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Quest Means Business
Carillion Collapse Puts Thousands of Jobs at Risk; 77 Hurt as Floor Collapses at Jakarta Stock Exchange; Five Days until U.S. Government Runs out of Money; Trump Presses on with Deregulation Agenda; Iran Releases 440 Anti-Government Protesters; SPD Leaders Want New Coalition with Merkel; Retail CEOs Say Physical Stores Are Not Dead; Luxury Watch Fair Begins in Geneva; Tide Responds after Teenagers Eat Laundry Pods; "Impossible Burger" Targets Meat Eaters. Aired 4-5p ET
Aired January 15, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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RICHARD QUEST, CNN HOST (voice-over): No trading on Wall Street, marking the Martin Luther King holiday, spectacular early evening skyline from New
York. Europe did have trading. I'll update you with those numbers later in the program.
Today it is Monday, it's the 15th of January. Tonight, a giant corporate failure puts pressure on the British government. It's a calamity over
Carillion.
Terror on the stock exchange floor. Dozens are hurt after the collapse in Jakarta.
And Democrats in Washington threaten to shut down the government as Donald Trump reaches one year in office.
I'm Richard Quest, live in the world's financial capital, New York City, where I mean business.
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QUEST: Good evening. From school meals to spy centers, large swaths of services in the British public sector are run by one company and today that
company collapsed. It is Carillion which operates around the world and is going into liquidation after its lenders refused to keep pumping in more
money to save it.
So let me show you exactly what happened with Carillion. Construction is at the heart of this company, which is at the heart of Britain. In the
U.K., 19,000 jobs are at risk. And the projects that Carillion's working on include a $550 million redevelopment of the Battersea power station
here, which is a London landmark.
But let's spread out further, turn the crane and you see, there are big implications for the British government because Carillion is also
responsible for critical public services and schools and hospitals, including 32,000 daily school meals.
And GCHQ, which carries out maintenance, that the British secret eavesdropping center. One more, even more for the cranes to turn, there's
the international fallout, employing 43,000 people worldwide and with current projects in Canada to the Middle East, whereas the contractor on
the Abu Dhabi campus for New York University.
You get an idea of just how big, important and yet systemically relevant this company is.
So why did it collapse?
CNN's Bianca Nobilo reports from London.
(BEGIN VIDEOTAPE)
BIANCA NOBILO, CNN CORRESPONDENT: Carillion is the second largest construction company in the U.K. Its contracts extend to hospitals,
schools, prisons, even GCHQ, the intelligence service. So it affects all aspects of the public services in the U.K.
There's also concerns over the fact that Carillion employs 43,000 people worldwide. About 20,000 of those within the U.K.
What happens to those people's jobs?
We don't yet know. There's also concern over the money that Carillion owes to smaller firms and whether or not they'll be able to pay all their bills.
If they don't receive the funds that they were expecting.
It also raises question marks about corporate culture in the U.K. where there are reports that the chief executives continued to receive their
bonuses when the company was in trouble.
It's also an opportunity for the opposition party, the Labour Party in the U.K., to highlight the differences between them and Theresa May's
government because Jeremy Corbyn has been pushing for wider nationalization of public services in the U.K. This cell site is a perfect example,
whereas the government is more in favor of privatizing some of the public sector.
So this could potentially create more problems for the prime minister -- Bianca Nobilo, CNN, London.
(END VIDEOTAPE)
QUEST: Let's find out exactly the situation. Rehana Azam is the national secretary for the public service at the GMB Union and Rudi Klein is the
chief executive of the Specialist Engineering Contractors Group.
You both join me from London and what we aim to, in this discussion, is to find out the reasons that you see them and the ramifications.
So start, Rehana, as I'm -- what do you see as the reasons why a company that had had so many solid government contracts but had profits warnings
now collapsed?
REHANA AZAM, GMB UNION: I mean, I think that's the key thing here is this was a solid company but, in the summer of 2017, there were three profit
warnings and what the government did is rather than take notice of a company that potentially was in difficulties, what the government did was
decided --
[16:05:00]
AZAM: -- to award them further contracts.
So our question to the British government is, why did you feel it was necessary to continue to award contracts to a company that was clearly
having problems?
And the consequences, as the announcement is today, you know, the creditors haven't been able to come up with a package. The company is now in
liquidation and as your news piece has just said, 20,000 jobs (INAUDIBLE) but more importantly, there are tens of thousands if not hundreds and
thousands of jobs in the supply chains that are also at risk as well.
QUEST: And that takes me to Rudi Klein, the chief executive for Specialist Engineering Contractors Group.
Your members which are in many cases, the supply chain and the ripple effects that go further out from the main contractor, they are going to
feel the effect from loss contracts and payments for work that may not get -- they may not get any payment for.
RUDI KLEIN, SPECIALIST ENGINEERING CONTRACTORS GROUP: Yes, that's absolutely. I think the industry is going to be seriously damaged as a
result of this. Everybody thinks that Carillion does some if not all the work.
In fact, Carillion outsources absolutely everything. That outsourcing goes through many layers of subcontracting. You've got three or four, maybe
five tiers of subcontracting. So the risk here is that you've got subcontractors, possibly going down, bringing with them also sub-
subcontractors, and on it goes.
QUEST: OK, so what's the answer?
First of all who or should -- let's ask you, first, Rehana, should the government, should the British government, have poured more good money
arguably after bad and rescued this firm?
AZAM: Well, absolutely not, because when the company was in the difficulty it was, the government should have stepped in and started to make sure that
vital services were protected. They, unfortunately, failed in their duty to do that.
And that's why today what we've found is whilst the government is stepping in and putting a bit of a sticking plaster, we need a proper long-term
solution and the GMB trades union is saying, quite simply, public services should be delivered by public services and within the public ownership.
And what we're saying is for every profit that's been made, that is jobs, that is services being taken away from our communities.
QUEST: Right, but, Rudi Klein, you wouldn't necessarily agree with that, would you, because what Rehana is saying is keep it all in the public
sector; whereas your members are in the private sector.
KLEIN: Well, that's right. They are. And I'm -- at this stage I'm reluctant, obviously, to get involved in that debate. My concern is, and I
think Rehana made this point, that why is it that we are still letting these big infrastructure projects, the companies, that are
undercapitalized. Carillion has been undercapitalized for years. This problem is nothing new. It just got worse.
So why are we doing that?
And I think the government needs a massive rethink on actually how it procures construction work, whether it should continue to procure work from
these big, large, undercapitalized companies.
QUEST: But, Rudi, on that point, the projects that they are involved in, school meals, construction, (INAUDIBLE) being taken back into public works.
But the projects, they are projects that they are still -- they are functions that still have to take place.
So moving forward, how do we rescue -- how do you, how does the British government, rescue this situation?
KLEIN: Well, they apparently do have plans, so I'm told. But one of the things they'll be looking at is actually to see how much they can take in-
house. That would be the first thing. So things like catering, those kinds of services, may be taken in-house.
I think the second thing is they're now going to be looking at the options for other companies to take over some of this work. There's still capacity
in industry, I think, to do that.
QUEST: Tonight, Rehana, can you give any hope to your 20,000 or 30,000 members, although your members though are working for Carillion in the
U.K.?
AZAM: Well, absolutely. Our first and foremost is to retain our public services and make sure that the government, who have a duty to deliver
those services, continue to do that. So our message to our members is that we are fighting to retain jobs in the public services and keep those
contracts going.
QUEST: To you both, thank you for coming on this evening, Late in the evening in the U.K., I know. Thank you, I appreciate it, talking about
this important story. I appreciate it.
As we continue now on the question of Airbus. Now Airbus is warning that if a single deal falls through, it will have to end its A380 Superjumbo
program. Now this is the A380. The plane which Carries more passengers than any other, can actually carry more than up to 880 of the planes.
But the future is depending on a decision --
[16:10:00]
QUEST: -- by Emirates for the survival of the double-decker airline. What the problem, of course, is, that most airlines now are preferring instead
to go for planes like this. This is in High Ned Airlines Culver -- colors. It is the Boeing 787-8 or -9, which carries fewer passengers but can carry
them further and at a lower price.
Don't be fooled by the size difference here; actually this is considerably bigger but this is arguably much more fuel efficient. As they've gone head
to head, well, there's a silver lining. Airbus did beat Boeing in terms of orders last year.
However, until new orders airbus wins but in terms of planes delivered, Boeing wins. Boeing delivered more planes. Now when it comes to the 380,
last year Tim Clark told -- of Emirates said they'd keep flying the 380 as long as possible.
(BEGIN VIDEO CLIP)
SIR TIM CLARK, EMIRATES: We will continue flying the 380 for as long as we can. It is an airplane that has incredible marketing pull. It's extremely
popular with our passengers wherever we place it. I mentioned Auckland on the 380.
Who would have ever thought that a 380 going to Auckland daily would ever pass muster with regard to trip economics?
But it certainly does. So we will want to sustain that and keep it going as long as possible.
(END VIDEO CLIP)
QUEST: And, of course, you'll be aware that since that Airbus did -- sorry -- Emirates did actually choose to buy the 787 over the 380, but now they
are negotiating between the two, Airbus and Emirates, over a renewed deal.
The main European bosses, the Euro bosses, they finished in the red. The FTSE was down a fraction as the collapse of Carillion hit confidence. The
DAX in Frankfurt lost a third of a percent and the euro strengthened against the dollar. That makes European exports less advantageous.
Dozens of people were hurt in the Indonesian stock exchange in Jakarta after a mezzanine floor collapsed in the middle of the trading day. Now,
when you take a look at these pictures, it is extraordinary and amazing, thank God, that no one was killed.
CNN's Lynda Kinkade has more.
(BEGIN VIDEOTAPE)
LYNDA KINKADE, CNN CORRESPONDENT: (voice-over): Terrifying moments in Jakarta at the Indonesian stock exchange as a floor collapses, sending
people plummeting. No one was killed but dozens were injured and are being treated at local hospitals.
UNIDENTIFIED FEMALE: One victim that suffered from a severe bleeding, he went on to surgery, while six others that suffered from a fractured wound
will be scheduled for a surgery tonight and tomorrow.
KINKADE (voice-over): Around 12:30 pm local time, a hallway between two buildings suddenly gave way. People fell to the lobby below, where
visitors often gather to buy coffee and snacks. Witnesses say the lobby was crowded at the time of the collapse.
Not only were people just finishing lunch but dozens of university students were visiting the stock exchange and were reportedly among those injured.
UNIDENTIFIED MALE (through translator): The roof of the first floor collapsed onto the ground floor. There might be a few people who are
injured, like the receptionists and the people who were hanging out in Starbucks. But I didn't see any dead. Looks like they were injured and
unconscious.
KINKADE (voice-over): A scene in Indonesia correspondent reposted that after the collapse the stock exchange director made an announcement through
a loudspeaker for everyone to evacuate. The building where the incident happened houses both the Indonesian stock exchange as well as the World
Bank's Indonesia office.
Authorities say the incident is not terror related.
UNIDENTIFIED MALE (through translator): We can confirm that this incident was not caused by explosive material.
KINKADE (voice-over): The stock exchange resumed trading for the remainder of the day while the cause of the collapse is under investigation -- Lynda
Kinkade, CNN.
(END VIDEOTAPE)
QUEST: As we continue tonight, the U.S. government is quickly running out of cash. Five days to go. And the Democrats are talking tough. They want
the White House to compromise or they say they will force a shutdown of the government -- after the break.
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QUEST: As we approach the one-year anniversary of Donald Trump's inauguration, all this week, we're going to be examining here on QUEST
MEANS BUSINESS the cornerstones of his economic overhaul.
And it really does come down to deregulation. Donald Trump, when he came into power, promised to cut two regulations for every new regulation that
he brought in.
Well, how successful has he been in that way?
It was absolutely fundamental in the first days of his administration. The White House says so far he has cut 22 regulations for every new one.
Massive, massive deregulations. And thousands more have been delayed or withdrawn.
It's made the chief executives very happy indeed. For instance, every year, the business roundtable asks members, what are the biggest cost
pressures that their companies face?
And it's always been regulatory costs, regulatory costs, regulatory -- until last year, when it was for the first time in six years, it was labor
costs instead.
They say this shift creates confidence in the economy and you need to look no further than the Dow Jones industrials, which, as you know, because
we're here every night, chatting with other, has pushed it to record highs where it's ended all last week. But this deregulation is about much more
than just the stock market.
Look at the areas, the lists targeted in the first year, everything from clean power and clean water, arbitration laws, borrowing defense laws,
pharmas, fair practice rules, on and on, firearms prohibitions, home mortgage disclosure, net neutrality.
Tweaking all of these rules has transformed the U.S. economy, arguably and economists are divided, whether is harms or helps. But we can say without
fear of contradiction this is an economic overhaul right under our nose and if the president's believed, it's only just getting started.
Democrats may soon throw a wrench in the plans. The government shutdown is looming on Friday and the Democratic Senator Coons telling us his party
will not vote to extend government funding unless the White House compromises.
(BEGIN VIDEO CLIP)
SEN. CHRIS COONS (D-DEL.), MEMBER, FOREIGN RELATIONS COMMITTEE AND JUDICIARY COMMITTEE: We will not fund the government without a DACA deal.
The challenge is to make it clear to the American people this is not just about immigration. It's also about CHIP, it's also about community health
centers, it's about response to hurricanes.
The Republican majority and the Republican president, to put a very sharp point on it, have failed to come up with a way that we can fund the
government and address the vital needs of states and territories, of families and children all over this country.
(END VIDEO CLIP)
QUEST: Phil Mattingly is on Capitol Hill as the first year anniversary comes up.
Phil, you just heard me talking about deregulation and now the budget shutdown. Let's just stick with deregulation for the second. This is,
over the course of the week, we're going to go into it industry by industry and get details. But this is a shift that is taking place almost by
stealth.
First off in the White House, with executive orders, now cabinet secretaries in individual departments are deregulating the U.S. economy
pretty much under everybody's nose.
PHIL MATTINGLY, CNN CORRESPONDENT: Yes, look, I think for as chaotic as the Trump administration has been, discombobulated maybe critics would call
it, on this area specifically they've been laser focused.
And you laid it out perfectly, obviously the president can do things with his own pen via executive orders. But you can't overstate the importance
of the very rock-ribbed, conservative technocrats that are running the agencies that make or kind of --
[16:20:00]
MATTINGLY: -- disband all of these rules.
You also have on Capitol Hill Republicans control the House, Republicans control the Senate, Republicans, ideologically, are aligned with the idea
of cutting back regulation, letting the free market reign, in their words.
They have even worked systemically through the process to cut back as many of the Obama administration's regulations throughout the agencies,
throughout the issue areas that they possibly can.
Now there are limits to what they can actually do, timelines to how far back they can actually go in terms of regulations they're going to cut,
particularly if they don't have Democratic support in the Senate.
But make no mistake about it, for all of the legislative failures and follies of his first years in office, when it comes to cutting back
regulations, it has been a massive success if that's what you're looking for, if that's what you believe drives the economy.
QUEST: Right. Now let's stay with that idea without making party political, as you rightly point out. Let's just stay with this idea.
Are they going back just to a, if you like, the status quo ante from Obama just before he came in?
Or are they rolling back even before, down to the Bush years, the Reagan years and further back?
MATTINGLY: They're going further back. I think there would be no limit to how far back they want to go because the way that -- and, look, Republicans
are not anti-regulation but there's no question about it. There's a state of mind in the Obama administration, I think more importantly in the wake
of the financial crisis, there was just a massive pendulum swing about what people thought the role of regulation played in markets. What people
thought the role of regulation played in business.
That pendulum is now swinging back and it's swinging back hard. And I think when you look at what's happening at the EPA, when you look at what's
happening at the Department of Energy, they're moving further if they can. Again, there are limits to what they can do here on Capitol Hill.
They're moving further back than even the Bush administration was, to some degree the Reagan administration. That's kind of a driving economic theory
right now that's kind of pervasive in the Republican Party in Washington. And they're going to push it as far as the possibly can at this point.
QUEST: So if we take, for example, net neutrality just as one example, or we could take a dozen, the pipe line or any of them, is there a possibility
that one day, as I said in the introduction, Americans wake up in three years' time and find the landscape -- I mean, metaphorical landscape,
completely changed?
MATTINGLY: Again, I think it's important to note the agencies can only do so much, Congress is necessary for any type of major legislative action,
which obviously doesn't pertain to the FCC on net neutrality, doesn't necessarily pertain to pipeline decisions but on major regulatory
decisions, say, the rolling back of the Dodd-Frank financial reforms. That will take Congress to actually play a role.
And as long as Republicans don't control 60 seats in the U.S. Senate, there's limits to what they can actually do. I think the interesting
element here, particularly in the wake of the financial crisis, is there going to be a point where Americans wake up and look around and some
regulation that was removed or some series of regulations that were removed lead to some catastrophic failure in a marketplace or in an industry?
That's an open question right now. But in the meantime, you talked about business leaders, I think that's the most important right now -- fact right
now, that's why Republican leaders feel like what they're doing right now is working, what they're doing right now is effective and what they're
doing right now is proving to be results-oriented.
QUEST: Phil, thank you for elegantly setting up our entire week, looking at this. I appreciate it. Thank you very much, indeed.
Now stay with this idea of the first year in office. South Africa is issuing a diplomatic protest to the United States over Donald Trump's
vulgar remarks at last week's infamous meeting.
The U.S. diplomats in South Africa, Ghana, Botswana, Senegal, Haiti, have been summoned to receive formal protests. American ambassadors in other
countries are expected to be called in over the course of the week.
Sir Peter Westmacott is in London, former British ambassador to the United States in Washington.
It's really good to see you as always.
SIR PETER WESTMACOTT, FORMER BRITISH AMBASSADOR TO THE U.S.: Good evening.
QUEST: From your knowledge, maybe not personal experience but from other colleagues who've been through it, what is it like when an ambassador gets
summoned in?
WESTMACOTT: Well, it can be rather disagreeable if there's an unpleasant message to be delivered with some emotion. Sometimes it's very formulaic.
And I've been summoned occasionally in the past to this or that palace or White House equivalent in other countries, and I've been told I have got to
deliver this message because I've been told to.
But it's done with a smile and an understanding and between professionals and I take careful note and I report back that the government concerns is
really very unhappy about whatever it happens to be.
And sometimes it's not so much a summons. You actually your head scrapped in person by the head of state if you happen to be talking to them. And
that person will make clear his or her dissatisfaction with what's going on.
So it's a part of daily live for an ambassador. But you take it on the chin, you report it back and usually it doesn't do any serious damage to
the personal relationships.
QUEST: And while we're still talking about this -- we're coming to (INAUDIBLE) in just one second, whilst -- I want to talk about this, this
idea that, for example, an ambassador resigns when they can no longer support the policies of a government, as the U.S. ambassador in Panama has.
I mean, that's a very delicate line.
WESTMACOTT: It's very --
[16:25:00]
WESTMACOTT: -- unusual, Richard. I can hardly think of any occasions when we've had that in our service. I can think of one or two more junior
diplomats who resigned over the Anglo-America military action in Iraq in 2003.
But it's very rare. And I think it does show that there are a number of heads of mission around the world who just aren't happy with the president
that they're representing.
QUEST: Peter, I've just been reading your piece that wrote for Politico you earlier in the week on Iran. I mean, the idea of this -- since you
wrote it, the president of course has re-signed or re-authorized but says it's the last time.
You're adamant that if he does -- if he does abandon the joint comprehensive plan of action, the JCPO, then it's a bad move.
WESTMACOTT: I'm very clear it's a bad move. If he abandons it, it may be that the other signatories, particularly the Europeans, can keep the
nuclear deal with Iran intact but it would be extremely difficult and it's difficult for lots of reasons.
But one is all those European banks and businesses, which are supposed to be trading with Iran as part of the nuclear deal, they'll be even more
scared off because there will be additional American sanctions in place.
But also more seriously, it would give the Iranian government the opportunity to walk away from their commitments. And then they might
decide to get on with enrichment and all sorts of other elements of a nuclear program, possibly including making bombs.
And that's a very bad idea.
QUEST: So this six-month period or whatever it might be, before the president, he's basically said if you don't do something in six months,
I'm telling you now, I am not going to sign the waiver again.
So what realistically can the other members offer up?
Let's go to realism, not theoretical.
WESTMACOTT: I think it's four months actually. He's given us 120 days and there's a certain amount of, as you say, ultimate language, which has been
given to the Europeans and to Congress.
One thing that can happen is that Congress -- and there is a bill going through the Senate at the moment -- could give him something which makes
him feel able to say we've got some tough additional sanctions that we can throw at the Iranians if they don't do A, B and C.
But the idea that we can strengthen, change the terms of the nuclear deal with Iran without Iran's consent and that the Europeans and the other
signatories, the Russians and the Chinese, would sign up to this, I think is a very, very long shot.
The whole point about this agreement is that it was an agreed text, an agreed plan for the future, joint and comprehensive. And the Iranians
certainly won't agree to those additional elements that the president was talking about in his statement on Friday.
So I hope what he'll say is OK, what I can get from Congress in the coming weeks is enough and he will probably be applying other sanctions. He's
already announced additional sanctions to the Iranians for nonnuclear things.
But I think it's very important that we keep that nuclear deal intact one way or another.
QUEST: Ambassador, thank you for joining us this evening. Thank you, sir.
Social Democrat leaders in Germany are trying to convince party members to enter a new coalition government. Martin Schulz and Angela Merkel, the
chiefs of the two parties reached an outline agreement last week at a crucial meeting of Social Democrat this weekend.
Julian Reichelt is the editor-in-chief of Bild Digital. He joins me from Berlin via Skype.
JULIAN REICHELT, BILD DIGITAL: Hi, Richard.
QUEST: The short question is, how on Earth, I mean, who's running Germany's policies at the moment?
What policies are Germany -- is Germany following?
REICHELT: Well, Richard, the truth right now is no one really is. Of course, Angela Merkel still is the -- is chancellor, running a provisional
government. But so far there hasn't been much legislative work in the past weeks.
Pretty much only thing this bundestag, this parliament has agreed on in the past week was a raise for their own salaries. That was something that went
very easily. Apart from that, not much legislative work being done because everyone is trying to set a new government, a new administration but so far
without any success.
QUEST: Now if we just take the normal course of events, politicians, government departments, ministers, they constantly bring out reams and
reams of policies, legislation, rules, regulations, all sorts of things come out.
But you're saying this isn't happening at the moment in Germany.
So is it fair to say there's not -- there's almost not quite paralysis but just nothing's getting done?
And that will continue for another two or three months.
REICHELT: Well, that is a very likely scenario. I mean, obviously the daily work of government, that is still being done. But the big projects
that are necessary for Germany (INAUDIBLE) infrastructure, investment, you know, the role of Germany in Europe, the way Europe look at us, European --
[16:30:00]
REICHELT: -- project, all that is kind of resting.
If you look at our minister of finance (INAUDIBLE) or former minister (INAUDIBLE), now he's not in office anymore. He's now the president of the
parliament that has no administration.
So you know, there is no real minister of finance in the situation were it Germany but also Europe needs a strong voice in the finance ministry in
Germany. And that is just one example.
When it comes to the big projects, there is no, you know, there's no real policy coming out of Berlin these days because everything is focused on
building an administration but not policy.
QUEST: Julian, thank you. We needed to hear that point of view tonight. I appreciate it. Thank you.
As we continue tonight, U.S. retail bosses are in New York and there one common thread, it's Amazon's dominance. It's the biggest talking point at
the biggest retail conference in the U.S. We will have Clare Sebastian there after the break.
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QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. As we continue tonight, this is CNN and, on this network,
the facts always come first.
(HEADLINES)
Hundreds of retail executives are in New York and they're here to talk about how to survive in a world of digital shopping. It's part of the
National Retail Federation's big exhibition. CNN's Clare Sebastian is there amongst, I suppose, this is the shop for the shoppers for the
shoppers' shoppers.
CLARE SEBASTIAN, CNN CORRESPONDENT: Well, yes, Richard, you think this looks like an average grocery store, but actually you're very much --
[16:35:00]
SEBASTIAN: -- mistaken. Take a closer look. It's very simple but this is a digital display.
You know those stickers that are in all your grocery stores, well, this is a digital version. A very simple solution, but this lets the stores update
the prices whenever they want. They can cut things down to a few cents at the end of the day to avoid waste.
This is just one of the ways, Richard, that stores here are starting to think more like websites. So marry the idea of brick and mortar and
ecommerce. And that is the overarching theme of what we're seeing in retail as a wholesale.
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SEBASTIAN (voice-over): At first glance this looks like any other Madison Avenue menswear store. Take a closer look. The first thing you notice,
well, there's only one of every item on display. And there's only one size as well.
What about where you pay?
Where are all the cash registers?
UNIDENTIFIED MALE: Think of it almost like the physical manifestation of a website.
SEBASTIAN (voice-over): Andy Dunn (ph) started Bonobos (ph) online 10 years ago. Five years later, he began opening physical stores.
Or are they?
SEBASTIAN: This is essentially not a store, is it, this is just a showroom.
UNIDENTIFIED MALE: I don't know what it is, we call it a guide shop.
SEBASTIAN (voice-over): They now have 48 of these so-called guide shops in the U.S., offering a one-on-one fitting experience and then you just place
an order online.
UNIDENTIFIED MALE: So we have here, you know, probably no more 1,200-1,400 square foot space where we're able to put in thousands and thousands of
styles.
SEBASTIAN (voice-over): It's a concept so successful that last year, Walmart bought the company for $310 million.
SEBASTIAN: Was it wild to think that you're now part of the world's biggest retailer?
UNIDENTIFIED MALE: It's wild. We thought offline retail didn't matter when we started the company. We thought the future was all digital. It's
really both.
SEBASTIAN (voice-over): That future could mean rethinking not just store size and inventory but also the people who work there.
UNIDENTIFIED MALE: What we're inside of is an unattended, fully automated store.
SEBASTIAN (voice-over): deepmagic uses artificial intelligence which recognizes all the stock on the shelves and tracks your every move.
UNIDENTIFIED MALE: So we're using camera (ph) technology, like you remove something from the shelf, then we basically assume you're buying it and if
you walk out the door with it, we basically bill your credit card.
SEBASTIAN (voice-over): They hope to launch in stores this year amid formidable competition. Amazon's been testing its own cashier-free grocery
concept, Amazon Go, for the past year.
SEBASTIAN: Should everyone in retail be afraid of Amazon, do you think?
UNIDENTIFIED MALE: I mean, I belong to Walmart so I'm not afraid of it. But I think that the combination of having both great physical experiences
with being digitally innovative, I think the combination is the most powerful thing.
SEBASTIAN (voice-over): And just like with the perfect pair of stretch washed chinos.
UNIDENTIFIED MALE: That actually is going to get us the right ratio.
SEBASTIAN (voice-over): -- it's all about getting the right balance.
(END VIDEOTAPE)
SEBASTIAN: So the question, of course, Richard, is, what is the right balance?
Andy Dunn from Bonobos told me he thinks that eventually we're heading toward 50 percent ecommerce and 50 percent brick and mortar.
Of course for those few who like to get our hand on a bunch of bananas and test it out, see how good it is, then brick and mortar is clearly here to
stay. But as we talked about earlier, this is an arms race and these technological solutions are some of those arms.
QUEST: Right. Well, it's 20 to 5:00 in the afternoon here in New York, so those bananas should be going on sale so they don't spoil. Bring me back a
couple for tomorrow's breakfast. Thank you.
SEBASTIAN: They may be going on sale just now. We'll (INAUDIBLE).
QUEST: Absolutely, good, prices going down. Thank you, Clare Sebastian.
Now when we come back, from doing the weekly shop to doing the weekly laundry. I'm going to tell you, these are -- this is the Tide pod. After
the break, the Tide pod challenge and why manufacturer is now saying don't eat this stuff. I think it's extraordinary.
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(COMMERCIAL BREAK)
[16:40:00]
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QUEST: All right. I've been using the same timepiece for the last 10 years. Probably time for a new one. But one of the world's biggest luxury
watch exhibitions is underway in Geneva. Anna Stewart is in Switzerland for us tonight.
And I'm -- good grief, Ms. Stewart, looks like blowing a gale there and you're keeping warm in the rain.
ANNA STEWART, CNN CORRESPONDENT: I know. All the glitz and glamor inside there, Richard, not so much out here. But the news has been quite upbeat.
The Swiss watch industry has had something of a recovery in the last few months and it's looking like it'll be a good year this year as well.
But still, Richard, plenty to moan about: the threat of the Apple Watch, the gray market demand in the U.S. and legislation. Just how swift should
a swift watch be?
(BEGIN VIDEOTAPE)
(MUSIC PLAYING)
STEWART (voice-over): Vintage, smart, and diamond encrusted. There's watch to suit everyone and they're all Swiss made.
Saying a watch is Swiss made is far more complicated than it sounds. A new law was passed a year ago which means that 60 percent of the watch has to
actually be made here in Switzerland.
It's designed to safeguard the industry's image plus encourage more manufacturing at home. At the high end, many watchmakers exceed the 60
percent rule.
UNIDENTIFIED MALE: (INAUDIBLE) we go much beyond what is expected from a legal point of view. So it's really something for us, which is not much of
a concern. We are very happy to manufacture almost everything. So I see the new rules as being for me a no-brainer.
STEWART (voice-over): It's still a topic of debate here in Geneva.
UNIDENTIFIED MALE: Not everybody is happy, I have to confess. Some of the opinion that the rules ae too strong and others, the rule is too weak. I
would say that the rule that has been decided by the Swiss government and these are good compromise for everybody.
STEWART (voice-over): Of course, some components of these watches clearly can't come from here. Alligators and sapphire mines are hard to come by in
Switzerland. According to a Deloitte survey, 44 percent of Swiss watch execs think the new rules are positive for the industry and a fifth
actually think they're negative.
Boutique brand H. Moser says the rules don't go far enough.
UNIDENTIFIED MALE: You see in many ways you can produce most of the components in the Far East and still assemble a few things in Switzerland
and be Swiss made. That's fine for many brands. From us, H. Moser & Company, who make everything in-house, or in Switzerland, and we don't need
to write Swiss made on the face, the most beautiful part of the watch.
STEWART (voice-over): The law may have divided option but in one thing they're united, much like someone else's mantra, they want to make Swiss
made great again.
(END VIDEOTAPE)
STEWART: Well, President Trump there in spirit if not in person but of course he will be here in person in Switzerland, at least next week for the
World Economic Forum, in Davos, as will you, Richard. And perhaps next year on your way, you should sweep past Geneva to this watch fair. I know
how much you love watches.
QUEST: Well, I can't afford one of those expensive ones, at least not yet. Anna Stewart, who is in Geneva, Anna, thank you.
As we continue tonight, a marketing slogan for these. Now these are Tide pods. It's a detergent that is owned by Procter & Gamble and the --
basically the idea was it started so innocently. It was called the Tide pod challenge.
How clean could you make your clothes?
And then teenagers seeking Internet fame began taking these pods and figuring themselves, literally chewing them and poisoning themselves. And
challenging their friends to do the same.
It is the most -- look at the video of people doing it and it is -- it's quite remarkable that anybody would actually think to take a Tide pod, put
it in their mouth and start chewing it.
[16:45:00]
We can't really show you too much more than this because either they start to foam or it all starts to -- people start to throw up or literally they
start to poison themselves. Tide has had to respond by hiring the American footballer Rob Gronkowski to implore people not to eat Tide pods.
(BEGIN VIDEO CLIP)
ROB GRONKOWSKI, NEW ENGLAND PATRIOTS: No, no, no, no, no, no. No.
No, no, no.
No.
What the heck is going on, people?
Use Tide pods for washing, not eating.
(END VIDEO CLIP)
QUEST: Bruce Turkel is a branding expert. He is in Miami. We're looking at that side of it.
And Bruce, look, I mean, all right. So you've got a company, Tide, they're facing a completely unintended disaster if people eat the pods, which
common sense says don't.
What do you do?
BRUCE TURKEL, BRANDING EXPERT: Well, first of all, you don't equate teenagers and common sense. So --
QUEST: My bad.
TURKEL: -- suggesting that that makes sense, you and I were the guys who, you know, your mother would say if everyone jumped off the roof, would you,
too?
It's not what they intended; it's not what they wanted. It's what they need to do now. And what they need to do now is first of all, take these
things off the shelves and when they put them back, put them back in a way does not look edible, appetizing, exciting or anything else.
QUEST: Now, hang on a second. Hang on, hang on. You're' saying change the product. Hang on, hang on. You're saying, change the product; you're
saying that -- I mean, yes, they do smell fresh and -- but, I mean, they smell like disinfectant. But -- and they do look attractive. And I can
understand legitimate issues with babies or children picking them up and those sorts of things.
But teenagers: what change your product because somebody's stupid enough to think that you can eat something's that's poisonous?
TURKEL: Well, we could debate why you should or shouldn't all day long, Richard. And I might actually agree with you that that shouldn't be
something you should have to do except for liability and except for the fact that five children have already died from this.
So this is no longer funny. And this is no longer a product that you should have on the shelves. Regardless about regardless of whether people
are too stupid to know better and, once again, telling teenagers not to do it says, do it, do it, do it.
I mean, you want to have a real challenge? Get teenagers to do their own laundry. I had two teenagers. I know how hard that would be. This
product's got to be changed. It's not marketing. It's not PR. It's demonstrating that safety matters more than profits.
QUEST: OK. So on the label here, it's got, "Warning: harmful if put in mouth or swallowed."
Now i might have thought that was self-evident.
How much of a crisis is this for Tide facing now?
TURKEL: Let's talk about those two points. Putting a label on a product would be a great thing to do if, in fact, you could prove it works. And
let's be honest, it has not worked with cigarettes. So why do you think it would work with this?
But moving on, how big of a problem is this?
Five, 10, 20 years ago it might not have been a problem because the people who had a problem with it couldn't do anything about it. But with social
media and the power that each one of us have in our phone, in our tablet, in our computer, it's a huge problem.
And it's much bigger than any profits that Tide is going to make from this product. And there's lots of PR consultants and crisis consultants who do
what I do who will get paid a lot of money to tell them how to better manage this process.
But I'm telling you right here and now, the way to do it is to get it off the shelves.
QUEST: Wow. That was -- I was not expecting that answer. I was expecting a branding answer or some form of marketing answer.
Bruce, great to see you. Thank you, sir.
TURKEL: Thank you, Richard.
QUEST: Bruce Turkel, who always helps us when we have these issues of branding, marketing and what companies should do.
When we come back after the break, the Impossible Burger. It's not meat. It tastes like it. It's extremely popular. And it's a fascinating example
of what you can do. Now I shall put this away until it's laundry day next month or year.
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(COMMERCIAL BREAK)
[16:50:00]
(MUSIC PLAYING)
QUEST: It's very simple. It tastes like a beef burger, bleeds like a beef burger and contains no meat at all. It's called the Impossible Burger.
(BEGIN VIDEOTAPE)
QUEST: A rose by any other name would smell as sweet. Ah, but would a burger by any other name taste as good if it didn't have meat in it?
Dave is with me as is Lele Shepard (ph). You're going to put on one of these Impossible Burgers for me.
What is the point of an Impossible Burger?
UNIDENTIFIED MALE: Well, it's a meat eater craze, a delicate burger like the Impossible Burger made entirely out of plants. We use 95 percent less
land, only a quarter of the water and a fraction of the greenhouse gases are produced.
QUEST: I ask again, what is the purpose of an Impossible Burger?
Surely -- I mean, what's it made from?
UNIDENTIFIED MALE: It's made entirely out of plants. But the thing is, blind versus a burger from a cow, it's preferred half the time. Every meat
eater can make the world a little bit of a better place by having a delicate burger now.
QUEST: Isn't by definition a burger supposed to be part of a cow?
You could call it something else. You could call it a planter, whatever, a planterger. Whatever. But a burger is meat.
UNIDENTIFIED MALE: A burger is something that the meat eater craves, wants and you can't make a burger craveable without what's in this burger,
something called heme. We just found it naturally occurring in a plant.
QUEST: What's -- who are you aiming at?
I mean, I am a meat eater. I wouldn't say I'm a meat lover but I'm a meat eater.
Are you aiming at me?
UNIDENTIFIED MALE: We are aiming at you. We are aiming at me. I am a meat eater. In fact, 75 percent of the people who keep coming back, who's
making this the bestselling burger edamame (ph) are meat eaters.
QUEST: Jeff, is it different cooking this?
Oh, no pickle for me. No pickle for me. Never liked pickles. (INAUDIBLE) who likes --
JEFF: Sour enough, huh?
QUEST: Oh, oh. Very good.
Tell me, is it different cooking it, the length of time it takes, anything like that?
JEFF: It's very much like a burger. It smells like a burger, it looks a burger made from meat and it takes about the same amount of time.
QUEST: You've received tremendous financing for this, haven't you, from unlikely sources and many sources. Tell me.
UNIDENTIFIED MALE: Yes. So we've received financing from early phase VCs, like Khosla, to sovereign wealth funds like Tomase (ph). And the reason
why they've invested in us is because they see the problem we're solving and how big an issue can be solved.
QUEST: What is that problem you're solving?
Because that's really -- we can go backwards and forwards on the vegetarian and the vegan.
But what's the problem you're solving with the Impossible Burger?
UNIDENTIFIED MALE: We can't serve meat eaters what they crave without a new technology. The old technology doesn't allow for it. It's simple
math. Animal farming uses almost 40 percent of the ice-free land on the globe today. And with more and more eating -- meat eaters around the world
asking for delicious, craveable meat, you have to find a new way to sate their desires.
QUEST: Well, you've made it here. I'm going to try it with a certain amount of trepidation.
I mean I do sort of -- (INAUDIBLE).
UNIDENTIFIED MALE: Mushrooms. More mushrooms.
QUEST: What do you got about mushrooms?
UNIDENTIFIED MALE: I think it helps bring out the richness of the burger.
QUEST: What, you mean it masks the fact it's not meat?
UNIDENTIFIED MALE: No definitely not --
UNIDENTIFIED MALE: -- makes it even more like meat because this is how we love to eat a regular burger.
This is a little cheese sauce.
You OK with that?
QUEST: Why not?
UNIDENTIFIED MALE: Why not.
QUEST: In for a penny, in for a pound.
[16:55:00]
QUEST: Didn't want this suit anyway.
(LAUGHTER)
QUEST: You ready?
UNIDENTIFIED MALE: We are.
QUEST: You sure?
UNIDENTIFIED MALE: Absolutely.
QUEST: (INAUDIBLE).
"Profitable Moment" after the break.
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(COMMERCIAL BREAK)
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QUEST: Tonight's "Profitable Moment," the Tide pod challenge and teenagers eating laundry detergent and what the company, Tide, Procter & Gamble does
about it. It sounds the most extraordinary problem and yet it's a real problem facing a very large companies that has to come up with a solution.
That's why we covered it on tonight's program. Common sense seems to have gone out the window when it comes to the teenagers eating these things, or
at least challenging each other.
But for Procter & Gamble and Tide, they have to come up with a policy that actually addresses it more than just simply saying, don't eat these things,
it's bad for your health.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. As always, whatever you're up to in the hours ahead, I hope it's
profitable. We'll do it again tomorrow.
END
