BUSINESS-01
transition team says the President-elect will start renegotiating the North
American Free Trade Agreement. Australia's opposition Labor Party says, TPP
should be put on hold indefinitely. Russia's economy minister meantime, has
been fired after he was charged with bribery. - Part 2>
Richard Quest >
Managing Director, International Monetary Fund; Mathias Cormann, Australian
Finance Minister; Mark Fields, CEO, Ford Motor Company; Bob Nardelli,
Former CEO Chrysler; Valentjin Van Nieuwenhuijzen, Head of Strategy, NN
Investment Partners; Etienne Schneider, Deputy PM, Luxembourg >
transition team says the President-elect will start renegotiating the North
American Free Trade Agreement. Australia's opposition Labor Party says, TPP
should be put on hold indefinitely. Russia's economy minister meantime, has
been fired after he was charged with bribery>
Europe; Government; Immigraon; Labor; Mining; Stock Markets; Treaties and
Agreements; Woman; Elections;>
FIELDS: We're always looking at the business environment and looking at scenario planning so to speak. And clearly, something like a 35 percent tariff would impact our business, and importantly, when you look at NAFTA, both our, as well as the rest of the industry, our production, and our supply chains, are deeply integrated across the three countries. So, anything like that could impact those supply chains, which would impact ultimately U.S. workers. So, we want to make sure that we engage, as I said, in a very fruitful but fact based discussion to make sure that we end up doing the right thing for America and U.S. workers and for our company.
LAKE: You know there is also talk about big spending on infrastructure. We know there is going to be a review of fuel efficiency standards, something that a Trump administration might be more friendly towards here. So, there are areas that could benefit your sector as well.
FIELDS: Yes, absolutely when you look at our policy recommendations, the first one is that we're going to continue to advocate for currency manipulation rules. We believe in free and fair trade. Secondly, we want to make sure that the fuel economy regulations are aligned with market realities. And some of the initial things that we're hearing during the campaign trail, may be beneficial to the business on that. At the same time, we're also going to continue to advocate for comprehensive tax reform, which we think would be good for not only our company, but also the industry in the economy overall.
[16:35:00] So, we'll be very consistent in some of the policy recommendations and engage with the administration and the policy makers around that.
(END VIDEOTAPE)
NEWTON: And so, you heard. Mark Fields is going to engage.
Joining me now, Bob Nardelli, who has been the CEO of Chrysler and as well as Home Depot. Earlier this year, he said a Trump presidency would be good for the United States. I'm going to say Mr. Nardelli, that you continue to hold that opinion. Why? Because even if you look at the auto industry when you look at what Donald Trump has said about tariffs and trade. He wants to turn the whole system upside down. What are you worried about when you see that?
BOB NARDELLI, FORMER CEO CHRYSLER: I'm not so worried. Let's talk about what I feel positive about is to have a business person in the White House after eight years of what I would say is less than a business-friendly environment. If you look at regulations. If you look at what they -- on medical devices, I have seen small companies go from positive to negative because of the taxes. If you look at some of the labor laws have been put in place. Have been very restrictive. If you look at some of the healthcare issues that have been put in place, people have not hired. If you look at a whole host of things that have kind of stifled -- some of the environmental things -- it really stifled the growth of business. What I'm encouraged about is that hopefully some of these policies -- and I'm happy to talk about them -- will actually get us a GDP of 3.5 percent or better. Which is what the administration talks about at the beginning of every year and then walks it back to a .9, 1 percent.
NEWTON: Even in a growth scenario like that, like you said it will bring up a lot of people for at a growth scenario that is 3 percent approaching 4 percent. I get that. But when you talk about trying to up end NAFTA, and you talk about trying to put tariffs in place. I mean, you heard Mark Fields, he might be optimistic, but he says quite clearly, 35 percent tariffs to the car industry? What would that do?
NARDELLI: Well, it depends on -- you know when I was there -- it depends on whether your closing a plant, dislocating employees and their families, to move it to a lower labor market. My philosophy was I never had an outsourcing philosophy. I had a global competitiveness philosophy. So, if we lower the tax rate -- the corporate tax rate -- then you can compete more on a global basis. If you reduce the repatriation tax, you're going to get more jobs back here. If we really reestablish energy independence. The cost of energy in the auto industry is more than the cost of labor. And if we didn't stifle fracking and the ability to export, to help -- to help it more as a geopolitical tool on a global basis. So, we become energy independent.
You're going to see more manufacturing jobs here. Certainly, you would see more auto businesses still here. It's interesting, if you produce a car, at one point when Fiat took over, they moved the small 500 to be produced in Mexico. Because the biggest export was Brazil and there was a lower tariff shipping out of Mexico to Brazil. So again, I think it is unfair to just paint a broad brush. I think you've got to look at the specifics of why corporations put plants in certain countries relative to helping the economics of their decisions.
NEWTON: But Donald Trump is saying, he's going to upend that decision- making. He's promised to bring jobs back to the auto industry and the Rust Belt. Is it what you want to see him do? Do at any cost to American business?
NARDELLI: No, I think again, we have to step back and look at the specifics here. If in fact, we lower the corporate tax rate. If in fact, we allow for repatriation. If we have energy independence. If we reduce some of the stifling regulations that are put in place. Corporations are not intentionally trying to hurt the U.S. employment ranks. They're trying to be competitive. We have a global economy now, right? You agree with that.
NEWTON: Well, I don't know. He is going to up end NAFTA and TPP is dead. Is that the kind of global economy that you think American industry needs?
NARDELLI: I think this is a global economy. Let's face it. We are more connected now than we've ever been. We're knocking to do things -- things are not going to get put in place that going to have a detrimental effect to the growth of the country, to the reemployment of people. Who desperately need a higher GDP that's going to pull jobs in. You can talk all you want about creating jobs. If you don't have an economy to pull people, and get them off the entitlement role, then it won't happen. So, I am encouraged. I'm optimistic that some of the things that he has talked, President-elect Trump, will put in place early on and let's see the signs of what happens, Paula.
NEWTON: We don't have a lot of time left, but I do want to get to what's happened with interest rates. Most people see inflation again and see interest rates rising. When you look at the auto sector, something you know well, and Home Depot, the housing industry in general. Do you fear about a chill coming to both of those industries with these rising interest rates?
NARDELLI: Well, the banks love it, right? They have been clamoring for lower interest rates ever since this thing has been --
NEWTON: That's because they make money.
NARDELLI: -- low and slow, number one. OK, number two, the auto city has already started to tip from 9.6 million SAR, Seasonally Adjusted Rate, to 17.
[16:40:00] We already see people pulling back because we have a saturation in the market place so that is not a result of this election or interest rates I think it is just where we are in the cycle the auto industry goes through. With housing, from my experience of Home Depot you win on both sides, with a housing recovery you win. And it if interest rates go up, people now will go from investing -- they will have to do maintenance. And what they will do is invest in their home because they will get an appreciated value if interest rates go up.
So, when I was there we saw a lot of do it yourselfers going to do remodel. Improving curb appeal. So, if housing stops people are now flipping homes. It was a positive situation.
NEWTON: We will see, it is definitely a brave new world with Donald Trump. I appreciate your time.
Now while Trump tries to get his transition team in place, a leaked memo in the U.K. Suggests the government there seems to have no clear plan for Brexit and is not even close to working one out.
(COMMERCIAL BREAK)
NEWTON: A leaked memo claims that the British government is still several months away from a solid Brexit exit plan. The document alleges the U.K. needs to hire 30,000 officials to put the plan in place. It says Theresa May is trying to settle too many of the issues herself. And warns that strategy is unlikely to be sustainable. Deloitte who wrote memo said the note was only meant for internal audiences. Theresa May's office in fact dismissed the report. Valentjin Van Nieuwenhuijzen is head of strategy at NN Investment Partners and he joins me now from London.
The strength with which 10 Downing Street pushed back on this memo seems to indicate that there must be some truth to it. At least that's just my opinion. How do you view it from London?
VALENTJIN VAN NIEUWENHUIJZEN, HEAD OF STRATEGY, NN INVESTMENT PARTNERS: We're clearly living in an age of political confusion. I don't know whether this sort of latest at least rumors or leaked memo is any indication of what is happening in the next few months in the U.S. as well.
But it is pretty clear that there is a lot of confidence with politicians to move forward and to dramatically change what is happening in their country, but the preparation for these dramatic swings and moves in political direction are clearly not all that great. And it is just an underlining of how difficult this process is, the separation process from Europe and it is going to stay with us for at least another couple of years.
NEWTON: I know you are not in this business but if you were advising Theresa May, the cabinet, and the U.K. government how to go about it, what would you say to them?
VAN NIEUWENHUIJZEN: I would at least be more cautious in the promising and running the risk of under delivering.
[16:45:00] It is quite clear that Theresa May has been interpreting the Brexit results very as a -- as a validation of a very broad agenda to change the policy direction of the U.K. government. Not only with respect to the separation process but actually also with the role that the government is taking on domestic policy with respect to how they address businesses in the U.K.
And thereby it has a lot to manage at the same time and I think the process and engaging in a constructive manner with Europe is very complicated matter. And they should focus on that rather really broadening out the overall policy agenda.
NEWTON: That's interesting you say that because Theresa May came out right away and actually as you said made her platform to broaden out that agenda, and you're saying concentrate on what you can do for now.
I think they would say, look, it's early days. Just a few months. The U.K. economy is growing. There have been discussions about lost investment. Do you think the shoe has yet to drop on Brexit and they will, because you know what has been happening? Everybody has been saying, look, the reckoning did not come. It hasn't come yet. And some people say it will never come.
VAN NIEUWENHUIJZEN: You cannot exclude it. All of these things are usually uncertain. I would be quite skeptical on that approach. The big thing we have gone through in the last couple of months is indeed that in the region as a whole, this has been digested better than we anticipated. Also, the momentum in the U.K. economy has held up better.
But I think for the next couple years, the U.K. itself in a more separated and isolated position. The rest of the world can deal without the U.K. and the U.K. economy to some extent much better than we feared. But all of the changes in terms of impacting the setup, specifically the corporate sector in the U.K. I think will certainly still come home. And that will be painful for the U.K. I will be more slowly moving it will not be a shock to the system but it will be felt. And that is something that has to be digested over the coming years specifically here in the U.K.
NEWTON: Right, very interesting insights as we continue to cover this very fascinating story. Thank you so much for your time.
Over the last few days, sky watchers have been dazzled by a rare spectacle. It's known as a super moon. It really is spectacular. It is closer to earth than it has been since 1948. That is breathtaking, isn't it?
Meantime in Luxembourg a galaxy gazing of different kind. The government has a plan to mine precious metals, yes, in space. And Richard found out more on a special Europe 2020.
(BEGIN VIDEOTAPE)
RICHARD QUEST, CNN CORRESPONDENT AND ANCHOR: This is Luxembourg. Tiny, landlocked and picturesque. Already famous for the muscle of its financial center. It is a planning to be a global leader in space mining. Leading this surprising change is the deputy prime minister who has put more than 200 million dollars of government money into funding the venture.
ETIENNE SCHNEIDER, DEPUTY PM, LUXEMBOURG: For me it is important to try new ideas and to reinvent the Luxembourg economy.
QUEST: Minister, when you came up with the plan, some thought you were barking mad.
SCHNEIDER: Absolutely. Some still do. You know, I am a politician, I need to have a vision. You need visions to bring your country forward.
QUEST: The plan is to send small aircraft to orbit to harvest asteroids for their potentially highly lucrative minerals. Billions of dollars' worth of platinum lie untapped while resources on earth are fast depleting. There is only one problem, and it is a big one. The cost of bringing the stuff back. It is far higher than the value of the materials themselves.
SCHNEIDER: If I gave you an example in the 1970s a computer was $4 million, and now on your smart phone you have more capacity and it only cost you $400. It shows you that technology will evolve, nowadays it is not really a good business model. But in the long term and with the development of new technologies it will be feasible and I'm sure it will be done.
QUEST: What role did you see for Luxembourg?
SCHNEIDER: The only country which has legal framework in order do space mining is the United States since December last year and Luxembourg will be the second. The fact that it is really technological and it will be very complicated is not a reason not to do it. But we want to get started right now and we want to be in the driver's seat at least in the European Union.
[16:50:00] QUEST: Such large ambitions could be too much for tiny Luxembourg on her own, so they're teaming up with companies in the United States that will add some space muscle.
FREDERIC BAKER, COO, DEEP SPACE INDUSTRIES, EUROPE: Here we have the first product that is literally the first step in the vision that we have to mine asteroids. It is essentially a flying steam kettle.
QUEST: They may not look like much but these modest sized creations are the spacecraft in development.
BAKER: We're 100 percent sure of what we will find. Asteroids don't have much gravity. The gravitational forces are next to nothing. The challenge for us will be to land on the asteroid, not bounce, but land.
QUEST: Despite the tremendous challenges, and of course skepticism about this project, there is one thing that is clear, the determination, the technological know-how and money that are moving to Luxemburg to build a new sector and fast.
(END VIDEOTAPE)
NEWTON: After the break, Christine Lagarde tells me women and men must continue to hammer against that glass ceiling.
(COMMERCIAL BREAK)
NEWTON: Christine Lagarde was named woman of the year, before she picked up her award I asked her what she learned in her full career fighting for women.
(BEGIN VIDEOTAPE)
CHRISTINE LAGARDE, MANAGING DIRECTOR, IMF: It has not always been easy, but that is true. There have been various cracks and lessons I learned along the way. Certainly, one was that when the place is miserable and not hospitable to women you should not necessarily be miserable yourself. And you should run that is certainly the first think I learned in my professional interview with a big law firm, which indicated that I was welcome to join, I would be paid a nice salary but I would never make partnership because I was a woman. That was my first leaning on the job.
NEWTON: A tough lesson, and many women I am sure have had the same lesson that you have had. You have used your candor to speak about sexism, but do you think now in this country at this time with the election of Donald Trump that many women are sitting back and saying look, that glass ceiling, sometimes, just seems incredibly shatter proof.
[16:55:00] LAGARDE: Well, it is difficult to breakthrough and to constantly prove yourself and prove that you can do it just as well, as much, and as long as boys or a man can do it. It is just a constant struggle and we just have to go through and do it and be together amongst women and with men. Because it is something that is not going to change if we're not together in that quest. So, we need to crack that celling together, men and women together.
NEWTON: And yet there were some uncomfortable things that came out in the election and some argued that this is a repudiation of women by women. And I know some people think that is a dramatic statement but as Slate said in their headline, white women sold out the sister hood and the world by voting for Trump. Why do you think white women rejected Hillary Clinton as their president?
LAGARDE: I'm not enough of a political expert to understand that, but what I know based on the economics, and on the focus, we have about women joining the workplace, having access to finance, being on boards, women being educated. They represent an enormous value that the world cannot waste and spare. We have to be part of this together.
NEWTON: And yet the election that just happened, do you know -- has it not level many, many women disheartened?
LAGARDE: I certainly hope that the new team will be able to embrace the cause and dignity of women. The space that women need to have. The contribution they can make to the economy. I was a member of government in my own country. The government was 50 percent men, 50 percent women, that was a fantastic combination. We could enrich ourselves with our differences and contribute in a really positive fashion.
(END VIDEOTAPE)
NEWTON: That is QUEST MEANS BUSINESS. I'm Paula Newton and I'll see you tomorrow
END
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