Reduce the Rate of Cost for the Input Used to Produce the Output

Use the same type of input and the same activities, but pay less for the unit of input employed in producing the output. A reduction in rate is equivalent to a reduction in the number of inputs for the same ICD. For example, if a person who makes $10 per hour could produce the same amount of output as a person making $20 an hour, the substitution of the $10 person for the $20 person in the process would be equivalent to cutting the number of people required to do the work by 50%.

E. Request supplier to lower the price of the input:

Negotiations with the supplier may sometimes result in a lower unit price for the input.

Warnings and Advice

No.	Industry SIC	Year	Notes
1	0	2004	Monopsony arises when one or more companies gain enough buying power to push their suppliers' prices down. This is gaining more attention as giant companies are forming. This kind of hard-bargaining drives down prices for consumers.
2	0	1986	Telephone and construction workers received large wage gains compared to pay decreases of workers in depressed steel, copper, and aluminum industries.
3	0	1988	Bureau of Labor stats show that union workers earn 40% more in wages and benefits, and bluecollar union workers earn 70% more in wages and benefits than nonunion counterparts.
4	0	1992	Advice: A recession is the best time to save money and upgrade quality through purchasing practices. Suppliers are willing to make improvements during a recession.
5	3312	1986	United Steelworkers, striking against USX, won't accept pay cuts for jobs because job savings are insecure.
6	3312	1992	Most vulnerable companies to shake-out in steel industry are those that were "saved" from closing out in 1980s, through restructuring. They're out of money. Labor costs are rising after initial concessions worth 20% of pay.
7	3465	1993	ACG plans to shut down money losing businesses. ACG has won major concessions from its unionized workers–like a tiered wage scale. But ACG's largest union hasn't made such deals, causing wage gap offering big incentive to move work to Mexico.
8	3524	1986	In 1983 B&S suffered a three month strike in order to win much of the flexibility it needed to remain competitive. B&S' labor costs are 50% higher than that of the Japanese.
9	3600	1988	At GE, union leaders asked for job-security provisions. When mgmt balked, leaders agreed to a tentative pact that contained modest pay hikes, but little new job security. Union members rejected the pact.
10	4512	2004	The airlines acquired by US Airways in 1987, both had lower costs and better service, but instead of adopting their culture, US Airways introduced high living to them. Workers at the acquired airlines got large raises to bring them up into line with US Airways' employees. US Airways did not force its company to adapt to the lower cost system because it would have involved a nasty fight with the unions.
11	5734	1989	Businessland demanded steeper discounts from Compaq to resell its products. Earlier, Businessland refused to carry products with EISA (championed by Compaq and others). Compaq replied by withdrawing products from its shelves.
12	7372	2005	Governments in Europe, South America, and Asia are turning to open source software, or using the threat as a leverage to get Microsoft to cut prices. Microsoft cannot afford to lose government agency clients which make up 10-15% of its revenue.

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