When I reviewed some recent cost breakdowns from our Vietnam partners, I noticed something surprising: even in precision-machined parts, labor wasn’t the top cost driver—it was raw materials 1.
Typically, labor accounts for 17–22% of the total manufacturing cost for custom metal parts sourced from Vietnam. That percentage can go up or down based on process complexity, automation, and volume.
In this article, I’ll explain what determines labor’s share in your import costs and how you can influence it.
What labor cost percentage is typical?
In most of our projects involving Vietnamese metal suppliers, labor tends to make up 15–25% of the total landed cost—less than you might expect.
This range comes from both industry reports and our sourcing experience: simple parts trend toward 15%, while highly machined or assembled parts creep closer to 25%. 2
Labor Share Benchmarks by Process Type
| Process Type | Typical Labor Share (%) | Notes |
|---|---|---|
| Basic stamping/sheet metal | 10% – 15% | High automation, low manual work |
| CNC machined (medium complexity) | 15% – 22% | Setup + skilled operator labor adds cost |
| Precision machining + finishing | 20% – 30% | High skill, longer cycle times |
| Welding + assembly + QC | 25% – 35% | Includes indirect labor (QA, inspection, assembly line) |
Labor costs in Vietnam are still low compared to China or the U.S., but they are rising every year, which slowly shifts this percentage upward over time 3.
I’ve found that labor becomes a bigger piece of the cost puzzle when parts get more detailed.
Complex shapes, tight tolerances, and manual operations like deburring or assembly increase operator time and reduce opportunities for automation—raising labor’s share of total cost. 4
Let’s break this down a bit more:
Complexity Factors That Drive Up Labor Share
- Tight Tolerances: Tighter tolerances demand slower machining, more tool changes, and higher-skilled workers.
- Manual Finishing: Hand polishing, cleaning, or post-machining often can’t be automated.
- Assembly Work: Bolting, welding, or joining parts increases indirect labor.
- Inspection & QC: Complex parts may require 100% dimensional inspection or functional testing.
- Rework Risk: Higher part complexity increases the chance of defects, which adds to labor cost.
Labor Share Ranges Based on Part Complexity
| Part Complexity Level | Estimated Labor Share | Example Features |
|---|---|---|
| Low (simple stamping) | 10% – 15% | No finishing, no tight tolerances, no assembly |
| Medium (machined part) | 15% – 25% | Tolerances ±0.1 mm, one or two finishes |
| High (precision + finish) | 25% – 35% | ±0.01 mm, polish, weld, full QC, assembly steps |
If your drawing calls for multiple threads, reamed holes, or ±0.01 mm tolerances, you can expect labor to become more significant—even if it’s made in a low-cost country 5.
Does volume reduce labor percentage?
This is one of the areas where I’ve seen the biggest swings in cost breakdowns.
Larger production runs spread out setup time and increase operator efficiency, reducing labor’s share of each unit. 6
Think of it this way: whether you make 10 or 10,000 units, the operator still needs to set up the CNC machine. That setup takes time—and on a per-part basis, the labor cost is much higher at low volume.
Labor Cost Impact Based on Batch Size
| Batch Size | Typical Labor Share | Notes |
|---|---|---|
| 1–50 units | 25% – 35% | Setup, testing, first-article approval dominate |
| 100–1,000 units | 18% – 25% | Setup amortized, operator efficiency improves |
| 5,000+ units | 10% – 18% | High efficiency, process refinement, faster cycles |
Even in Vietnam, where wages are lower, this effect is very noticeable. So if you want to reduce labor cost as a percentage, batching production runs is one of the most effective levers 7.
How do automation & tooling reduce labor cost?
When a Vietnamese factory invests in automation—like robotic arms, pallet changers, or automated QC—the labor share goes down.
Automation shifts cost from labor to capital and tooling—but that’s often a good tradeoff over time. 8
Automation helps in the following ways:
Ways Automation Lowers Labor Share
- Unmanned CNC cycles: Machines run overnight with minimal human supervision.
- Multi-part fixtures: Operators load several parts at once, increasing output/hour.
- In-process inspection: Built-in probes reduce manual inspection time.
- Automated deburring or laser marking: Replaces hand finishing with machines.
Tooling plays a role too. For instance, custom jigs or multi-cavity fixtures reduce handling time, and indexed tool changers cut cycle time.
Of course, tooling and automation aren’t free. But in Vietnam’s lower-wage environment, factories increasingly adopt semi-automation because it brings:
- Consistency in quality
- Predictability in production planning
- Lower defects, which means less rework (and labor)
If your part design allows for repeatable setups, it’s worth asking your supplier how they plan to automate and how that affects cost structure 9.
Conclusion
Labor typically makes up 15–25% of the landed cost when importing custom metal parts from Vietnam, with complexity, volume, and automation being the key influencers. Understanding this helps you make smarter sourcing and negotiation decisions 10.
Footnotes
1. Overview of cost structures in Vietnam manufacturing. ↩︎
2. Data on typical labor percentage for Vietnam metal parts. ↩︎
3. Analysis of rising labor costs compared to China and the U.S. ↩︎
4. Explanation of how complexity raises labor cost share. ↩︎
5. Impact of precision tolerance on total labor share. ↩︎
6. Effect of production volume on labor percentage. ↩︎
7. Efficiency improvements from larger batch sizes. ↩︎
8. Role of automation in lowering manufacturing labor share. ↩︎
9. Benefits of tooling and repeatable setups in Vietnam factories. ↩︎
10. Summary of key cost drivers in Vietnam manufacturing. ↩︎
