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Quest Means Business
Who Is to Blame for Air France Concorde Crash?; 4 Million Unemployed in Spain
Aired February 02, 2010 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: What really happened, and who is to blame for the Air France Concorde crash? The trail began in Paris.
Four million out of work in Spain for the first time in the country's history.
And Ford forges ahead, January sales that rebound very strongly.
I'm Richard Quest. We have an hour together, and I mean business.
Good evening.
Five men and an airline went on trial in France this Tuesday, charged with committing errors that lead to a fatal accident, nearly 10 years ago. And 113 people died when the Air France Concorde went down just after taking off from Charles De Gaulle Airport in July of 2000. All the accused are facing charges of involuntary manslaughter.
Continental Airlines is in the dock over a strip of titanium found on the runway. Prosecutors will argue it had been shed by Continental DC-10 that took off from the runway and then caused one of Concorde's tires to burst, which eventually lead to a fire.
The individuals charged are the mechanic and a maintenance official with Continental, responsible for fixing the piece of metal onto the plane. Three others are accused of failing to address known weaknesses in Concorde's design. Two of them are from the company that built the supersonic jet, Air Especial, now part of EADS, and the former head of France's civil aviation body.
The trial will attempt to reconstruct the events of July 25, 2000. Because on that day, what is known, is Air France flight, a charter flight, carrying 100 German tourists, who were going on a luxury cruise to the Caribbean, via New York, took off from Charles De Gaulle. Halfway down the runway the events happened that, of course, lead to the fire. And the questionable event (UNINTELLIGIBLE).
The plane did manage to rotate and get into the air, the plane, however, never caught altitude, it lost power in left engines one and two, before eventually crashing into a hotel in the little town of Gonesse, just outside Paris.
Lawyers for Continental spoke to reporters before the trial opened. They said the company is being targeted because it is a convenient scapegoat.
(BEGIN VIDEO CLIP)
OLIVIER METZNER, LAWYER FOR CONTINENTAL AIRLINES (through translator): The investigators for the BEA, the initial (ph) investigators, have always privileged only one and one only lead. The one that says the titanium strip fallen from a Continental DC-10 would have rammed into the Concorde and would have exploded it. This version is the only official one.
We are going to fight it and establish that the Concorde caught fire 8 seconds before this scrap of metal met with the Concorde. So, about 700 meters before.
(END VIDEO CLIP)
QUEST: OK. That is the fighting grounds, if you like. Jim Bittermann joins me now, live from Paris.
Jim, before we get to the details of what-what Continental's case, or the defense is going to be, the judge, the lady judge, when she began the proceedings, I am told, read out the names of those who died in the crash.
JIM BITTERMAN, CNN INT'L. CORRESPONDENT: Right, Richard. In fact, that is the way the court case started today. And then it went into a lot of procedural matters. Basically, this case is going to go on for, they think, at least four months. And so there is a lot to be worked out about what witnesses will testify when and basically a lot of procedure today. I don't think we will really get into the meat of the what happened until perhaps a week or two down the line.
QUEST: OK. I've read-I mean, because I covered the case, all those years ago, I have had to read the actual final investigation, report, by the BEA, the French investigative authority. And the Continental lawyer is basically correct. It does pretty much, from start to finish, say it was the titanium strip the caused the accident.
So, what are Continental saying they are going to come up with that is new or different?
BITTERMANN: Well, the lawyer says that he has a 20 or so witnesses who will say that they saw flames coming from the Concorde before it would have hit that strip. In fact, he says, 800 meters before it would have hit that strip, that the Concorde was already on fire.
Now, of course, going back 10 years to ask for recollections of people who might have seen the Concorde taking off, to determine exactly when it might have caught fire, seems to me to be a little bit of a stretch of the imagination that people would be able to determine exactly, something that took place in a matter of seconds.
The other thing is that the lawyer on the other side of the case, the lawyer who is representing the Air France in this case, says that, in fact, they have scorch marks from the runway that indicate that what the Continental lawyer is saying is not true. That, in fact, the fire-there is no evidence of runway burn until much further on down the runway, when it would have hit that piece of the Continental Airlines plane.
So, we'll see how that argument plays out.
QUEST: Now, if-and it is a big if-it is a trail, the maximum sentence for the individuals concerned, if convicted, would be a term of imprisonment. Is anybody-let's just speculate, if one is allowed to do that? If they were convicted, I've read reports that a term of imprisonment is unlikely?
BITTERMANN: I would think so. For one thing, with the two Americans involved, they did not show up in court today. One sent a letter and said they might show up at some later date. The other, his lawyer said that, in fact, the didn't have a passport and couldn't travel.
The French employees were in court and they-well, they are all ex- employees I should say. The two of them from the EADS, or at least the forerunner of EADS, or Air Especial. And the gentleman that was involved with the certification of Concorde, worked for the aviation authority. They are now up in years. I mean, they are-and the fact is that sentencing and jail, I don't think is anything anybody really wants to do at this point.
QUEST: Right.
BITTERMANN: But who knows how it will turn out?
QUEST: Jim, a final, following on from what you have just said. The Americans who were not in court, was there any indication that they would not turn up for court? They would snub the court?
BITTERMANN: Well, the one lawyer-one of the Americans did send a letter through a lawyer that, in fact, said that he might come at some point down the line. So, it is possible that he would show up in court. Continental, of course, is represented. So the representation is there, but whether or not the actual physical people will be there, that is another question.
QUEST: Jim Bittermann, who is in Paris and will report on this trial, throughout its many months. Many thanks, Jim.
So, the markets and how they have traded. European markets notched up a third successive day of gains. Now, we mustn't underestimate this. Mining stocks did well. In fact, as metal prices rose Reardon (ph) to Anglo American, both up more than 3 percent in London. Banks were in demand, RBS up 3.7. Deutsche Bank more than 2 percent higher in Frankfurt. In fact, it was the best gains-not much to say, but I suppose it is one thing. The best gains of Frankfurt since the year began.
BP shares sank nearly 4 percent after the oil giant said output would fall slightly in the coming year, despite the sharp rise in core profit for the fourth quarter, at about $4.4 billion.
On the other side of the world, Australia took traders by surprise. The central bank left interest rates unchanged, after three consecutive increases. The Australian dollar lost more than 1 percent of its value against the U.S. currency.
To the markets in the United States that are open and doing business. Stocks on are very much building on previous rallies. Investors coming in on better-than-expected corporate results. And look at that, that is a nice rally. Over 1 percent gains, 102 gain, 10,288 for the Dow Jones. We'll have some analysis on why that is in just a moment or three.
You are up to date, the news headlines now. To bring you up to date on those, Fionnuala Sweeney.
(NEWS BREAK)
QUEST: When we come back in just a moment, this number is just simply staggering, nearly one in five are out of work, and there is no sign of the end to the recession. The country is Spain. It is suffering and it is doing worse than the rest of Europe. In a moment.
(COMMERCIAL BREAK)
QUEST: In Spain, the queue to sign on as an employee is longer than it has ever been. In January for the first time, the number of people out of work and claiming benefits, exceeded 4 million and 50,000; nearly 125, 000 people made fresh jobless claims. Earlier in the recession the construction industry accounted for a huge number of these people that were out of work. Now, the layoffs are coming thick and fast, and in many sectors, from services, manufacturing, obviously tourism at certain parts of (UNINTELLIGIBLE). If you put the official jobless unemployment rate, it is 18.8 percent, 19 percent. And that doesn't include the informal economy.
It is the highest in the European Union. The only country where the job situation is worse, perhaps, is Latvia. Unemployment is far from the only sign of deep distress in Spain. And remember this is one of Euro Zone's big four economies, that we are talking about.
Come with me and I will show you exactly, let's go to the library. The GDP still shrinking in Spain. GDP down a 0.3 percent in Q3. And interestingly, and worryingly, with this, the GDP forecast by the IMF is one of the only major countries in the revision of the World Economic Outlook, the WEO. Spain actually, in 2010, is worse. From a plus .1 to a minus .6. So Spain is not expected, it is actually expected to do worse this year than first thought. The mountain of debt that has been issued is huge. It is feared if Greece is looking dodgy then Spain is not far behind.
And to deal with this the government of Prime Minister Zapatero is having to create saving, it is having to do whatever it can by some $70 billion, to try and restore the fiscal imbalance.
Now, if you put it to where Spain lies within the European Union, look at these numbers. If you come back and I'll show you where Spain is and who is at the bottom of the EU league table when it comes to jobs. Including EU countries that aren't in the Euro Zone, Latvia suffers the most, 23 percent unemployment. Spain, including the 19.5 percent, those who aren't claiming unemployment benefits; Estonia, joblessness is over 15 percent, Slovakia and Ireland, both have rates of around 13 percent. Unemployment across the Euro Zone as a whole is at 10 percent, the first time it has hit double figures.
As a sign post to what is going on in an economy, unemployment is seen as a lagging indicator. Unemployment will reduce, jobs will be created, once there is evidence of a recession that is coming to an end. Job creation is one of the last factors to improve when recovery begins.
I asked Juan Somavia, the director general of the ILO, if he accepted that jobs would be the last to change.
(BEGIN VIDEO CLIP)
JUAN SOMAVIA, DIRECTOR-GENERAL ILO: What I'm saying is the same effort that went-the same creativity that went into saving banks, why don't we now put it into investment, job creation, saving jobs and creating jobs? Why not? We did it for the banks, why not do it for jobs and people who are the ones who that are most worried now with the crisis.
QUEST: When you talk about creativity and effort, governments would say, yes, well they are doing what they can to try and create jobs. So what more do you want them to do?
SOMAVIA: No, because you can't -it is not just about governments, you have to get the real economy moving again. So you need the banks to be lending much more than they do. You need the investors, who have reasonably risk averse to be able to also to go into the investment mood. Maybe governments can do something by generating some sort of a security and some sort of risk sharing, and some sort of assurance.
QUEST: Right. But what does the ILO want at the moment? What are you calling for?
SOMAVIA: We believe that there has to be an answer to the needs of the real economy. We want a productive solution. The productive solution that we are looking for, which is investment and job creation, is called the Global Jobs Pact. That was approved by the ILO in June. It has full support in the U.N. and the G20, in the business community. It is a good practical instrument that concentrates on job creation, on social protection for people, so they don't fall, on dialogue and social dialogue there is a lot of innovation and social dialogue within companies and within sectors. And making sure that this is not the moment to throw workers right out the window.
That is what the Global Jobs Pact is about. Many countries are utilizing it in their policy.
QUEST: What do you fear will happen if job creation is not made a priority? Because you are numbers, of the number of people out of work, particularly in youth unemployment, are worrying.
SOMAVIA: Look, I think that there is a sort of underlying social tension that expresses itself in different ways. But if the message is, look, we did everything possible to save the financial system because it was necessary and we all agreed with it. But we agreed because we believe that we did it in order to be able to be lending to the real economy and that is not happening. So, if we celebrate that we saved the financial system, that the stock market is going up, that maybe we are getting into a modicum of growth, but at the same time we say, but unfortunately jobs is going to take four or five years, I think that the message that you are sending out is in total conflict with what is going on. And people are going to say, yeah, but you know, you did it for banks. How can't you do it for jobs? How can it be that you don't have the imagination to do things that can reduce the time. So that is the political situation.
If it is not done, to answer you question, I think that there is going to be a reaction and particularly in the long-term, you are going to have a structural problem. So, the jobs issue is not just, you know, a discussion of what happens in an enterprise. It is now the global security problem, it is a global security, you know, systemic risk. And it is something which governments and business, and trade unions, and different stakeholders-this is what this forum is about-come together to say, look, we just can't let this happen. We have to have the capacity to have the same policy decisiveness that we apply to saving banks, to saving and creating jobs.
(END VIDEOTAPE)
QUEST: The issue, the macro economic issue of jobs. Now let's turn it back again to Spain. In the Madrid I'm joined by Jose Antonio Herce from the Spanish consultancy, Analysta Financerios (ph) International.
Sir, the situation facing Spain at the moment: Unemployment so high, budget deficit high, and spending cuts have to come about, how bad is it going to get?
JOSE ANTONIO HERCE, PARTNER, ECONOMICS DIRECTOR, AFI: Well, it is getting bad. I believe that this January, which has been awful in terms of unemployment, and in terms of (AUDIO GAP) employment destruction. It is but the first of three (AUDIO GAP). Unless we-until we will see destruction of employment and piling up of unemployment, we think that most probably by March, April perhaps, the unemployment -the employment destruction will bottom down, so that the number of people on jobs will kind of stabilize.
The thing is that how long will it take us to absorb those 4 million of unemployed people? And how long will it take us to see consumer spending and more turn over in firms? This is going to take a lot of-a lot of time.
QUEST: We'll have to leave it there, unfortunately, sir, we have a poor connection. I apologize for that. We do have a poor connection. We'll see if we re-establish the line.
My apologies. The modern wonders of telecommunications, also means sometimes things don't go quite according to plan.
We'll be back in just a moment. QUEST MEANS BUSINESS, the first real clues to the fall out of Toyota's safety recall. How is the competition cashing in? And of course, the old question, who knew what, and when? In a moment.
(COMMERCIAL BREAK)
QUEST: Welcome back.
It doesn't take a genius to work out recalling millions of cars and halting production of several models inevitably, invariably makes a dent in Toyota's sales. Now, for the first time we are getting some indication of how big the impact is so far.
Maggie Lake is in New York. Maggie, joins me now.
And the numbers that I have seen, I'm not going to steal your thunder, Maggie. But as it is, tell us what happened.
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Yes, as you said, no brainer for Toyota. They did see a decline so that the problems are having a direct impact already. And we should say it is just the beginning. It happened late in the month, so Toyota sales down 16 percent. Analysts were already expecting a decline of something in the area of 12 percent. It is a little worse than expected.
What is surprising and interesting is if you look at the rest of these numbers. Ford up 24 percent, that is a very nice gain. Although, if you dig beneath the numbers, Richard, which is my job to do for you; a lot of that coming from fleet and government buying. Retail sales to consumers actually down. And that number, although impressive, a little below forecasts. So a tad of caution there.
General Motors, though, pretty good story, up 14 percent. That was better than expected. They are coming out and raising their outlook for their seasonally adjusted annual rate. Nissan, also, double digit gain. Honda, with a slight decline.
A lot of people looking at all of this-go ahead.
QUEST: Oh, 24 percent? (AUDIO GAP)
(COMMERCIAL BREAK)
QUEST: Right, I am ably informed that we did pay the electricity bill, but the rubber band broke somewhere across the Atlantic, between Maggie and myself.
There is that music again, Maggie. There is that music. Come on, I was beating you up. I was beating you up on your vinegarish .
LAKE: Yes.
QUEST: . response to a 24 percent gain by Ford. Why does it matter whether it was fleets or consumers, except for the fact that fleets pay less?
LAKE: You are right, Richard. It is overall a gain, but everyone is looking at this particular number to see whether Toyota's problems are going to be Ford's gain. So, all I'm pointing out is that while the number is strong, it is not like all those people ran over from the Toyota dealership, straight over to Ford, and bought a Ford car. That's all. Ford does have a lot of good momentum behind it. But it is also interesting that GM which was lagging Ford, seems to be sort of getting a little bit of that momentum, too. That was my only point.
QUEST: All right. So, to what do we attribute these good numbers? From a weak base? Or I mean, because let's face it, Cash For Clunkers is gone. We saw the down turn. These numbers, my reading of them, earlier in the day, is they are not expected to be repeated.
LAKE: Well, I'm not sure about that, but it is important to note that January is usually a tough month, and so there are some seasonals here. But there, clearly you are seeing Ford and GM's effort to turn themselves around starting to pay off. Consumers are coming back. They are not completely dead. They did not go away after Cash for Clunkers was over. Can it continue? That is a big question and are they taking market share away from someone else? In other words, you have to look at, are overall sales going up? Or is somebody else just losing out, big time? That gives you a key about consumers.
I will say, Richard, one thing to watch a lot of Toyota's competitors are offering big rebates to lure customers in. So they might take a hit on profit, but you can expect maybe to see those sales numbers continue to go up.
QUEST: All right.
LAKE: Overall, auto analysts like this set of numbers.
QUEST: Don't touch anything, Maggie. We are broken enough tonight as it is without you sort of -without fiddling with anything. Maggie Lake.
I hesitate to do this, but let's see what happens. Do we have the Big Board? To see what the Big Board and how it is trading. Up nearly 1 percent.
Oh, no! That was - I promise you, it is one of those nights.
The Big Board, the market is up more than 100 points, up 99, a gain of 0.9 at 10,285, for the Dow Jones industrials.
One of those evenings, we are glad you are with us, nonetheless.
Good evening to you, I'm Richard Quest. QUEST MEANS BUSINESS, this is CNN.
Continuing a discussion on the question of motor vehicles and Toyota, which is facing the financial consequences of its global recall over problems with gas pedals. In the last hour it has emerged that Toyota sales did slump by 16 percent, as we were talking about with Maggie. That won't come as a surprise to the company's top executives, obviously. Top management spoke on Tuesday and admitted their business could be in trouble. CNN's Kyung Lah was at a news conference in Tokyo.
(BEGIN VIDEOTAPE)
KYUNG LAH, CNN INT'L. CORRESPONDENT: Toyota continuing to roll out the publicity machine. Its latest stop, Japan. An executive vice president in charge of quality control fielded reporter questions in a press conference format; the very first executive to do so. Speaking to reporters and fielding reporters questions.
This executive said that the reason why Toyota waited so long to speak to the media, more than a week, in fact, was because the company wanted to make sure they could have a fix to offer before speaking to the media. But they also wanted to make sure that they announced the recall quickly. So at risk of consumer confusion, but the also promptly wanted to notify drivers.
All of this, though, is going to cost Toyota. Toyota's executive saying that in past recalls what they have seen in the first month is about a 20 percent drop in sales, but because this is so global and this has been so extensive, the millions of people who are affected, they simply can't predict the financial damage.
(BEGIN VIDEO CLIP)
SHINICHI SASAKI, EXEC. VP TOYOTA MOTOR (through translator): This is the first case we have faced when we have caused such worry for the customer. We think that the impact is going to be a little bit bigger.
(END VIDEO CLIP)
LAH: Toyota, though, was quick to follow up by saying they are not focusing on new sales they are concentrating on keeping customers safe and happy. As far as whether or not they did compromise quality in its quest to become the largest automaker, the world's number one automaker, Toyota says that simply did not happen.
Kyung Lah, CNN, Tokyo.
(END VIDEOTAPE)
QUEST: We need to look more into this, because even if Toyota's publicity drive stems the drop in customer confidence, the status of the world's largest carmaker is seriously in doubt.
Look at these numbers for you. Toyota has made great inroads into the U.S. auto market in the past decade. But its market share gains had already started to level off even before the latest recalls. Go back to the beginning, of course, where you're just down some 10 percent, at 2002. A very sharp rise right the way through the decades.
Its latest catastrophe is that other car makers poised to benefit. And if Toyota's share falls this year, as one suspects it will do, simply on dint of numbers that we're seeing so far, that will be the first time since the mid-1990s that its share has actually dropped.
I think that graph tells a very interesting story, particularly the leveling off on what we can accept -- expect, perhaps, to see next year.
Toyota admits it -- it has been slow to respond to the problems. It needs to speed things up. The general manager of Toyota U.K. spoke to our Jim Boulden, who asked him how they plan to fix the pedal problem.
(BEGIN VIDEOTAPE)
SCOTT BROWNLEE, TOYOTA UK: It's a relatively simple lever (INAUDIBLE) this is one which pivots in here. And the solution is something which we will -- will -- a metal bar was precision cut, which we will set into here, which should reduce the likelihood of any rubbing and, also, the secondary effect of making the spring a little bit stronger so the return element would be faster.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: In the U.S., there's been, obviously, documented cases of accidents, deaths. That has not been the case in Europe.
With a difference or what would you say about the European experience?
BROWNLEE: We have -- we've got no reported instances of any accidents as a result of a sticking throttle. We have a very small number of -- of cases where it was reported. I can't really speak why that's a difference between the U.S. (INAUDIBLE) when we think of numbers. What does seem to be clear, though, is that it's wear related and also moisture or condensation related. So the older the car, there's more miles it's got, it seems to come more in the -- the wintertime.
BOULDEN: So we have the recall for the pedal, 1.8 million or so in Europe.
How many do you think will be in the U.K.?
BROWNLEE: We're not entirely sure just yet. We're looking for those big numbers. But we think somewhere between 200,000 to 300,000 as a total likely one, even within that number, we hope very quickly to re -- to narrow that down.
BOULDEN: In the U.S. last year, Toyota also did a -- recalled some five million cars because of floor mats. You didn't do that here in Europe.
What's the difference?
BROWNLEE: Yes, we'd the have a recall for that here. But the main difference is that the mats that we sell here in the U.K. and in Europe are manufactured through genuine parts and the crucial difference is we have some securing lugs on the floor so they don't slide forward.
BOULDEN: So Toyota is convinced that they've got the fix and they know they can fix this. So fixing the physical side is one thing. Fixing the brand is something else. I mean the damage to the reputation is -- has been quite strong just in the last week alone.
What are you going to do to fix that?
BROWNLEE: The crucial thing is we want to reassure everybody we take it very seriously and safety is of absolute paramount impatience. And that's why we've been communicating as openly as we can at every stage and trying to reassure people that we understand the problem, we've understood effects and we're going to get (INAUDIBLE) as soon as possible and fix their car.
BOULDEN: And so the -- the parts for the -- the fix won't come from here -- from the U.K.?
So it's going to take a bit longer for customers here to get a fix?
BROWNLEE: Yes, because it's one of the differences where they'll -- they'll have to be shipped in from (INAUDIBLE) we'll get them through Customs and then we get them out to the dealers. But I think we're -- we're talking a matter of days before we hope to have the first batches of components, then we can start fixing the most (INAUDIBLE) cases. And obviously, that question, then, of identifying the customers, which maybe two weeks, but a couple, three weeks until we get those names and addresses.
BOULDEN: It did seem to take Toyota a while to come out with the statements -- the on camera statements of -- the sort of putting themselves forward.
Why was that?
What -- what were you told by Tokyo?
You were told not to say anything for a while.
What was the scenario (INAUDIBLE)?
BROWNLEE: No, in -- in truth, I think we -- we've tried to see what we can when we could.
BOULDEN: It takes years to build up a reputation and it can take days to destroy one.
Where do you think Toyota's reputation is now?
And what are you going to have to do in the next couple of months, if not years, to -- to rebuild that brand?
BROWNLEE: I have to say, I think we -- we concentrate on what's always been true about the brand and what's been the proposition. It's about quality and reliability. We assure people that we care about them, we care about their business, we care about their safety and we're doing everything we can to address those issues. Time will be the judge. And hopefully, they will judge us and see that we did everything we could as fast as we could.
(END VIDEO TAPE)
QUEST: An honest assessment from the head of Toyota U.K.
In a moment, the prime minister of Thailand, who says his economy can grow by 4 percent this year.
The question is, what happens after that?
ABHISIT VEJJAJIVA, THAI PRIME MINISTER: I'm very afraid that...
(COMMERCIAL BREAK)
QUEST: Welcome back. Thailand's economy is in much better shape than it was a year ago. Political interests back then and protests brought the country to a standstill.
Thousands of passengers were stranded at Bangkok's main airport and the unrest caused real damage to the GDP, as you might have expected.
The economy has rebounded strongly since then, surging to growth in the final three months of 2009. The government is saying that for the whole of last year, the contraction probably came in at less than 3 percent. The risks of more shocks hasn't gone away, with more political protests on the cards.
I spoke to the prime minister of Thailand in Davos last week and asked him if he really thought growth of 4 percent was possible this year.
(BEGIN VIDEOTAPE)
ABHISIT VEJJAJIVA, THAI PRIME MINISTER: I think last year, after the first quarter, when we had a 7.1 percent contraction, people were very afraid that the recession would deepen, that there would be massive unemployment. But I think by -- at the end, the figure for last year will be close to something like minus 3.
So getting back to 4 percent, I think, is respectable. And it's a piece that we can manage.
QUEST: Positioned where you are, one -- and at a moment of re- balancing an economy, where do you look most for the future growth?
I mean, I hesitate to use the China word, because it seems as if, particularly here at Davos, everybody seems to regard China as the panacea that's going to solve all our ills in one go.
VEJJAJIVA: Well, the size of China is something that you can not not notice, you know. You have to notice what is going on there. And for Thailand, we identify areas where we think we have further potential for growth. One is agriculture -- food. We want to contribute to the -- the food security solution for -- for the world, continue to be big exporters. We want to increase productivity, increase the quality, increase the values that we add to our agricultural products.
The creative industry initiative is brought in because we know we shouldn't rely on low costs, because we've got lower-cost competitors -- big competitors in some key industries. We want to build on the tourism and service industry where we feel we have an advantage.
QUEST: Do you believe that Thailand has suitably put aside the governmental disruption, the -- the credibility issues that came about as a result of the coups and, ultimately, even right the way down through to the -- to the airport being taken over?
VEJJAJIVA: Well, we've -- we've been through a number of incidents that have clearly affected confidence. But last year, I think we proved that whatever political challenges we have -- and we still have a number of challenges still -- the government can get down to the business of governing, turn the economy around, initiate new policies, address the concerns of rural people, the poor, of our children and that things are functioning. And -- and...
QUEST: You keep talking...
VEJJAJIVA: And -- and the ultimate judge is the figures that we see - - are the figures that we see, particularly in terms of investment applications for tax -- tax privileges. That was up last year by 60 percent.
QUEST: You keep talking about the challenges of the rural economy.
But it was the challenges of the rural economy and the split politically between the urban and the rural that led to half the problems in the first place.
VEJJAJIVA: Well, this is exactly why we are proving that a government like ours is going to work for all Thais. Particularly, we've addressed the issue of the rural concerns on farm prices, farm income. But at the same time we are building our -- our -- our industries in urban areas.
Also, we're here to prove that we work for all Thais. And that's the best way to heal the rift.
QUEST: The political opposition might not necessarily see it that way.
VEJJAJIVA: Well, that's -- they're entitled to their views. And the difference with this government is we allow them to air their views -- allow them political space so long as they do not break the law.
QUEST: That break -- the definition of breaking the law is a -- is a...
VEJJAJIVA: Well, rioting is breaking the law.
QUEST: But...
VEJJAJIVA: Peaceful demonstrations do not.
QUEST: Yes. But as you're aware, it's often a moveable feast in terms of one man's riot is another man's protest.
VEJJAJIVA: No, no, no. I think -- I think the lines are clear. We've had many demonstrations last year. When they were peaceful, we allowed them to take place. When things got out of hand, that was in April and rioting began -- you know, with violence, with -- with armed demonstrators. We have to restore order.
QUEST: And as for the former prime minister?
VEJJAJIVA: Well, he's outside the country.
QUEST: Is it time to -- for olive branches to be offered?
Is it time to...
VEJJAJIVA: Well, it's time for him to accept, first, the consequences of his action, respect our system, respect the courts and then we will talk about reaching out and see what solutions might be offered.
(END VIDEOTAPE)
QUEST: The prime minister of Thailand.
Tomorrow on this program, I'll be speaking to Queen Rania of Jordan about her education initiative -- an extensive discussion and also fascinating about how her majesty sees the role of business when it's not paying lip service, but actually making a real constructive contribution to doing social good. That's on tomorrow's QUEST MEANS BUSINESS.
Now, if -- the one thing I do know for a fact, there was a lot of snow around in -- in Europe, at the moment. In fact, there's snow, snow and more snow.
Guillermo is at the World Weather Center.
Actually, before we -- we sort of get into the nitty-gritty...
GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes?
QUEST: ...of it, do you ski?
ARDUINO: Yes, I do. I don't snowboard, I ski. I like skiing.
QUEST: Well, it's a -- (INAUDIBLE) snowboard.
ARDUINO: That's for young kids, you know?
QUEST: I was about to say, come on, Guillermo, I mean, you know, you're younger than I am, but snowboarding?
ARDUINO: By two years, maybe?
One year-and-a-half?
Now, Richard, don't you think that skiing is very elegant?
It is really elegant when you see the -- the drawing on the snow?
QUEST: Yes. I -- I think some viewers may think after my efforts last week, elegance wasn't the first word that came to their mind.
All right, Guillermo, tell me how much snow there's going to be.
Where is it going to be?
ARDUINO: It's going to be especially in Switzerland. I actually have a couple of pictures that I'm going to show you. But we are dealing with a lot of snow here into the Baltics. And in Poland and Germany, again, listen to the cities where we're getting snow. And remember, I've been talking about them for weeks now.
Leipzig in Eastern Germany; Hamburg; Hanover; Gutterschloe (ph); Berlin; Copenhagen here, and getting a lot of snow, Bremen in Germany again; Frankfurt; Dresden. And then we have rain in places like Mannheim, Charles de Gaulle. Over here, we saw snow in Luxembourg and we're going to see some more rain showers, I think.
And we're getting the impact of this system, that it's dipping down and it's bringing the rain into France.
So, one picture, Belmus (ph) in Lithuania with a lot of snow and, of course, the delays and cancellations that we saw in the capital of Lithuania. And we are going to see some more snow. Perhaps there will be a little bit of a break, but then we get this front again into the area and we're going to get more snow.
Turkey, you're coming out of the woods for a little bit, but. You're going to see some more storms there. Look at this beautiful picture of Switzerland. So this is what I'm talking about. I would like to be there. I think that's sort of walking more than skiing.
But we're going to see a lot of snow in the vicinity of Davos again and now into Austria. So Geneva is going to see, also, some significant snow on the other side of the country.
But compared to the east here, Poland, in Sweden -- I went to the observations. I got a list of all the airports reporting what's going on. Sweden -- it's all snow from top to bottom. I mean there's no exception. And I wanted to take note there (INAUDIBLE) assumed, for instance. But I said it will be endless.
Copenhagen, you get to see some winds, also, along with it. Zurich and Vienna, as I was saying; in Munich, more snow; Paris, the chance of snow. I think it's going to be mostly rain and windy conditions. And Brussels also with some unstable weather conditions.
And Iberia looking OK. Italy, to the south, is where you will see some more winds. And Berlin, once again, you will see more snow.
Now this low that caused floods in the Canary Islands, it's going to bring some significant weather into Iberia, both in -- in Portugal and in Spain with this -- heavy rain, strong winds. And, also, in northern parts here of Morocco and -- and Algeria, we will see inclement weather conditions there. No doubt about it.
Temperature wise, I must say that if we don't take into account the wind, we're not doing that poorly. Berlin, zero; London, five degrees; Madrid there stands out at 15 degrees. So that's what we can expect.
And all Richard's viewers that are -- take some time and go to Polynesia, to the Cook Islands, this system, it's a significant cycle and even though it looks as though it's going toward Bora Bora directly, we think that actually it's going to turn down and go in between Bradotunga (ph), Tahiti and Bora Bora. We hope so. I'll keep you posted.
Stay tuned.
More after the break.
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QUEST: Twenty years ago today, forget Sergeant Pepper taught the band to play. Instead, American fast food made a dramatic entrance to the Russian market. McDonald's took what was then the Soviet Union by storm -- an iconic moment in capitalism, but just one more milestone in the history of the golden arches.
The golden arches -- now, love them or hate them, you've got to admire them. I think that's probably the best way to look at it. 1948, the first store opens in California. Dick and Mac McDonald open their first burger joint. It was in San Bernardino. There were nine items on the menu, including hamburgers, cheeseburgers, potato chips, coffees. The hamburgers cost 15 cents.
Now, the McDonald brothers were not the ones responsible for turning it into the chain. That was a man called Ray Kroc, who then followed on and took the -- the idea that they did.
By 10 years on, 1958, 100 million hamburgers have been sold and the -- by now, of course, it's got its second restaurant in Illinois. Things are moving particularly fast and furious.
By 1965, an initial public offering. The shares are listed at $22.50 each. Now, there are 700. By 1965, there are 700 McDonald's stores in the United States.
In 1967, just five years later, the company goes global, adds stores in Canada and Puerto Rico.
Today, McDonald's restaurants are in 118 countries.
Now, if we look and see two decades since Russia took its first bite. McDonald's has survived everything from health concerns to a global recession.
CNN's Matthew Chance sat down with the chief executive, Jim Skinner, and asked him if the international market -- the -- remember, that international market that they've been in since the late 1960s is now more important, perhaps, than the United States.
(BEGIN VIDEOTAPE)
JIM SKINNER, CEO, MCDONALD'S: It's very important, the international markets. You know, we have -- more than half of our restaurants are outside the United States. But let's not forget, the United States has 14,000 McDonald's. And we're 85 percent franchised there. And we're 80 percent franchised around the world.
The -- as I like to say, the United States is still the big dog in the pound.
MATTHEW CHANCE, CNN CORRESPONDENT: But there -- there has been a drop in sales in those McDonald's outlets in the United States, hasn't there?
I think it was down .1 percent in new -- new restaurants opened in the past 13 months, according to the figures I've looked at.
What's your plan to turn those figures around?
SKINNER: Well, first of all, we -- we have to -- we have to look at where we started. The United States has had seven consecutive years of same store sales growth. They had same store sales growth in 2009 to almost 3 percent. And those figures that everybody is so happy to state about the fact that there might be a downturn are just not factual.
CHANCE: You don't get the sense, though, that the -- the McDonald's product in the United States has kind of fallen out of favor with, perhaps, more health-conscious consumers, that it's not fashionable anymore to eat at McDonald's?
SKINNER: Absolutely not. People are not -- they're -- they're trading into McDonald's. The guest count growth in new visits has grown every one of those seven years, including last year, because the everyday affordability and value represented at McDonald's across the menu, the choice on the menu, all of those things have -- have -- have, on the contrary, kept us fashionable.
CHANCE: You've made significant changes, though, to the claims of products that McDonald's sell. I mean I've -- I've noticed over the past five or 10 years, the salads, the -- the other things that have come on the menu.
Has that been transferred overseas, as well?
SKINNER: Yes.
CHANCE: Do you -- do you sense there is a greater health consciousness?
SKINNER: Well, I think what...
CHANCE: (INAUDIBLE).
SKINNER: ...what you're describing is the fact that we expanded the choices on the menu. One of my goals is -- as the CEO of the company was to -- to do a better job around what we call balance the active lifestyles so that we have choices on the menu, Matthew, that you can come in and then you decide what it is you want to eat that fits your lifestyle. And it's about choke. It's not about changing the food, it's about adding items on the menu that make you feel better.
So whether it's a -- a premium salad or whether it's a fruit for the kids, fruit and Happy Meals and the fruit bags or vegetables or the kinds of things that people feel good about eating. Many people come and they feel good about eating a Big Mac. We're not changing that.
CHANCE: It -- it's still much more expensive, though, at McDonald's restaurants, isn't it, to -- to eat a salad than it is to eat a Big Mac?
In this restaurant here, it's, what, 70 rubles, a couple of dollars for -- for a Big Mac. It's $3.50 for a salad.
SKINNER: Yes. Well, premium salads are a value offering, however, at McDonald's, compared to every place else that you would go to eat a sour -- salad. And I think the idea on the value on the menu, we have value across the menu, the -- all the way from the dollar -- dollar menu to premium sandwiches and premium salads. We introduced angus burger. That's a $4 hamburger. We've introduced some big sandwiches here in Europe, which -- which the customers favor.
And they are a value offering, as well, for the price point that -- that you pay for those. And it's just a matter of choosing what it is you want to eat.
(END VIDEO TAPE)
QUEST: The chief executive of McDonald's talking to Matthew Chance in Moscow.
Now, one other news to update you with. Another food giant tonight, Kraft, has won its takeover of British confectionary, Cadbury. Seventy-one percent of shareholders backed the deal, worth more than $18 billion. So Kraft can guarantee control if it passes 75 percent, it can delist the shares from the London Stock Exchange.
Cadbury's workers were descending on London to highlight their opposition to the deal. Too little, too late, if you ask me. Outside parliament, they may have protested, but Cad -- but Kraft says it's looking forward to welcoming them into the Kraft enlarged family.
When we come back, a Profitable Moment.
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QUEST: Tonight's Profitable Moment.
The jobless numbers in Spain are horrible -- four million out of work and according to Eurostat, 44 percent of youngsters without jobs. Spain economy is still in recession and one of those Eurozone countries causing a concern. High deficit spending can't continue. The Spanish prime minister knows he will soon face the wrath of markets, like his counterpart in Athens.
Talking of Greece, the P.M. there has been convincing politicians of the need for deep cuts. Tomorrow, the European Commission reviews the plans of the Greek government and is likely to be called for further consolidation. There are large swaths of the European economy that remain in deep trouble. Rioting stock markets last year merely masked the fact things are not going well at the moment.
I don't want to sound like Dr. Doom and Gloom all the time, but nor do I want to sound Pollyanna and paint a rosy picture. Tonight in Spain, there are four million people who actually might agree with me.
And that's QUEST MEANS BUSINESS.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I do hope it's profitable.
"AMANPOUR" is next, after your news headlines.
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