable point, but I'm going to tell you something about business models. If your business model considers direct costs, whether labor or material, to be, in significant part, "fixed", you've got problems. Big problems. The reason I say this is that all economies eventually turn down, and when it happens those guys who can't react quickly are always at a disadvantage. To a large extent, you have identified the problem with the Big 3. They can't cut back production like a normal business because they have to keep paying the labor.