define the productivity of labor "as the amount of output per unit of labor" (p. 508). They say that labor productivity of any economic entity (plant, firm, industry or nation) "depends upon the quality of labor inputs, upon the quantity and quality of cooperating factors of production, and upon the level and utilization of technical and engineering knowledge" (Samuelson & Nordhaus, 1989, pp. 678-679).
Labor productivity is a measure of the efficiency of the labor force, unit yield v. unit cost, and is different from aggregate cost. The findings of the case study were that the American plant was more productive than the plants in Australia and New Zealand, even though on a unit basis the direct (wages and fringe benefits) costs of the latter were lower (Case, 1991, p. 126)
Water heater manufacturing "is a traditional metal manufacturing industry involving a 'mature' technology" (Case, 1991, p. xiii). The production of water heaters "involves the fabrication of an inner water tank [made from steel] . . . The final stages of this process involve the fitting of an outer steel jacket and the insertion of insulating material between the jacket and the inner tank" (Case, 1991, p. xiii).
The case study found that the labor forces at the four plants in the three countries all met the threshold requirements as to availability and level of skills, which in turn are a function of literacy, education and training. For those skills to be translated into productivity, they must be combined with the other factors of production, land, labor, capital and management and, in the case of the water heater business, another key ingredient, the availability, cost and quality of the principal raw material involved, steel. Possession by the labor force of the necessary inherent skills is insufficient unless they are wedded to the required design and manufacturing knowhow, most of which had been supplied to the Australian and New Zealand plants earli...