It is difficult to make money making small metallic parts. Just ask the folks who make money over at the US mint. (And they have a monopoly!)
The unit cost of producing and distributing the penny: $0.0179
Back in the day, these were over 90% copper, today they would cost about 2.5 cents.
According to the 2010 US Mint Annual Report, the penny, nickel and dime made up 87.7 % of total shipments- 5,399,000,00 circulating coins produced in 2010.
You think you have raw material price increases?
The per unit cost of the blanks for nickel rose 2.3 cents over 2009, increasing total nickel cost by 52.9 %.
So what did it cost the mint to make that 2010 nickel in your pocket?
$0.0922
Thats 9.2 cents
Fortunately, they make it up with volume, on the dime and quarter, which cost $0.0569 and $0.1278 to produce and distribute respectively.
If there is a lesson in all this, it just might be that “nobody, not even a government monopoly, makes any money producing the cheap metallic parts. Even in high volumes.”
P.S.: And hats off to the production and management team at the U.S.Mint. They did it while experiencing a 15 year low in injuries and illnesses- a record year for safety.
Penny Photo Credit.
Nickel photo credit.