We at TextileFuture wish to provide you with the latest useful topics in our Newsletter. These might inspire and help you to master the immediate future.
Today’s issue will present two items. Firstly the feature “When it is time to go back to the Office will it still be there?”, as food for thought. Secondly we will show to you “The Economic development reflected in China’s new five year plan”, giving you direct information from the Party Congress in Beijing.
Here starts the first feature:
When it is time to go back to the office, will it still be there?
By guest authors Dana Mattioli and Konrad Putzier from Wall Street Journal, Chip Cutter contributed to this article.
Someday, the coronavirus pandemic will release its grip on our lives and we will return to the workplace. The question is: Will there be an office to go back to when this is all over?
The changes the business world is considering offer a radical rethinking of a place that is central to corporate life. There will likely be fewer offices in the centre of big cities, more hybrid schedules that allow workers to stay home part of the week and more elbow room as companies free up space for social distancing. Smaller satellite offices could also pop up in less-expensive locations as the workforce becomes less centralized.
In San Francisco, Twitter Inc. notified employees this week that most of them could continue to work from home indefinitely. Canadian information-technology provider OpenText Corp. expects to eliminate more than half of its 120 offices globally. And Skift Inc., a New York media company, is giving up its Manhattan headquarters when its lease expires in July.
The modifications could have a profound impact on millions of workers who defined their work lives around a daily trip into “the office,” with consequences that are not yet known. Some employees in coastal cities might be able to take their existing salaries to places with a lower cost of living. But that may also mean those workers can be easily replaced by someone offshore, where costs are even lower. Employees would gain flexibility, but they might miss the temporary respite from domestic responsibilities and exchanging ideas in more impromptu ways. Big companies would save on real estate costs, but they might struggle to outbid smaller companies for the best talent if traditional office perks like free food and bike storage are no longer as essential as they once were.
The zeal for a new definition of the traditional office is driven in part by the shrinking economy, as companies look for new ways to cut costs during a downturn that is expected to be the worst since the Great Depression. Many executives also point to the success of an unprecedented work-from-home experiment, and how little productivity appears to have been impacted after millions of employees in technology, media, finance and other industries have been forced to work remotely for months.
“I mean, if you would said three months ago that 90 % of our employees will be working from home and the firm would be functioning fine, I would say that is a test I’m not prepared to take because the downside of being wrong on that is massive,” said Morgan Stanley Chief Executive James Gorman in mid-April on the bank’s earnings call.
The biggest loser in the rise of a reimagined office could be the commercial real-estate market and the big institutional investors that have invested heavily in it. Pension funds, insurance companies and other institutions have spent billions of dollars to buy big city office towers in cities. They are depending on continued tenant demand that now looks poised to slow.
This does not mean urban offices are disappearing anytime soon. Leases are hard to tear up, and few companies want to ditch the office altogether. There were also other periods where the end of the centre-city office building was wrongly predicted, beginning in the latter half of the 20th century as some companies decamped to suburban office parks and following the shock of 9/11. Each time the centralized office building proved to be surprisingly resilient.
Many who are attached to the real-estate industry still say there is no substitute to having all employees under one roof. “One of the most important aspects of American business over the last couple of decades has been the establishment of firmwide cultures—the idea that having the right firmwide culture can make your company successful,” said Will Silverman, a managing director at real-estate investment banking firm Eastdil Secured LLC. “I just don’t know how you establish a culture among people who are only together a few days a week.”
Space Race
Companies are re-evaluating their real estate needs in the era of Covid-19, asking whether a decentralized workforce might cut costs. Achieving that goal might be easier in certain cities where you can get more space for your money and enough excess square footage is available to let employees spread out safely.
Some companies, however, are already planning their retreat from traditional offices while a deadly virus spreads across the globe. OpenText’s elimination of more than half its offices will result in 2000 of the company’s 15000-person workforce working from home permanently across back-office roles, client relations and technology support, according to Chief Executive Mark Barrenechea. The company makes information-management software. “At this scale this is certainly being driven by the pandemic,” he said.
To keep the company’s culture intact while its people are physically apart, OpenText is conducting online happy hours, virtual chess tournaments and game nights while encouraging employees to use videoconferencing backgrounds that showcase their personalities. “I stepped back and said ‘OK, it’s working for us,’” Mr. Barrenechea said. The enterprise information-management software company is in the process of determining which office leases to let expire and which to renegotiate with landlords, he said.
In Silicon Valley, where company culture was always a cornerstone of startup life, some of the biggest companies were the first to embrace the concept of working remotely through the pandemic. Now they are also re-imagining how workers will congregate in the future.
Twitter Chief Executive Jack Dorsey notified employees Tuesday that they would be able to work from home even after the pandemic is over, with exceptions for some jobs that can’t be done remotely. Twitter does not plan to close or shrink any of its offices.
Since the pandemic started, the social media company has been hosting virtual events to foster interaction between employees. Twitter’s chief human resources officer, Jennifer Christie, said more people engage in the meetings now that they are virtual. They also create a level playing field. “Everyone has the same experience,” Ms. Christie said.
In the last decade, corporations have tried to reduce their office space by squeezing in as many employees as possible on their floors, but social-distancing rules make that increasingly difficult. Now, many companies say they will allow more people to work from home and restructure office floors to allow for greater spacing. Companies typically spend 2 % to 3 % of their revenues on office space, according to real-estate analyst Green Street Advisors.
Sprawling Out
Companies have been squeezing as many workers as possible into their offices. Analysts and brokers expect that trend to reverse, with some space shifting to emptier suburban buildings.
Belden Inc., a St. Louis-based manufacturing company, currently has an office layout where executives have closed-door offices and other employees have cubicles and desks.
“I reflect on that and I am like ‘it is a complete waste of space,’” said Chief Executive John Stroup. Belden would be better served having conference rooms for people to meet in and office sites with open desks where employees can bring their own laptops on the days they work from the office, he said. Belden employs 10000 and makes fibre optic and industrial cables for telecommunications, health care and other industries.
The CEO said he is noticing improvements in how employees interact virtually. In March multiple people would speak awkwardly at the same time on videoconference calls; this week he noticed more similarities to how people might interact in person, with “more joking around and more perception of body language.”
The company is re-evaluating its real-estate footprint and office layout to accommodate a schedule where employees could work from home some days each week, Mr. Stroup said. Maintaining the company’s culture while doing so “is something we’ll have to figure out, and, in my view not something that is insurmountable.”
Some executives say offering the option to work from home keeps employees happy and helps attract better job candidates. Discovery Inc., the parent company of TV channels TLC and Food Network, said a survey showed that employees would prefer to work from home two days a week even when things return to “normal,” said Adria Alpert Romm, the company’s chief people and culture officer.
“It’s worked better than we ever would have imagined,” she said. “We will most definitely provide the opportunity to have this hybrid schedule because it’s working.”
Some companies are ditching the office altogether. Skift Inc., a roughly 60-person business media company that covers the travel industry, is giving up its office in Midtown Manhattan when the company’s lease expires in late July. It also won’t renew a deal for a co-working space for London-based employees. The moves will save the company close to USD 600000 annually, including expenses for utilities, office snacks and commuter benefits for employees, said Rafat Ali, Skift’s chief executive. The company may rent a flexible working space for perhaps one or two days a week in the future so employees could physically come together.
“It comes down to, one, saving money at this point,” Mr. Ali said. “We’ve learned the taste of what it is to not be in an office, and I think this is the perfect time.”
There are multiple reasons why some companies might resist an outright retreat from the office. While many jobs can be done remotely, creative types often benefit from being around others and having all employees in one place makes collaboration easier. Some companies see big offices as a way to safeguard sensitive information and keep an eye on their employees.
Certain employees are also more dependent on the culture and capabilities a centralised office can provide. Stock traders, for example, depend on the type of high-speed internet that can’t always be accessed from home. And younger employees often need that face-to-face interaction to build a network and advance in their careers, said Tina Witney, a managing director at Deloitte. Employees with little children or small apartments have other incentives not to work from home.
“I do think there’s a hit on productivity from groups not being able to meet together spontaneously and solve problems,” said Scott Wine, the chief executive of Polaris Inc., a manufacturer of snowmobiles, motorcycles and other vehicles. Around 80% of Polaris’ engineers are currently working remotely in jobs where collaboration is essential, he said. “Engineering’s been the one hiccup where we can’t really replicate it as well at home. You can’t really share your screen,” said Mr. Wine.
For now, he is not reconsidering the Medina, Minn.-based company’s office space. In a video he said he shared with 14000 employees this week, Mr. Wine lauded the benefits of exchanging ideas in person. “Most people haven’t been in offices for two months now and they have embraced it, but it’s not something I want to keep in place forever,” he said in an interview.
Other companies are trying to find the middle ground between working from home and working from a big corporate office. They are looking to open smaller satellite offices closer to where employees live. They believe workers like to get out of the house but don’t want a long train commute to the city, which is becoming a major concern healthwise as employees prepare to head back to the office.
Some brokers and analysts say the pandemic could lead to a revival for suburban offices, which have struggled with high vacancy rates for years. An increase in remote work could also ease the pressure on the country’s hottest property markets and bring economic growth to remote locations.
Opening smaller offices in leafy suburbs can also bring significant cost savings. Suburban rents are 40 % cheaper on average than in cities, according to Moody’s Analytics REIS.
A rush to the suburbs would reverse the trend of the past two decades, when more companies moved to city centers in a bid to appeal to job prospects. General Electric Co., for example, announced in 2016 that it was moving its headquarters from Fairfield, Conn., to Boston partly to attract talented younger employees. Cities invested heavily in their centers, building public transit and dangling tax breaks to companies. Neighborhoods like Brooklyn became office destinations by appealing to a millenial workforce.
James Ritman, an executive vice president at brokerage Newmark Knight Frank who specializes in office leases in New York’s suburbs, said he is getting daily inquiries from firms based in Manhattan looking to open a suburban office because their executives don’t want to take the train into the city anymore. “In my 18 years in Westchester and Fairfield County, we haven’t had this type of velocity of groups looking out of Manhattan,” he said.
Access management company Okta Inc. is offering more employees the option to work remotely, and plans to open small offices in different cities to give their employees access to a workspace without having to travel far. The company’s senior vice president of global workplace services, Armen Vartanian, said this would allow more employees to move to cities where the cost of living is lower.
Okta encourages leaders to hold daily virtual meetings to make sure employees interact. The company also has a fitness app where employees can log their movement, compete with each other and win awards for passing certain milestones. In the long run, the company is considering hosting speaker series or learning programs to encourage its employees to come together.
“I think companies are all going to transition to this model where there will still be a place for in-office interaction, but real estate portfolios will be truncated,” Mr. Vartanian said.
That is bad news for many big developers. Over the past decade, these firms have built expensive new skyscrapers such as Hudson Yards in New York and the Salesforce Tower in San Francisco, backed by pension funds and plenty of debt. Between 2010 and 2019, investors spent about half a trillion dollars on office properties in central business districts, according to data firm Real Capital Analytics. With tech companies leasing larger and larger offices and young professionals moving to cities in droves, demand seemed limitless.
Now, it could be drying up. U.S. office vacancy, currently at 16.8 %, will rise to 19.4 % by the end of the year, according to estimates from research firm Moody’s Analytics REIS. That would surpass the previous record set in 1991, as businesses shutter and lay off workers. Big-city offices also face potentially massive declines in rent as companies lay off workers and stop signing leases, said Victor Calanog, Moody’s Analytics’ head of commercial real estate economics.
A more permanent shift to remote work could mean that the office market will never fully recover from the recession. “This is a national shock,” Mr. Calanog said.
In a late-April survey among corporate real estate users by the trade group CoreNet Global, 94% of respondents said employees will spend more time working remotely even after the pandemic is over. And 69 % said firms will use less real estate in the future as a result of remote work, up from 51% in March.
New York City-focused office owners are already under pressure as investors fret over missing rent payments and potential declines in property prices. The shares of SL Green Realty Corp. and Vornado Realty Trust are down 59 % and 47 % since the beginning of the year, compared with a 11 % decline in the S&P 500 index.
“The supply and demand for office space may change significantly,” Warren Buffett said earlier this month at Berkshire Hathaway Inc.’s annual meeting. “When change happens in the world, you adjust to it.”
Vornado Chief Executive Steven Roth said during a recent call with analysts that traditional offices have been around for 1000 years and won’t disappear now. Collaboration in the office is the “winning ticket,” he said, quipping that few people want to work in pajamas with their children running around.
“Please don’t get too comfortable working from home,” he told the analysts at the end of the call. “We need you back in the office and paying rent in our buildings.”
Here starts the second feature:
The Economic development reflected in China’s new five year plan (FYP)
Here we delineate the primary objectives of the FYPs from 1953 to date.
China’s Five-Year Plan lays out specific economic targets, such as GDP growth rates and social development goals in healthcare, environment and other areas.
The primary objectives include economic reform and industrial restructuring, which have paved the path for establishing and improving the socialist market economy and formed the foundation for transforming the mode of economic growth and optimising economic structure.
Starting from the 7th FYP (1986-1990), every FYP projected an average annual GDP growth rate, making it an essential indicator for measuring the national economy for the next five years.
However, China announced on May 22 that there would be no specific target set for its economic growth in 2020 because it is facing some unpredictable factors in its development as well as high uncertainty regarding the COVID-19 pandemic and the global economic and trade environment.
In terms of contribution to the GDP, the secondary sector maintained a bigger share with a dwindling primary sector and a growing tertiary sector.
Manufacturing is the foundation of China’s economic boom
The industrial sector has been the primary driver of China’s economic development and the driving force to shift China’s economic structure into a high-quality growth pattern.
Here we highlight all the texts related to the industrial sector. The related content accounts for nearly half of the 1st FYP.
As China diversifies its approach to national development, the number of policies directly related to the industrial sector has fallen.
During the 1st FYP, China focused on developing its heavy industry.
The annual value added of the industrial sector declined at the end of the 2nd FYP (1958–1962) but rallied during the three-year period of adjustment that followed. It dipped to 49.7 billion yuan in the 3rd FYP (1966–1970) but has remained above 80 billion yuan since the 1970s.
China’s industry growth rate was in a downward trend when the government unveiled “Made in China 2025,” a 10-year national strategy put in the 13th FYP (2016–2020) to upgrade the country’s manufacturing sector.
Agriculture remains vital to China’s national economy
China is the world’s largest agricultural producer, producing a fourth of the world’s grains.
Content related to agriculture is highlighted. Most FYPs make fewer references to agriculture than industry. Agriculture remains a vital sector in the national economy, though its growth rate has typically been lower than that of industry.
Plans for rural development appear in the second part of the 11th FYP (2006–2010), called “Construction of New Socialist Villages.” In the subsequent FYPs, rural development plans make up a whole chapter listed at the top of the document.
Chinese Premier stresses achieving main economic, social development targets
Chinese Premier Li Keqiang on Saturday, May 23, 2020 stressed striving to achieve this year’s main targets for economic and social development, though the country is facing difficulties and challenges like never before.
Li, also a member of the Standing Committee of the Political Bureau of the Communist Party of China Central Committee, made the remarks while taking part in deliberations of the government work report with fellow deputies from Guangxi Zhuang Autonomous Region to the 13th National People’s Congress during its ongoing annual session.
Li called for ensuring stability on six fronts: employment, financial sector, foreign trade, foreign investment, domestic investment, and expectations, while fully maintaining security in six areas: job security, basic living needs, operations of market entities, food and energy security, stable industrial and supply chains, and the normal functioning of primary-level governments.
He said the deficit increase this year and the special government bonds for the COVID-19 control must be transferred in full to governments at city and county levels, in order to support efforts in stabilizing employment and ensuring people’s livelihood.
The premier also called for support for micro, small, and medium-sized businesses as well as self-employed individuals to help them get through this challenging time.
Noting that the COVID-19 epidemic has caused a relatively big impact on people’s life, Li urged efforts to provide for the basic needs of the poor and the unemployed populations.
He also demanded concentrated efforts to fight extreme poverty.
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