SETP No. 14 The Economic Value of Incremental Employment in the ...

on imports is ‘lost’ to the economy and that true cost comparisons must take
these losses into account. The second is the overall macro economic effects of
separate construction techniques.
7.23 In preparation for the final section of this report we estimate the imported and
local components for the purchase and running costs of a Bell 1204 wheeled
loader. The estimates for a wheel loader with a 71% imported share is given in
Table 7.7 and for that with a 48% import share in Table 7.8. As shown in the
tables, these estimates are based on the following assumptions:
• Hourly hire rate of R150 per hour
• Five year capital write off period
• Driver (and therefore machine) works an 8 hour day with one hour for
breaks
• Of the diesel and oil 80% of the value is imported
• Labour is half of spare and service charges and 80% of spares are
imported
• All margins accumulate to the national economy. These margins are
made up of profit and all other costs like overhead costs, costs of raising
capital, etc.
7.24 Under these assumptions the wheeled loader will have an annual running cost
(including capital repayment) of R277,000. If the loader has an initial 71%
imported component, the total imported component of the running costs is a little
over R154,000 and the local cost component totalling nearly R122,000.
Table 7-7
Local and Import costs of operating Wheeled Loader
Based on a Bell 1204 with 71% import component.
Cost/ Total revenue/ Total annual Imported Local
Assumptions cost per hour margin cost component component
Total revenue Based on hire rate of R150 per hour 150 277,200
Capital cost Rm Five year amortisation 619,300 123,860 87,941 35,919
Driver Works 7 hr day 22 day month 20 36,960 - 36,960
Diesel & oil 80% imported 40 73,920 59,136 14,784
Spares & service Labour local, 80% spares imported 10 18,480 7,392 11,088
Total margin Revenue less direct costs 23,980 23,980 23,980
Total annual cost 277,200 154,469 122,731
55