The Grandmother in the Siheyuan

Chapter 527 Cost Reduction
To bring down engine prices, the first step is to reduce costs, which boils down to two things: increasing revenue and cutting expenses.

Cost reduction means cutting expenses, which means reducing the cost of the product itself by reducing labor, raw materials, and so on.

As for ways to reduce costs, the solution is to expand the market and use mass production to reduce the cost per unit; the more products are produced, the cheaper they become.

The current situation is that it's impossible to expand the market for the time being because cars are expensive and not something that just any ordinary person can afford. The market can only expand when prices come down, so the only option is to cut costs.

By integrating the supply chain, warehousing and logistics costs can be reduced, ultimately leading to a reduction in overall costs.

Currently, Taiyi Heavy Industry has over a hundred related parts suppliers, ranging in size, which has inadvertently increased the cost of those parts. If the suppliers could be consolidated into a few large parts suppliers, the cost of the parts would drop dramatically.

However, the headache is how to integrate these large and small parts suppliers into a few major suppliers. After all, they have worked hard to start their businesses, and it's impossible for them to merge their companies with others or even give them away just to reduce your costs.

Liu Hua was very troubled, but he couldn't let himself be the only one suffering. After all these years, he had spent so much money and supported so many people; they had to be put to use eventually.

Why not just gather the company's management and think tank together and discuss an effective solution? Almost everyone agreed that Liu Hua's idea was good, but somewhat impractical.

Liu Hua slammed his hand on the table: "My idea is good, of course, but I know it's unrealistic. That's why I'm bringing you all together. If we don't integrate the suppliers, it will be very detrimental to my future development."

"Boss, if we want to reduce costs, we don't necessarily have to integrate suppliers. We can reduce labor costs."

Liu Hua frowned as he looked at the man who had just spoken. Liu Hua didn't recognize the guy, but judging from his seat, he was probably from the human resources department.

Seeing Liu Hua's frown, the management team who had grown up with him knew something was wrong. Their boss always hated deducting workers' wages, and now that someone was saying this, it was like swatting a fly on a tiger's head.

Liu Hua said in an unfriendly tone, "Labor costs, you mean cutting workers' wages?"

Seeing his boss ask him that question, the guy got a little excited, feeling like he was about to make something of himself.

He excitedly opened the file in front of him and began to prepare to speak eloquently, wanting to make his boss think he was well-prepared.

"Boss, although I have only been with the company for two years, I believe that our company has great potential for development. So I have put in a lot of effort and conducted a very detailed investigation. Our company's labor costs are among the highest in the country, comparable to those of foreign companies. Such high labor costs undoubtedly increase the cost of our products. Because of my relatively short tenure, I have not had the opportunity to suggest to you that we reduce labor costs."

Liu Hua said with a half-smile, "Because of their relatively short tenure, they haven't had the opportunity to offer me any advice."

The HR director of Taiyi Heavy Industry immediately explained, "Boss, he once wrote two proposals, both about reducing workers' wages, but I rejected them both."

The guy immediately pressed his advantage: "Boss, I believe that as HR professionals, we have a responsibility and an obligation to help you save on personnel costs." After saying that, he looked at his boss smugly, as if he was about to be promoted and receive a raise, and even replace his boss as the HR director.

"How about we start with you as a pilot program?" Liu Hua said sarcastically. "Would you take it or not if we reduced your salary to one-third?"

The higher-ups who had risen to prominence alongside Liu Hua looked at him with pity, while the middle-level managers were gloating.

You dared to say whatever you wanted? Now you've gotten yourself into trouble. The higher-ups haven't even said a word yet, and you're already showing off your abilities. You don't understand any social etiquette at all.

This guy never expected that instead of rewarding him, the boss would turn the tables on him.

But as the saying goes, there's always someone stronger, and there's always someone better.

After thinking for a moment, the guy gritted his teeth and said, "In order to help the company get through this difficult time, I am willing to accept a pay cut of one-third."

The entire conference room erupted in commotion. Liu Hua stared at the guy in disbelief. "You're out here working not for the money? You must have something much more ulterior motive."

Liu Hua shook his head: "I didn't expect you to be so ambitious. I wouldn't dare hire someone like you. The human resources department should fire him, pay him the compensation and subsidies he deserves, and not owe him a single penny."

Someone couldn't help but chuckle. Liu Hua shook his head: "Besides, I want to reduce costs not because the company is facing any difficulties, but because I think cars are too expensive now. We need to reduce costs so that ordinary people can afford them. If our company cuts workers' wages, who will be able to afford a car?"

Now that he's been fired, this guy is ready to go all out and make a scene. He's thinking, "Since you, surnamed Liu, have no taste, then I'll make you look bad."

But sitting next to him was the human resources director, who had retired from the military. Although he had been retired for many years, he was still very skilled.

Seeing that this kid seemed to be up to no good, the HR director put a hand on his shoulder and gave him a sharp tug: "Xiao Chang, since you've been fired, go out and hand over your work to your colleagues. Don't worry, you'll be paid in full, everything will be done in accordance with the law, and you won't suffer any losses."

A sudden pain in his shoulder brought him back to his senses. He suddenly remembered that his boss was no ordinary person; he was an academician and a leading figure in the industry.

If he really embarrassed him today, it would be difficult to find another job in the future. So he could only sadly pack up the documents in front of him and walk out. He felt like Feng Tang was getting old easily and Li Guang was hard to be ennobled. To be precise, he was a talented person who was not recognized.

Liu Hua tapped the table: "The older employees who have been with me for a long time know that I never like to cheat workers. Because I believe that workers are the backbone of our country and our factories. If we don't respect our workers, it will be difficult for a company to survive."

(End of this chapter)