Reducing Unit Cost

The secret to reducing the unit cost in manufactured products is found in increasing throughput. If you can double the number of products you produce you can cut unit costs almost in half. It requires new production equipment.

When I arrived at Schwan Foods in 1975, our annual revenue was $150 million produced by 3400 employees. We embarked on automating pizza production and by 1979 our annual revenue was $650 million produced by 3400 employees. We were able to create higher paying jobs to support the new production processes and did all promotions from within. We launched Red Baron pizza and many other products.

When I arrived at Hayes Microcomputer Products in 1983, our annual revenue was $35 million produced by 100 employees. We bought auto-insertion and automated test equipment and by 1986 our annual revenue was $260 million produced by 900 employees.

Norb Leahy, Dunwoody GA Tea Party Leader