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First Move with Julia Chatterley
China Sparks Growth Fears with Forced Fuel Cuts; The U.K. Petrol Crisis Continues as Troops Prepare for Action; Ford Invest Billions in an EV Future. Aired 9-9:30a ET
Aired September 28, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:06]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.
Power down. China sparks growth fears with forced fuel cuts.
Army alert. The U.K. petrol crisis continues as troops prepare for action.
And electric dreams. Ford invest billions in an EV future. We've got the CEO.
It's Tuesday. Let's make a move.
A warm welcome to FIRST MOVE this Tuesday. Coming up this hour, we will take you live to Capitol Hill for a pivotal U.S. Senate hearing on the
withdrawal from Afghanistan. Top U.S. military brass will be testifying.
And in the meantime, a bit of Tuesday turbulence on global markets, too. An early fall chill, I think as investors consider upcoming market peril. P -
well, that sounds for petrol. The U.K. shortage continues and crude prices have topped $80.00 a barrel. E stands for energy cuts in China as I've
mentioned and the risk that then poses to growth.
E also China's ongoing Evergrande debt crisis, too, which we're keeping an eye on. R - for rising global bond yields pressuring tech stocks in
particular. I - for inflation, Fed Chair Jay Powell set to warn the U.S. Congress today that supply shocks could mean higher prices for longer.
And L - lifting the debt limit. Congress remains hopelessly deadlocked. We've got all the latest on that. The upshot, of course, to all of this,
weaker U.S. futures and a weaker European session along with it. The Dow is set to break a four-day win streak and tech set to tumble, all pressured by
rising bond yields.
We've got the U.S. 10-year yield that I'm showing you there, back above 1.5 percent, but of course, it's a global story as supply fears fuel global
inflationary concerns and the energy complex is well and truly key to that. Oil prices rising to a three-year high.
But what about natural gas prices? They're up another 5.2 percent today. That follows a 12 percent rise in Monday's trading session. They are
trading near record highs as we head closer to the winter months. Something, I think the Chinese are very well-aware of in particular, and
that is where we begin the drivers.
A new threat to the world's second largest economy, Goldman Sachs, the latest analyst to cut China's GDP forecast as a result of recent power
cuts. This video on social media showing a family including two children stuck in an elevator after a sudden power outage.
Selina Wang joins us now with the latest. Selina, great to have you with us. I mean, we can talk about the potential risks to growth and of course
that is a risk to itself, but what about the dangers of seeing things like this where a family is stuck in an elevator. We've also seen traffic lights
not working in certain cities as well and of course, colder temperatures in the northeast, too, as we head into the winter months. Huge problems.
SELINA WANG, CNN CORRESPONDENT: Julia, exactly, and we are only seeing this ripple effect worsen. You've seen this trigger blackouts for
households, forcing factories to cut production according to state media. The power outages are hitting three northeastern provinces, as well as
cities in the southern Province of Guangdong, which is a major shipping and industrial hub.
You mentioned the impact this is having on people's daily lives in addition to those factories, major traffic jams from reports of cities that are
having traffic lights that aren't working, as well as sales of candles soaring in some places, and that video you referenced of a family trapped
in an elevator for 45 minutes. The mother complaining of the struggles of being trapped there with her children.
Now, Julia, the factors leading to this power outage, however, have been brewing for some time. You've got surging demand for Chinese goods as the
global economy emerges from the global pandemic that is increasing demand for China's power hungry, electricity hungry export factories and that is
sending energy prices soaring. At the same time, China is trying to hit its very ambitious climate goals trying to be carbon neutral, carbon net zero
by 2060, peaking its energy carbon emissions by 2030.
So local officials are under pressure to limit electricity demand and that has all created this perfect storm for this power crunch that we're seeing
right now.
CHATTERLEY: Yes, and you can throw in there the tensions with Australia as well, chief coal supplier as well just adding to the mix, as you point out,
it is the perfect storm.
I mean, gauging what the growth impact is going to be going forward as much as analysts are trying to predict and are lowering estimates, it depends on
how long this goes on. What's the government saying potentially about trying to restore more consistent energy supplies? How long will this go
on?
[09:05:02]
WANG: Well, analysts are expecting this to worsen especially as we get into these winter months and you're going to see heating and electricity
demand soaring. But China's state grid corporation, which is the government run power distributor, they put out a statement saying that, quote. "It
would go all out to fight the tough battle of power supply, making every effort to secure residential consumption."
But as you say, economists are already slashing these growth estimates, Goldman Sachs slashing their estimates citing this mounting uncertainty and
this already reflects the Communist Party's struggle to balance this effort to rein in pollution, to reach its climate goals, as well as trying to
stimulate economic growth.
And of course, there's also places more strained on the already strained global supply chain as this has raised fears that there could be shortages
of goods as we head into the Thanksgiving and Christmas seasons.
CHATTERLEY: Yes, bad news there. Selina Wang, thank you so much for that update.
Okay, let's move on, panic buying and pumps running dry, Britain's petrol crisis has become so dire the government is now putting army drivers on
standby. To be clear, the problem is with the supply chain. The U.K. has plenty of fuel, but not enough drivers to get it to the service stations.
Anna Stewart joins me now.
Anna, it's a case of head in hands quite frankly, because you and I were talking about this issue and the potential issue weeks and weeks and weeks
ago, but we can talk about that. I read this morning that prices have hit an eight-year high, according to the RAC and it does come down to
availability rather than supplies. It's about the chain.
ANNA STEWART, CNN REPORTER: It's all about availability. And you know what, it was a struggle this morning to find a petrol station in London
that has petrol. All the ones near my house have run out.
Now, there was a huge queue here this morning at the one in East London where I'm at, I'll have a little look here. The queue is actually rather
have subsided. They had a delivery of 20,000 liters of unleaded petrol this morning, which has gone some way to help.
The problem is though, Julia, of course, lots of people need it. There has been some panic buying, in addition to the fact that not enough petrol can
get to the stations because of the shortage of drivers. Certainly, the U.K. government has been pushing the idea that if people didn't panic buy
petrol, there will be plenty to go around for those that really need it.
And that is the problem. Of those I've seen today, it is all taxi drivers, delivery drivers, people that need to drive for work and there is a big
concern about first responders, fire engines, ambulances, policemen. The British Medical Association this morning was saying that they would like to
see some petrol stations designated as a priority for critical workers. That isn't something yet the U.K. government has done.
The big announcement has been that the army, stands ready. They always are in case there are strikes. There are always some personnel within the army
ready to drive fuel tankers and fill up stations.
CHATTERLEY: Yes, you raise such a critical point, though, and the idea of dedicating certain service stations to first responders seems like a
brilliant idea and let's put you in charge.
Do you think there's some element of profiteering, of price gouging going on? People have to compare what they're seeing in terms of prices? I guess,
if you're desperate, you go where you can.
And on that point, what's the bigger plan here from the government to tackle this?
STEWART: Well, in terms of the prices, you're absolutely right, there have been lots of reports of price gouging largely from independent gas stations
up and down the country. That is something the U.K. Petrol Retailers Association has been warning about. Remember, customers have very long
memories when it comes to crises like this.
Here actually, the price isn't much above, slightly above the average, but it has gone up in recent days. In terms of the U.K. government, so the army
is on standby. They've also announced in the last few days measures such as issuing temporary visas for 5,000 foreign truck drivers.
One could say, post Brexit, they have quite literally moved on and are they really going to come back? The British Chambers of Commerce President today
saying this was like pouring a thimble of water on a bonfire.
You and I have talked about the shortage of drivers for ages. Yes, it's also a problem in Europe. But here, it has been exacerbated not just by the
pandemic, but by Brexit and this is not new.
The supermarket shelves are still patchy, they have been for months. It is a problem right across the supply chain, and then let's just add in the
fact that quite separate to this, there is a gas price crisis, putting gas providers out of business, many going bust. Lots of different factories and
different sectors unable to produce things.
And if these petrol keys are put for itself having a sort of combustion engine car, they want to buy electric. Well good luck, because the global
semiconductor supply crunch means that you've got about six months to wait if you wanted to buy an electric car -- Julia.
CHATTERLEY: Yes, Anna, don't add anything else and I'm not sure I can cope with the anxiety of it, quite frankly, I'm only half joking. Thank you so
much for that update there.
STEWART: Right.
CHATTERLEY: Yes, it's complicated. Anna Stewart, great job. Thank you for that.
All right, to the United States now. Congress is battling to agree a way to keep the government running to raise the debt ceiling, avoid default, and
to quote Janet Yellen, "avoid economic catastrophe."
[09:10:00]
CHATTERLEY: John Harwood joins me now. John, I think for most people internationally, this is pretty bewildering. Can I just get this straight?
Because it does feel like brinksmanship to me.
The Democrats do have the option to raise the debt limits on their own and prevent a default, but they want the vote to be bipartisan and to share
responsibility with the Republicans. And the Republicans have said they'll agree to a clean stopgap bill to keep the government open, but Democrats,
of course want to attach the debt limit vote to that, and Republicans voted against that yesterday.
Is everyone with me? Is anyone with me? It feels like classic D.C. dysfunction. John, do I have that right, and who blinks first?
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Well, you do have it right, Julia. But I think this is a consequence of the increasing propensity of
Republicans over the last decade or so to play hardball harder than it was played in the past with the issue of the debt limit.
Remember, in 2011 when President Obama was in office, House Republicans forced a downgrade of the U.S. credit rating by withholding support for the
debt limit until they finally made a deal.
Now, Mitch McConnell is not trying to -- or not saying he's going to prevent a debt limit increase, but he is trying to force Democrats to do it
through a circuitous process that would make it more difficult to pass the rest of President Biden's agenda.
Now, the easy part is keeping the government funded. Everybody agrees that that's going to be done, so you can -- I think you could pretty much take
that off the table as a question mark. The real question is going to be how exactly did they proceed on the debt limit? Is there a scenario in which
Mitch McConnell does not filibuster a debt limit increase? Let Democrats vote for it on its own, because right now that vote yesterday, Republicans
are filibustering it, not just forcing Democrats to vote for it, but preventing Democrats from being able to vote for it?
Or do Democrats say, okay, we've got to jump through some hoops. It's going to take us a couple of weeks. It will slow down the rest of our agenda, but
we're going to do it on our own. That is very much up in the air, a subject of big debate within the White House and within Democratic leaders in
Congress.
CHATTERLEY: John, what is your guess? Very quickly, what happens?
HARWOOD: The debt limit is going to get raised. The only question is how much drama there is and whether or not it gets delayed late enough that
there is a turbulent market reaction to be a forcing mechanism.
We've seen that before. Nobody wants it. It's still possible.
CHATTERLEY: Yes, sometimes it's required though, to get the action that's necessary. John Harwood, thank you very much for that, and I appreciate
your explanation. Bewildering.
Still to come here FIRST MOVE, call it Ford's Model E, the car maker CEO on the multibillion dollar retrofit designed to give it the edge in electric
vehicles. We'll explain, next.
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[09:15:28]
CHATTERLEY: Welcome back to FIRST MOVE with a look at the stories making headlines around the world. Later this hour, U.S. military leaders will
testify publicly for the first time since America's exit from Afghanistan.
The U.S. Senate Committee is expected to grill General Mark Milley and Secretary of Defense Lloyd Austin about various issues including chaotic
evacuations from Kabul, an airstrike that killed 10 civilians and future counterterrorism missions.
Haiti's Prime Minister says the government has dismissed its Electoral Council further delaying the country's elections. Ariel Henry told CNN that
Haiti now expects to hold a vote next year.
In a wide ranging interview with our Melissa Bell, he also addressed the mass deportation of Haitian migrants from the United States.
(BEGIN VIDEO CLIP)
ARIEL HENRY, HAITIAN PRIME MINISTER (through translator): For us, all Haitians, who return to their native soil are entitled to be welcomed, and
we will welcome them as best we can. We will make room for them and we will try to reintegrate them as best as we can into society.
Regarding the deportation, we are not responsible for their deportation. What we are saying is that as long as there are countries that are better
off than others, there will always be an appeal towards those wealthier.
(END VIDEO CLIP)
CHATTERLEY: South Korea says North Korea fired what's believed to be a short range missile off the east coast of the Korean Peninsula on Tuesday.
It would be Pyongyang's third missile test this month and a violation of international law.
The U.S. condemns the launches and is pushing for diplomacy with North Korea.
Okay, let's get bring it back to one of our top stories today and U.S. carmaker, Ford, invented the factory assembly line, now, it plans to
reinvent it for the age of the electric vehicle.
The company plans to invest $7 billion on four new U.S. plants. One will assemble the F-150 lightning, its electric pickup truck. Three others will
produce EV batteries in partnership with South Korea's SK Innovation, which is investing a further $4 billion.
The carmaker says the factories in both Kentucky and Tennessee will create near 11,000 jobs and be operational by 2025. And I'm pleased to say,
joining us now is Jim Farley, the CEO of Ford.
Jim, fantastic to have you on the show and wonderful to have you announcing this huge investment in the United States and in EV. It feels like you're
signaling the ultimate transformation of the auto industry. Talk us through your ambitions.
JIM FARLEY, CEO, FORD: Well, this is a really big moment for Ford. We're really excited. This is the biggest investment we've ever made in the
history of the company. We're the number one automaker in the U.S. in employment.
We're going to have four sites. A new assembly plant is six miles, the largest plant we've ever built. It will be zero -- carbon neutral. It is
going to have zero landfill and a hundred percent recycling water.
We have three battery plants, one in Tennessee and two in Kentucky. They're very large, 43 gigawatt each. That means we'll have about a million
vehicles worth of batteries just for Ford in a couple years from now.
So this means we're scaling at very large levels that only Ford can do, and really taking the lead in clean manufacturing of automobiles, these
electric digital automobiles in America.
CHATTERLEY: Yes, there's a huge focus on sustainability I know in what you're building here, but also room for suppliers as well, which I think
points to everything the auto industry and beyond quite frankly have been through and witnessed in the last year and a half or so, and that is
shoring up the supply chain.
Talk to me about securing the future supply chain and that the circularity, I think that you're trying to ensure through recycling going forward.
FARLEY: It is such an important point you're bringing up. About 70 percent of our bill of material for these battery electric vehicles are key
electronic components, like silicon and semiconductors, and battery components, as well as electric components.
And we're going to insource most of that. This is really going back to Henry Ford's first principles at the Rouge plant where he insource and
vertically integrated. We're doing the same thing at Ford.
Not only we're going to have battery on site, as we talked about, we're going to have red wood materials. Hopefully, we're going to do all the
recycling, end of use, and also our scrap from our manufacturing. We will have a lot of other partners, even potentially key electronic components
suppliers on site.
This is our way of going back to our roots and vertically integrating so we can control the supply and not be vulnerable like we are today.
[09:20:14]
CHATTERLEY: Yes, I mean, this is a critical point, whether it's as a business or as a government looking to ensure this for production
facilities going forward.
Talk to me about the hiring as well. I mentioned the near 11,000 jobs, but I've seen sort of voices coming from both of these states saying actually,
the indirect jobs from this are going to be in the tens of thousands, too. This is a critical point and a hugely important moment in time as well.
FARLEY: You know, it comes at a good time. Yes, 11,000 jobs, yes. A lot of them are in the battery plants as we insource these components, even though
the actual assembly of the electric vehicles is more efficient, i.e. less labor, we can more than make up for that by this insourcing.
So, we're going to be adding jobs to Ford, which are great. These are really great jobs. If you go to a battery plant, you know, high skilled
jobs, that's one of the reasons why we came to Tennessee and Kentucky because we had access to that kind of skilled labor and the local
governments who are supportive of training. This is really a very important growth story for the company, and I think as we insource the other benefit
of a tighter supply chain is employment.
CHATTERLEY: You've also promised -- and this is where I thought you were going to go, Jim, $525 million over the next five years to boost job
training to create present, I think and future technicians, which I also want to mention too, because it's okay building the technology, you've got
to have the skill set in your labor force to have it as well.
You're very much aligning, I think with where the Biden administration is going on electric vehicles and cleaner technologies. But there are all
sorts of challenges, whether it's the technology itself, the charging infrastructure, the labor skills, what do you think is going to be the
greatest challenge and whether it's state or Federal government? What further support is required? What's essential today?
FARLEY: Great question. I think essentially, we need support to help customers make this transition financially. These are expensive vehicles.
We've seen in in Europe, Germany, Netherlands, Norway, and China, the governments where they put their foot on the economics for the customers,
customers switched to these vehicles. We need that kind of support. We need to build out the infrastructure.
In the first inning here, it's not super critical. People can do most of the charging at home or depot charging for a small business. But as we get
to 40 or 50 percent electric, we need a complete electric grid upgrade, as well as things like bidirectional charging, so we don't have to build new
power plants, as well as more charging, especially high speed charging.
But it doesn't stop there. We need to move -- we need to find mines. There are a lot of second order issues beyond employment that we have to solve
for with this move to e-mobility. Mining is a good example. Today, cobalt and nickel, you know that they get moved halfway around the planet to make
these batteries. We have to start to build mines locally where we build these batteries.
CHATTERLEY: Yes, I mean, we've gone full circle again on the on the supply chain issues. Speaking of that, Jim, I know you've spoken in depth about
the challenges that have been presented to Ford as a result of what we've seen for chips and also some of the issues. Japan, of course, and the
supply chain as well. What can you tell us today? How long is this going to last in your mind?
FARLEY: We think the supply shock on the chips will probably last through the end of next year. It could go faster, it could go slower. It all
depends on COVID variants.
Ford was very disadvantaged in the second quarter. We lost over 50 percent our production, about 30 percent of that 50 was a Naka 3 facility in Japan
that burned down in March. We're very exposed to single sourcing silicon there. They are now back up and running. We're starting to improve our flow
now. Our manufacturing volumes are really growing around the world. But we still see a very large headwind on access to these critical electronic
components.
The COVID outbreak in Malaysia and other southeast countries really impacted the availability of these components. We think it's going to be
short, but it will get better over time over the course of the next 18 months. And you know, the great thing is, the pricing environment has been
really strong. It helped to offset a lot of the production losses.
CHATTERLEY: Yes, that's such a great point as well. Jim, you know, it's interesting when you speak to a CEO of a company, when you follow their
social media and you see what their passions are and you truly are a car lover and I couldn't help but see the tweet that you sent out about the
Mustang Mach-E, speeding around that course and how happy you were that it had passed the test of the Michigan State Police.
But it was your comment on Twitter that you said, "This is freaking fast." This car, talk me through the speed. And for those people that you're
trying to convince on electric vehicles, talk to me about speed. Talk to me about how to drive one of these things and why people should invest in
electric cars? Because it is more expensive for now.
[09:25:11]
FARLEY: Well, you know, I think, you know, unfortunately, the first generation of electric cars were super rational, small, compact cars, and
people thought of them as really, you know, kind of, you know, rational products.
You know, what we learned from Tesla is that these early adopters, they want the good stuff. They want really great products. That's why we made a
Mach-E and even the police departments love it, as you say. You know, they want F-150s to power your house for three days. They want a truck like
President Biden drove, he looked like he was in "Top Gun" with his aviators on. He we went zero to 60 in four seconds in our F-150 Lightning. He loved
this thing.
You know, they're great products. Even an old school car guy like I who loves the smell of gasoline, you know, these are better cars, let's face
it, and they're really fun to drive. And we can be passionate about these products, just like we were a Mustang coupe.
CHATTERLEY: Electric can be sexy. I think that's the message. Jim, very quickly, you're a big CEO, obviously, in the United States with global
interests, I just wanted to get aligned from you and what we're seeing in D.C., and some of the dysfunction, the risk, perhaps of a debt default in
the United States, a message to Congress.
FARLEY: You know, I'm not a politician. I'm a business leader, and I'm optimistic that they're working on the right problems. You know, we've
under invested in a physical and digital infrastructure in this country for a long time. We've got to get serious.
And I'm optimistic that there's a pony in there. And you know that's why we support you know, the general direction here. I don't know how to handicap
it, but I sure hope there's a there's a compromise because it's important for the country.
CHATTERLEY: Yes, get the job done. That's the message.
Jim, great to have you with us. We look forward to chatting to you again soon. Jim Farley. CEO of Ford there. Thank you, sir.
All right, coming up, Erica Hill, Jim Sciutto bringing you live coverage from Capitol Hill as lawmakers question top U.S. military generals over the
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