Test for College and Cat

The feedback on the Caterpillar piece I wrote a couple days ago was highly provocative. It appears that Cat may have overplayed its hand by playing hardball in Joliet, Illinois, at their hydraulics components plant. By locking in new workers at $12 per hour Caterpillar has made the calculation, I believe, that it is willing to let skills erode, and make up for the decline in talent with sophisticated machinery like robots and automated inspection machines. This is not so different from what you see in hospitals where very expensive equipment is simplified so technicians making $15 per hour can operate it. McDonalds uses this model with great success.

The industry that is really on the verge of a mass assault today is the university complex. Colleges have seen their costs expand in a fashion similar to the auto industry of the 1980s and ’90s. Eventually the wage structure brought chaos to those industries. With college tuitions reaching absurdity today, the Internet warriors are about to crash the colleges’ headlock on degree giving, which will dramatically erode their power to charge crazy tuitions.

Internet education companies are just beginning to ally themselves with degree granting colleges, which is moving us into the $99 per credit hour world. If it takes 120 credit hours to graduate we are talking about a $12,000 Bachelors Degree. This will crash the $150,000 degree, which is becoming the norm.

There will be hybrid programs combining Internet and classroom, but if the credential granting power of colleges is cracked, the game will be in the late innings for old-school schools.

Colleges and Caterpillar are different kinds of entities, but the union cartel and the education cartel are both aimed at artificially propping up prices. Caterpillar Corporation is testing the market to see if it can find enough talent to produce an excavator with $12 per hour labor. Knowing Cat, they will add incentives if they need them to lure and hold workers.

And when the colleges can no longer find kids and parents who will pay stupid tuitions because $99 credit hours make sense, the colleges will adapt too.

Question: Do you think Internet education will become more popular than traditional college education?

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15 thoughts on “Test for College and Cat

  1. Don Bentley

    I think the current political stance is to publicly fund all education, and in the future nearly everyone will have some sort of degree or certification. The push is not to make a college education affordable, but to make it almost mandatory. Unfortunately a lot of the degrees are meaningless in the real world and may serve only to provide a sense of accomplishment.

  2. Mark

    For those of us that attended the university in the 80’s at a cost of 4-5 thousand a year the university of today is a joke. Is the financial benefits of the degree today worth that much more than 30 years ago along with the decline in middle class income I would say that the traditional degree is becoming a waste of money and time give me a welding certificate. Popularity is the wrong word I would say necessity as the average American cannot afford to accumulate the massive debt that comes with the traditional college degree the online/hybrid is more a result of need than option. Unions have destroyed the American way.

  3. Nick Bloom

    Knowledge on just about any subject can be had for free. Getting accreditation and the campus social experience is another story. Sal Khan, a former hedge fund manager, started tutoring a relative in math and found it easier to do online. This turned into Khan Academy which promises “a free world-class education for anyone anywhere.” And they can back it up. Please visit it, I think you’ll be impressed: http://www.khanacademy.org/ . Sebastian Thrun, a Stanford professor of computer science offered a free online class on artificial intelligence late last year and 160,000 people took advantage of it. So he quit his Stanford job to start Udacity,www.udacity.com a low-cost online school, because he felt that helping hundreds of thousands of people versus 20 people at a time was no longer a viable choice for him. Between these online “schools” and many like them anyone can become really smart on a lot of subjects. About 10 years ago I took an online class on Access, the Microsoft database program. It gave me the tools I needed at the time. Really, there is no debate if online classes will change the landscape in education. It’s been happening for years. But they won’t have the cachet of a Yale or Harvard, not to mention, the price tag. Those who want to learn, can.

  4. Jim

    Web-based training has these advantages:
    *cheaper to produce
    *can be re-used several times (if recorded)
    *time/place advantage (I can take the class where/when I want)
    *difficult portions can be viewed again for better understanding

    *difficult to build personal relationships with classmates (which is a LOT of what college is about)
    *more difficult for student to retain focus
    *asking questions can be difficult (impossible for pre-recorded material)

    My alma mater is already mixing on-line and in-class instruction. I don’t think I would attend a college that has only on-line instruction. Maybe someday when holographic technology improves to the point where I can sit in a virtual classroom with my fellow students…

  5. Val Zanchuk

    Online learning is only part of the education mix, but a valuable one. I don’t foresee people getting an engineering, medical, or law degree online. I do see engineers, doctors, and lawyers getting continuing education online. I see people getting low feedback, specific technical training online. However, high feedback education still requires interaction with teachers and fellow students.

  6. Dave Dibble

    People will vote with their wallets in a free market. As long as the government doesn’t regulate the internet educators out of existence at the behest of the traditional universities, internet education will grow. Long story short, competition is good.

    Adding to Nicks comments on knowledge being available for free, we need to get back to the attitudes of Lincolns day. He read the law to become an attorney.

  7. Joe Landry

    Hey All,

    The high tuition issue is simple supply and demand. As long as every high school administrator and guidance councilor thinks EVERY student needs a 4 year collage degree, tuition will remain high. There are thousands of college students out there that have no business being in a 4 year collage. They will not learn a marketable skill, and they will certainly not use their degree to excel in a manufacturing job.

    What we need, Caterpillar included, is a technical collage curriculum that actually teaches modern manufacturing. Community college instructors salaries have to increase so that they can hire instructors that actually know something about modern manufacturing.

    I personally have been working on this for several decades. Unfortunately I have made little progress. Parents, Teaches, Guidance Councilors and Administrators have no clue, and don’t want to understand, that today’s manufacturing environment is a much better career than their public education gigs.

  8. DRB

    Pay more for less. An extremely expensive piece of worthless paper. It’s too bad they can’t teach common sense and true human interaction. If they could, they would be out of business for the majority of the “degrees” they offer.
    The dumbing of America.

  9. Rich

    Most college degrees are of little use and do not prepare students for the world outside the classroom. The cost of a degree should reflect the value received. At this point there is plenty of cost but not much value. For 80% of the time internet courses could do the job. The other 20% of the time would be well spent on internships or COOP assignments.

  10. Mike Rudincki

    Social interaction is critical to a persons success, social skills are at least as important as knowledge. Internet, or even computers for that matter cannot be,
    KIND, DARING, FUNNY, CREATIVE, LOYAL, GENUINE,FEARLESS, ORIGINAL, BRAVE, GRATEFUL, HAPPY, and a whole gamete of other things that people bring to the table. That being said internet education will certainly become more popular than a traditional college or university education, but I don’t believe that it stands a chance at creating better people or better workers. “A teacher without feelings or passion is an instructor, so is the internet”.

  11. Derek

    I obtained my MS in Engineering Managament online. However, it was taught by the same teachers that I took in undergrad, so they already knew me from class years before – which I think helped.

    I question how much HR believe in online programs, however.

    If I had a child about to graduate from HighSchool, I would question them going to college unless it was a strong field. I can’t believe kids/parents pay such high prices to learn things like history – which you can learn about on your own as a hobby.

  12. Derek

    To the person that was concerned about the ‘for profit’ colleges, I can also argue that I have issues with state run universities paying football coaches millions a year and giving scholarships to students only for athletic reasons with little care as to what degree they pick, or how well they do in class. If you think college athletics isn’t a ‘for profit’ business, you are kidding yourself.

  13. Nancy Burrows

    Interesting article and interesting comments. I am sensing the same polarities about education as about so many other topics these days, and I find that to be unfortunate. I worry that we are demonizing higher education and trying to over-simplify something that is multi-faceted and quite complex. For example, I do agree that there needs to be a connection between edcation and workforce readiness. This connection should include both technical and the soft skill preparedness for the world of work, which is probably the most significant goal we have when going further in education. Looked at this way, even issues such as getting to class on time become significant.
    Additionally, however we envision training and education as being delivered, we need developers of that training to be knowledgeable and excellent communicators, so that learning can take place, and many of these people need higher education and degrees. Moreover, to continue to develop simpler, faster, and more realistic training, there need to be people who understand the material to be taught, the ways people learn, and the potential technologies that can be used, again, often requiring higher education and degrees. In the case of developing products, such as sophisticated medical equipment or machines that continue to be simplified to operate but can do ever more complex tasks, education once again proves valable. In each of these situations, there are probably gaps between what is needed and what is taught today.
    So, what we have is the need for problem solving by a combination of leaders from education, business, labor, civil rights and community builders to come together with respect and awareness of the complexity of the issues, a group that leaves bashing at the door, and works in a timely manner to make some changes, applying best practices from all of these sectors.

  14. Mark

    If Robots can and have ended the need for skill and talent.
    Someone needs to develop a Robotic CEO, there is some big cost savings in that.

  15. Steve Baranyk

    The current model of a four year degree at a residential school is unsustainable – no surprise. It exists because of government supported student loans the growth of which track very closely with the increase in the cost of a four year degree.

    Our great country cannot continue to subsidize these costs and thus there will soon be a sad day of reckoning. The Free Market, if it is allowed to function, will provide cost effective solutions.


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