- Arvind's Newsletter
- Posts
- Arvind's Newsletter
1.Reliance, Disney ready term sheet to merge India operations, reports Economic Times
The plan, as of now, is to create a step-down subsidiary of RIL’s Viacom18, which will absorb Star India via a stock swap. Reliance is pitching to be the larger shareholder with at least 51% in the merged company with Disney owning the residual 49%. Both businesses are being treated as similar-sized ones, so RIL is likely to pay cash for the controlling stake.
The deal is likely to give the Mukesh Ambani-led group a controlling stake in what will become the country’s largest media and entertainment business if the deal goes through.
The two sides are also negotiating a business plan to inject cash as immediate capital investment, expected to be $1-1.5 billion. The final shareholding structure of the entity will get crystallised and its value established based on the cash infusion from each of the parties.
2.India bets on worker dormitories as Apple leads tech pivot from China, reports Financial Times
India’s appeal to the likes of Apple as a “China plus one” manufacturing hub may depend on how the country and foreign investors resolve one glaring issue: how and where to get enough workers in the right place.
In China, hundreds of millions of migrant workers played a crucial role in the country’s rise as the “workshop of the world”. Executives hoping India will emerge as a parallel manufacturing centre as geopolitical tensions rise are waiting to see whether its workers will prove equally willing to leave their homes and families for a job that includes spending long periods with a dormitory bed as their only private space.
“When we started manufacturing in [the Chinese city of] Shenzhen all workers came from far away, so there was the necessity to build accommodation for them from the very start,” said a person close to Foxconn.
The issue of worker accommodation is of special urgency because of the role women play in the electronics industry. They account for the bulk of the workforce in electronics in longer-established manufacturing hubs such as China and Vietnam, where workers’ dormitories are a central part of companies’ focus, alongside regulatory issues such as trade tariffs and labour law.
India has fewer women in factory work than most other Asian countries because of safety issues around commuting and social stigmatisation of women’s work, making the issue of worker accommodation particularly pressing.
As the likes of Apple and Foxconn shift more production to southern India, companies and local officials are making plans for dormitories that between them will accommodate tens of thousands of beds. In Tamil Nadu, a hub of India’s electronics industry where Foxconn has its main factory assembling iPhones for Apple, a government agency is building multiple blocks to accommodate about 18,000 women, local officials told the Financial Times.
Foxconn is expected to take up all of this capacity, according to people close to the Taiwanese company. Foxconn expects to finish construction of another dorm in Tamil Nadu in the coming months that can accommodate 20,000 more workers.
In Karnataka, home to India’s IT capital Bengaluru, where Foxconn has broken ground on another plant, the state has formulated a draft policy to support and build dormitories.
Read on.
3.San Francisco jury ruled that Google’s Play Store illegally suppresses competition.
Epic Games, the maker of Fortnite, sued both Apple and Google in 2020, claiming that their app stores were an abuse of monopolistic power, forcing app developers to pay billions in fees.
Epic lost its case against Apple in 2021, but won against Google. The antitrust analyst Matt Stoller said the verdict will make it easier for judges, “generally afraid of being the first to make a precedent-setting decision,” to rule against Google in other competition trials. It also shows that “big tech is not above the law,” Stoller wrote in his newsletter. “[Skeptics think] the powerful will always win … But that just isn’t true.”
4.The Biggest Winners and Losers From the Work-From-Home Revolution, reports Wall Street Journal
The fivefold increase in working from home ushered in by the pandemic is perhaps the largest change to hit U.S. labor markets since World War II. It has touched just about every manager in America, reshaped industries including real estate and business travel, and led to an exodus from city centres to the suburbs.
And working from home is here to stay—at least in a hybrid model where a commute to the office is limited to just a few days each week. Tracking detailed survey data, we see working-from-home levels were rapidly dropping from 2020 to 2022. But by early 2023 they stabilised and have remained flat ever since. Hybrid working has become the new normal for millions of professionals and managers across America.
So, it’s time to tally up the impact. Looking ahead to 2024 and beyond, who are the biggest winners and losers from the work-from-home revolution?
The biggest losers are likely city-center office and retail property owners. The massive shift to home working has created a doughnut effect in major cities around the world. Millions of employees are no longer commuting every day, leaving many offices half-filled and retail stores struggling for customers. The owners of this real estate—often pension funds, family firms and endowments—have collectively lost hundreds of billions of dollars of investments.
In the long run, the sector will slowly recover as supply contracts. New construction has slowed, some empty buildings are slowly being converted to residential accommodation, and some lower-quality offices will be torn down. But recovery will take years to complete. Winter has come for the office sector. One forecast that a major leasing company shared with me was it would take until 2033 for occupancy to recover to prepandemic levels in San Francisco—perhaps the hardest hit city.
Another loser has been mass-transit rail systems. Ridership has dropped by 30% nationally as commuters shift from a five-day commuting schedule to two or three days a week. These commuter rail systems have high fixed costs due to inflexible track and train costs, alongside rigid union-controlled labor expenses.
Large drops in ridership revenue translate into larger budget deficits. To date these deficits have been bailed out by pandemic-era federal and state subsidies. But the fear is unless public transit costs can be right-sized, once these subsidies run out they will see devastating service cuts or outright closure.
But there are winners
It isn’t all gloomy, particularly for the biggest work-from-home winners: the workers. In national surveys, employees report they value the ability to work from home two or three days a week as much as an 8% pay increase. Multiplied across the roughly 70 million Americans who are currently working from home, this is a perk valued at roughly $500 billion a year. This vast dividend has benefited employees through less commuting and lower stress, alongside more personal, leisure and family time.
One recent study highlighted how the typical U.S. home-working employee spends 40 minutes more a week on child care from the time saved from avoiding the daily commute. This will have longer-run effects ranging from higher labor-force participation rates—possibly pushing up growth rates—to potentially even a fertility dividend as parenting becomes somewhat easier.
Another winner is the environment, thanks to reduced travel and energy needs. A recent study found working from home two days a week reduces pollution by about 15%. This comes from lower commuting emissions alongside additional savings from lower office energy bills. A double dividend is the reduced congestion on emptier roads, with traffic speed data from Inryx suggesting the morning commute is 10% faster.
And perhaps the biggest work-from-home winner are companies. Research finds that hybrid working three days a week in the office has a net neutral on employee productivity, while allowing firms to save on recruitment and retention costs. Firms can save money by trimming office expenses while using remote working to lower labor costs by hiring employees outside major cities.
5.The Golden Globes nominations are out: “Barbie” leads the movie category with nine, followed by “Oppenheimer” with eight. Read the full list below. But there are surprises and snubs too.
