Benchmarking Profitability Derivatives of Labour Cost in Boatyards for a Sustainable Coastal Environment in Nigeria

Abstract

The research benchmarks the profitability derivatives of labour cost of boatyards for a sustainable coastal environment in Nigeria so as to proffer solutions towards ameliorating wage increase agitations by workers of boatyards. Using the Linear Programming (LP) approach applied to the extracted information on selling price of various boat types and the cost of materials available in the records of the selected boat yard, a model is formulated and solved to attain optimality for the boat types modeled. The findings reveal that boat yards in the area could produce 6 units of the Nineteen Capacity Passenger Boat (NCPB), 1 unit of the Twenty three Capacity Passenger Boat (TCPB) and 0 unit of the Twenty three Carrier Boat (TCCB) in order to attain an optimal profit of N1, 098,000. 00 per unit boat built. The research impact would be that boat building firms within the coastal environment may enjoy profit margins up to N386, 000. 00 when compared to the previous firm’s total profit of N712, 000.00. This is supported by the sensitivity analysis that reveals that increased labour cost has no significant effect on the profit margin of the firm. This justifies the increased wage agitation by workers which could be considered by the firm’s management. The practical impact would be felt on the overall productivity of the boat yard as there is a maximized profit margin and minimized wastage of component materials in the boat building process. The firms would concentrate on the production of the NCPB and TCPB against the production of TCCB because the agrarian and coastal nature of the Niger delta pre supposes a push in the demand for passenger transportation against heavy cargo transportation which is costly and left in the hands of few wealthy and Multinational companies that could afford heavy building construction as well as industrial plants. It is further recommended that boatyards within the coastal environment and Niger delta should leverage on this benchmark to continuously embark on profit maximization while reducing wastage of component materials and cost as low as possible which ultimately would lead to a sustainable coastal environment in respect of small craft design.