A U.S. company has two manufacturing plants, one in the United States and one in another country. Both produce the same item, each for sale in their respective countries. However, their labor productivity figures are quite different. The analyst thinks this is because the U.S. plant uses more automated equipment for processing while the other plant uses a higher percentage of labor.
a. Explain how the labor productivity figures can be misleading in the scenario presented above.
b. Can you suggest other measures of productivity for comparing the two plants that would be more meaningful? Explain your answer.