Labor Productivity in Water Heater Industry

This research paper examines various factors relating to labor productivity in the international water heater industry based largely on a case study of four water heater manufacturing plants owned by South Australian Brewing Holding Limited (SABH), two in Australia (at the Sydney and Melbourne plants), one in New Zealand and one in the United States. Because of the relatively small size of the New Zealand market, primary attention is given to a comparison of labor productivity between the American and Australian plants and between the Sydney and Melbourne plants. In general, the Australian and New Zealand plants have lower labor productivity than the American plant which is due to a number of reasons, but primarily plant to the adverse effects of industrial relations policies, practices and attitudes, especially at the Sydney plant.

Factors Affecting Labor Productivity

A variety of factors bear on labor productivity in the water heater factories which are the subject of the case study --some macroeconomic or external to the firms involved, and some microeconomic or intrinsic to their internal operations but first some definitions are in order. Productivity refers to the "quantity of output produced per unit of input" (Case, 1991, p. 119). Productivity growth means "either producing more with the same inputs or the same output with less inputs" (Case, 1991, 1).

The level of productivity is an important factor

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pital investment. Australia and the United States, both underwent high rates of inflation in the 1980s, Australia later than the U.S. Inflation was suppressed by a combination of government policies and the recessions of the late 80s and early 90s in both countries. Average inflation rates in the United States and Australia in 1990-1994 were roughly comparable, 3.6 percent in the United States and three percent in Australia (The Truth, 1996, p. 8). Competition in the water heater industry. There are a number of competitors in the American water heater market. The U. S. plant studied had only 12 percent of that market (Case, 1991, p. 87). In Australia, the SABH plants have 75 percent of the domestic market. The case study report recommends that consideration should be given to government action to bring about more competition in that industry. It also mentions that SABH's quasi-monopoly in the domestic market was a factor in its earlier tendency to acquiesce in union demands for higher wages and fringe benefits, because it believed it could pass on their costs to consumers. One unfortunate result is that at those higher prices, Australian water heaters are not competitive in foreign markets. The case study report comments that "
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Approximate Word count = 3145
Approximate Pages = 13 (250 words per page)