Last time, I talked about private planes being very expensive. I mean how many of us know someone who owns a plane? It doesn't work.
The cheapest private jet is Cirrus Vision Jet which starts at $1.96 million. That's insane. Only corporations and billionaires can afford such.
Here are different methods to reduce manufacturing :
- Cheap labor
- Simplify parts
- Process innovation
- Economies of scale
- Radical innovation
Cheap Labor
This has been happening with offshore manufacturing.
An excellent price reduction example is Dollarama. Cars in US are assembled in Mexico because of their relative cheap market.
Labor consists of 75% of manufacturing cost. So if you find workers that are half the wage, that will make the product 38% cheaper for example. If the wage is 1/10th (about Vietnam), 77% cheaper.
It's not only the simple labor but the number of workers involved play a role as well.
Simplified Parts
There are 6 million parts involved in making Boeing 747. Say private jet contains 100,000 parts. That is still in sharp contrast against cars that have 30,000.
Parts number counts with more install work hours and manufacturing logistics to handle. Let alone the cost to make each.
The benefit doesn't stop there. With less moving parts, there'll be less chance of things going wrong reducing maintenance cost.
Process Innovation
Henry Ford reduced the car pricing with the conveyer belt. The method assembled cars as it rolls down the road where workers attached the parts around it. It seems obvious now, but it was innovative at the time.
Another example is Toyota's kanban style just in time scheduling.
This is hard to think by before entering the manufacturing process.
Economies of Scale
When you start selling planes, you can deploy larger machines to produce even more planes. The volume starts to speak. That's the story of machine base mass manufacturing.
This is the classic industrial revolution story. Machines started taking over textiles in England.
This is unlikely the source of further radical price reduction as conventional manufacturers must have deployed the large machinery already.
Radical innovation
If we are looking for reducing the price radically, it has to be designed from a different approach using different material, and possibly for a different use case than now. For example, so called flying taxis are working on short metropolitan distance vehicles that's built not for long distance travel. That help explore different ways of plane architectures, which can potentially drop the price of manufacturing siginificantly.
Only imagination is the limit.