Newsletter: California Inc.: Solving the productivity puzzle
Welcome to California Inc., the weekly newsletter of the Los Angeles Times Business section.
I'm Business columnist David Lazarus, and here's a rundown of upcoming stories this week and the highlights of last week.
The Volkswagen cheating scandal remains one of the biggest business stories. Even so, VW announced that its U.S. division sold 26,141 vehicles in September, up slightly from the same month a year earlier. We'll see if those numbers hold up. On Wall Street, meanwhile, a brutal third quarter has ended and investors are keeping their fingers crossed that the final three months of the year will be kinder and gentler on portfolios.
Looking Ahead
Solar energy: State regulators on Monday will review proposals to reduce compensation paid to owners of rooftop solar panels for sending power to the electric grid. The proposals, which call for crediting solar users at about half the current rates and also charging them monthly fees, will be discussed at hearings before the California Public Utilities Commission in San Francisco. Backers of solar energy fear the plans would stifle interest in the systems.
Microsoft calling: Apple and Google unveiled new phones last month — now it’s Microsoft’s turn. At an event Tuesday in New York, Microsoft is expected to take the wraps off a pair of Lumia phones as part of its new strategy to sell just a few models, rather than extensive lines of handsets. The phones will be aimed at cost-conscious consumers and business customers. A new Surface tablet and other devices also may be unveiled.
Dinner McMuffins: McDonald's will begin rolling out all-day breakfast nationwide Tuesday, a long-awaited change that could help boost sales for the flagging burger chain. The move is part of a plan by McDonald's Chief Executive Steve Easterbrook, who was hired in March, to transform the Oak Brook, Ill., fast-food giant into a modern restaurant chain. It’s also a gamble that breakfast will sell at all hours.
SeaWorld expansion: The California Coastal Commission is scheduled to meet Thursday to consider a plan by SeaWorld San Diego to build a larger enclosure for its 11 killer whales. The project is opposed by animal rights groups, which say that any enclosure is harmful. They want SeaWorld to free the whales to ocean sanctuaries. Under the plan, SeaWorld would expand and replace its existing holding facility with a new 450,000-gallon pool and a 5.2 million-gallon tank.
Jobs biopic: Arriving in theaters Friday is Danny Boyle's "Steve Jobs," which writer Aaron Sorkin liberally adapted from Walter Isaacson's biography of the Apple co-founder. Each of the film's three acts is focused on a key Apple product launch. Michael Fassbender stars as Jobs, Seth Rogen plays Steve Wozniak and Kate Winslet plays Joanna Hoffman. Early buzz suggests this won’t be a flattering portrayal of the Mac daddy.
The Agenda
Today’s Business section explores what economists call the productivity puzzle — why workers’ output has remained largely static despite sweeping advances in technology. Sluggish productivity growth helps explain the long-stagnating incomes of most Americans. It’s also partly behind many analysts’ projections for mediocre economic growth. “The U.S. productivity slump is the No. 1 economic problem,” one expert says.
Story Lines
Here are some of the other stories that ran in The Times Business section in recent days that we’re continuing to follow:
Weak jobs growth: Federal Reserve policymakers held off on a long-awaited interest rate hike last month because they wanted to see more data to determine if a global economic slowdown had hit the U.S. On Friday, their fears were realized. The Labor Department reported that job growth slowed sharply last month to 142,000 while wages fell for the first time in nearly three years. The new data show the U.S. is feeling the effects of slower growth abroad. That means an increase in a key interest rate is unlikely this month — or maybe even this year.
Refinery deal: ExxonMobil's damaged Torrance plant will be bought by PBF Energy, a New Jersey-based oil refining company. The $537.5-million deal will close after repairs have been completed early next year. Consumers will see no immediate effect on gasoline prices in the Los Angeles area, where they've paid as much as $1.50 more a gallon than the rest of the nation after an explosion ripped through the refinery in February. PBF plans to offer all existing employees the opportunity to stay with the company.
Tesla SUV: Tesla Motors' new all-electric Model X sport utility vehicle gets to 60 mph in 3.2 seconds. But it might not get to your driveway any time soon. Despite two years of delays, and an extravagant public unveiling last week, the Palo Alto automaker has delivered only five of the futuristic, falcon-winged crossovers — or six, if you count Tesla Chief Executive Elon Musk, who got Model X No. 1. Tesla won't say when it might have more or how many its Fremont. Calif., factory can churn out. Expect to pay more than $80,000 for a base model.
Let's go skiing: Forecasts of an approaching El Niño winter have ski resort operators dreaming of snowy peaks. But optimistic talk of powder-covered slopes may not be enough to persuade skiers to buy expensive resort passes, especially after being disappointed by limited runs and broad swaths of exposed dirt the last several seasons. So this year resorts are trying something new: offering incentives if this year's predicted El Niño turns out to be a dud. They include simple discounts and guarantees that give pass holders credit toward skiing next winter.
DIY bartending: Your next draft may be pulled not by a bartender — but by you. A small but growing number of gastropubs and fast-casual restaurants are going self-serve, installing systems that enable drinkers to draw their own taps, similar to the soda fountain at McDonald's but far more sophisticated. Establishments in the notoriously low-margin restaurant industry say the technology not only cuts labor costs but also boosts revenue by encouraging customers to sample what can be a bewildering array of Belgian quads, India pale ales or oatmeal stouts on a menu.
What We’re Reading
And some recent stories from other publications that caught our eye:
Unicorn hunting: Aleph casts a wary eye on venture capitalists' desire for "unicorns" — those rare start-ups that generate big bucks. This obsession, the website says, "is ripping the soul out of entrepreneurship" and denying funds to companies focused on addressing real-world problems.
Egg-streme measures: AgWeb looks at the extreme measures some poultry farmers are taking to keep bird flu in check. The worst-ever outbreak in this country already has killed 48 million birds and cost taxpayers almost $1 billion.
Auto lending: American Banker examines efforts by the Consumer Financial Protection Bureau to end potential discrimination in auto lending. It concludes that the watchdog agency’s aggressive approach “won’t end discrimination and will likely raise overall auto financing costs for consumers.”
Tweeting for votes: Quartz can't help but shake its head at Twitter's 136-page handbook for how politicians should use the social-media service. It covers the basics but also includes gems such as "a chart on the anatomy of a tweet and examples on how to tweet about TV shows such as 'House of Cards.'"
Hold on tight: Bloomberg says GoPro isn’t satisfied being a mere maker of out-and-about cameras. It wants to be a full-fledged media company. Its strategy currently focuses on curating action-packed videos shot by sponsored athletes and other contributors. The GoPro YouTube channel has racked up 956 million views.
For the latest money news, go to www.latimes.com/business. Until next time, I'll see you in the Business section.
