Factors Affecting Labor Productivity and Cost per Gallon in Fluid Milk Plants

Abstract

Regression analyses were performed on data from 13 fluid milk plants to identify the factors that affect plant labor productivity and plant cost per gallon. Explanatory variables included basic plant descriptors, such as type of plant ownership, gallons processed per month, level of automation and technology in the processing and filling area, plant capacity utilization, and labor cost per hour.The results suggested that higher labor cost per hour, more technologically advanced equipment in the processing and filling area, and a higher percentage of product packaged in gallon and half-gallon containers have positive effects on the productivity of plant labor. Vertically integrated plants that were owned by supermarket chains were predicted to have higher rates of productivity per hour of labor than proprietary or cooperative plants.Type of plant ownership appeared to have the most significant effect on plant cost per gallon. Vertically integrated plants owned by supermarket chains were predicted to realize lower costs per gallon than cooperative or proprietary plants. Cooperative plants were predicted to have higher costs per gallon than proprietary plants. Despite the positive effect of labor cost per hour on labor productivity, higher cost of labor per hour was predicted to increase plant cost per gallon.