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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 in gaining or losing competitive advantage, but the latter concept is broader. Competitive advantage can take the form of lower cost, "the ability of a firm to design, produce and market a comparable product more efficiently than its competitors" and/or differentiation, "the ability to provide unique and superior value to the buyer in terms of product quality, special features, or after sale service" (Porter, 1990, p. 31).

Samuelson & Nordhaus (1989) ...

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