Manufacturing practices and performance: Comparisons between Australia and New Zealand

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Abstract

This study compares and contrasts manufacturing practice and performance variables in two neighbouring countries with broadly similar cultures and histories, but only one of the countries has undertaken substantial economic reform. A large, representative sample of manufacturing sites was examined in Australia and New Zealand in order to compare the manufacturing management practices and performance of the better performing sites in each country. New Zealands manufacturers came out ahead on most dimensions, particularly the management of people, leadership and quality management factors, whereas in these factors Australia's lack of labour market flexibility was found to be a barrier to progress.

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Introduction: The business context of manufacturing

Manufacturing companies that consider locating plants in particular countries must consider local conditions and norms of manufacturing practices and the impact of these on manufacturing performance. Hence, it is worthwhile to study the comparative differences between countries in terms of the manufacturing practices and performance that exist in those countries.

Australia and New Zealand's economies have been characterised historically as having strong agricultural industries, with Australia

Macro-level comparisons of New Zealand and Australia

The World Competitiveness Report Yearbook [1] provides rigorous assessments of many aspects of national factors that drive competitiveness. Table 1 shows comparisons for Australia and New Zealand of the key factors from that report. The rankings in Table 1 are from 46 industrialised countries including all OECD countries and many newly developed countries such as the Asian nations. Table 1 also shows recent significant changes in rankings.

From Table 1, it can be seen that New Zealand is ranked

Manufacturing practices and performance comparison: Empirical study

The policies, systems, techniques and actions of manufacturing managers drive a set of shop floor practices and a work culture that governs the outcomes of manufacturing operations. These outcomes are generally measured in terms of cost, productivity, quality, flexibility, reliability, innovativeness and other dimensions. This study empirically investigates the relationship between practices and performance in Australia and New Zealand, focusing particularly on aspects of international

Sample

An initial stratified, random sample was drawn from manufacturing sites in Australia and New Zealand. Each manufacturing site was registered with the Australian Bureau of Statistics or Statistics New Zealand in 1993, and had at least 20 employees. The stratification by industry and size (number of employees) was intended to ensure representativeness.

This initial sample of approximately 4000 sites across Australia and New Zealand were mailed a comprehensive questionnaire (described below) on

Strategy and practice

While the central interest was in the differences in performance, the differences in strategy and practice were also of interest. Therefore, many of the items on these facets were examined. The difficulty encountered with these analyses was the potential for restricted range of results given that the top 40% were chosen on the basis of the aggregate of many of these items. It was reasonable to expect that most sites had high scores on many of these items and with Likert scales the sensitivity

Summary

In summary, New Zealand appears to be significantly ahead of Australia on many facets of manufacturing practice, and performance. The null hypothesis H0 is rejected. This was particularly in the human resources area, which also carried over to quality management practices and quality performance. Dow et al. [5] and Terziovski et al. [3] have already demonstrated this relationship between quality practices and quality performance, and this evidence from comparisons of Australia and New Zealand

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