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Thailand Labor Cost Analysis

Evahan assisted Delta Hydraulics with the labor cost analysis of its hydraulic hose business division

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Delta Hoses Crimping

Labor Cost Analaysis to Support RFQ

The hose division of Delta Hydraulics Thailand's open book pricing agreement with Caterpillar Inc came under threat as a result of the customer querying the labor cost portion of 3,500 SKUs priced in the latest RFQ response.

Delta undertook an analysis of its actual labor costs for employees involved in supply chain management, production forecasting, assembly and fulfilment of hydraulic hose assemblies for the period February 2017 to October 2023.

The analysis output actual labor costs a ratio of sales, ratio fo employees, ratio of productive minutes of all labor and ratio of minutes of direct manufacturing labor.

The analysis also considered the impact of annual inflation, average economic wages data for the period 2016 to 2022 from sources such as the Bank of Thailand and compared Delta's labor costs with country wide averages for similar manufacturing and supply chain management and planning roles with foreign owned companies operating in Thailand. 

The analysis also included de-sensitized data showing wage increases for individuals who were with the company for more than 4 years to show the wage increase effect of annual (January) lump-sum bonuses and cumulative annual percentage wage increases. 

Delta Hydrualics Bank of Thailand
Delta Hydrualics Bank of Thailand

Project Outcomes and Value Added by Evahan
Evahan achieved the following outcomes for Delta Hydraulics Thailand Ltd:

  • A detailed historical analysis of its actual wage or labor costs for its employees involved in the hydraulic hose assembly division
  • Comparisons of Delta's labor increase with Bank of Thailand produced Thailand wide wages growth rates and averages and economy inflation rates
  • Supporting evidence for the labor cost analysis including independently audited wages summary, samples of redacted actual employment contracts and annual revisions with longer standing employees
  • The analysis was successful in avoiding a cost down due to providing a wages cost reduction in the RFQ, which was the goal of Caterpillar's global hydraulic hose procurement team based in Chennai

Looking to increases disbursement recovery costs from your customers and cut costs for your venture, operating business or project? Contact Evahan Managing Director and Principal Consultant Jason Bresnahan to explore how we can support you leveraging our financial analysis experience and supply chain analysis and improvement experience.

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