Shock’s Coming for Manufacturers

California’s manufacturers are still on the ropes. Yet the legislature seems intent on delivering the knockout smackeroo. I’m referring to last week’s bill that requires the state to generate all electricity from clean sources such as solar, wind and hydropower by 2045. That will make electricity more expensive. Maybe much more. And it will wallop manufacturers the hardest. California industrial customers already pay 86 percent more than the national average for electricity. (Residential customers pay about 40 percent more.) Will manufacturers eventually pay 200 percent more? Triple what others pay? That’s not unreasonable to project. What’s aggravating is the disregard that political types show for businesses. When it’s pointed out that they keep putting California’s manufacturers at a real disadvantage, they always seem to dismissively sneer something like, “Oh, they can afford it.” They can? Then why is the state’s total number of manufacturing jobs still below the pre-recession level (according the Bureau of Labor Statistics)? Then why is California, on a per capita basis, attracting manufacturing investments at only about one third the national average (according to the California Manufacturers & Technology Association)? And why is California virtually out of the race to attract reshored manufacturing jobs? This state only got 1.4 percent of jobs that returned to the United States from 2010 to 2017, according to CMTA. The legislature is heavily represented by coastal elites – the types who may not even need air conditioning. They have dim understanding – maybe no understanding – of the expense of air conditioning a sizable manufacturing operation in hot inland zones, such as the Valley area. The tragedy is that this doesn’t need to happen. Clean energy will come around eventually. The whole world wants it. But by pushing the issue, instead of showing patience at letting it evolve naturally, the legislature is forcing Californians, and particularly its manufacturers, to eat high costs. Or move. • • • Think of how many industries have been upended by the internet. Think retailing, publishing, terrestrial radio. Auto dealerships and auto rental companies are under attack now. Lyft and Uber have roughed up the taxicab industry such that medallions which fetched up to $1 million each just a few years are no longer sold by New York City. I’ve long wondered if higher education could be next. With tuitions continuing to escalate (it’s about $70,000 a year at USC) and average student loan debt at about $40,000, it seems like another industry that could be assaulted by killer apps offering online degrees. So far, not so much. Online degrees still suffer from a shady reputation. One San Diego online school was sued earlier this month for allegedly claiming its doctoral degrees could be had in less than 5 years at a cost of about $30,000 but, according to the plaintiff, the program was designed to take about 7 years and cost $50,000. But is a different narrative starting to emerge? Occasionally, you’ll see reports like one earlier this month in which an assistant business school dean at Arizona State University was quoted in a press release as saying that in the mind of the typical employer, the difference between online degrees and campus degrees has all but vanished. Of course, you’d expect him to say that; his school offers online degrees. Still, the basic point is a valid one. Employers today may be more open to job candidates who have an online degree. As long as the online degree were from a reputable school, why would an employer be concerned, really? Oh sure, the campus experience can be a rich one for students; but do employers care about that? What’s more, employers who send their young and promising employees back to school for an advanced degree might prefer they get those degrees from online courses, since they are less disruptive to the student-employee’s workday. In other words, employers may be among those pushing college credits onto the internet. As society grows more accustomed to what the internet can offer, and as employers become more comfortable with online degrees, it seems inevitable that our institutions of higher education may feel compelled to offer more online courses and degrees, probably at a much lower cost. Schools that take a proactive stance and move more of their programs online may put themselves in an improved position going forward. Charles Crumpley is editor and publisher of the Business Journal. He can be reached at [email protected].