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CNN BUSINESS UNUSUAL

Continental Airlines Soars to First; The Dirt on Laundry Detergent Wars; Baseball Revives Brooklyn, Coney Island

Aired July 29, 2001 - 06:30 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SUSAN LISOVICZ, HOST: Ahead on BUSINESS UNUSUAL, an airline CEO takes his business from worst to first. The dirt on the latest spin in the laundry detergent wars. And baseball breathes new life into a beleaguered neighborhood. That's all ahead on BUSINESS UNUSUAL.

Hello and welcome to BUSINESS UNUSUAL. I'm Susan Lisovicz.

The airline industry has had its ups and downs recently. But Continental airlines has managed to rise to the occasion. In February, "Fortune" magazine named Continental the most admired U.S. airline. And at the OAG Airline of the Year Awards that same month, the company was recognized as best business class and best transatlantic airline.

CEO Gordon Bethune says that he turned the airline around from worst to first. But can Continental continue to soar in these tough economic times?

Willow Bay sat down with Mr. Bethune and asked him how he's dealing with the turbulence.

(BEGIN VIDEOTAPE)

GORDON BETHUNE, CEO, CONTINENTAL AIRLINES: Like everyone else, we had a decline in revenues because people aren't spending as much. Businesses are trying to save where they can. So they say don't send four people, send one to the business meeting. Or plans your trips better so that you can reduce the size of the airfare.

WILLOW BAY, CNN CORRESPONDENT: So what do you do at Continental to weather, so to speak, an economic downturn?

BETHUNE: We don't wait for a down economy to go take out cost that doesn't add value to customers. So we are relentless in our search to take non-value-added cost. Don't take the cheese off the pizza. But we don't need a good kind of packaging to deliver a good pizza. We don't need three people to do two peoples' jobs.

So we haven't changed a lot. We haven't started canceling advertising. We need advertising or we wouldn't have a budget.

So we're going to continue to do the same things that got us where we are. So it's not a change in our philosophy or a change in our behavior at all. We are always that way.

BAY: Given how sharply revenues appear to be down, can you really do nothing else other than that?

BETHUNE: Well, I mean, to the best extent that we can, we'll make money I think certainly for the year. Will we make as much? No. Because revenues are down.

But are we going to lose money? I don't think we will. If we were going to lose money, then obviously we'd need to change something. But the things we do today are the things that brought us the money to start with. It's that old cost spiral that you can get into that can take you out of this business as quickly as anything else.

BAY: What do you mean, a cost spiral that can take you out of the business?

BETHUNE: The reason people come in -- and I've seen this a lot -- and says we need to cut costs by 10 percent. So they take a 10 percent across-the-board cut.

If you went to the doctor and he said you needed to lose 10 percent of your body weight, would he be talking about 10 percent of your heart and 10 percent of your teeth or just the fat? So you need to know what the business is to get the fat out, what you don't want, but don't be cutting into the muscle. So we are relentless in cutting fat, but we are not going to cut muscle. This is what we do.

A clean airplane is a necessity. It's not a nice thing to have. It's a necessity. A safe airplane, on time, pay people fairly. We have to do that, or we wouldn't have a product to sell.

BAY: One thing that you have had a fair amount of success with is rewarding employees for their performance, rewarding them with rebate checks for on-time performance, with parties and celebrations, giving them Ford Explorers for perfect attendance. Can you continue to do all of those things? Can you justify those costs?

BETHUNE: Sure we can afford that, because that's what got us to where we are. Spend a buck if you can make a buck-10. Don't spend a buck if you're only getting 90 cents for it. That's the cut over.

So, do we get some return on some of these thing we do? We get a tremendous return.

BAY: You've said that it's not an accident that the best places to work were also places that make the most money.

BETHUNE: Well, that's true. There's a 100 percent correlation between employee satisfaction and customer satisfaction. We're in a service business. You have to feel good. If you don't feel good, how can you treat anyone else good? I mean, you're just not in it.

I mean, it's nice to have men and women behind the counter and on our airplanes who actually are glad to see you, feeling pretty good. It makes you feel good. And so the best managers outperform their peers because they care about their employees. And you get a two or three percent better return.

It's a smart way to run your business. You actually get paid to be nice. Why wouldn't you do it? It's nicer to be nice. And if you get paid for it too, why wouldn't you do that?

BAY: What do you tell your employees, because I know they ask you about the economy and what's going on and how that's impacting your business, what do you tell them?

BETHUNE: We tell them everything. We're open with them because they're part of the team. Every day, we talk to them. So we know what our profitability is. They're very focused on profitability. When the shareholders win, they win. And when the shareholders lose, they lose.

BAY: And at this point, they're not anticipating any belt- tightening as a result of the slowdown?

BETHUNE: We always belt-tighten. Yes, we're more aware of it now. Yes, we talk about it now because it's more critical. But, you know what? The same disciplines and cost containment that got us this profitability are going to keep us this way.

(END VIDEOTAPE)

LISOVICZ: Will the belts be getting a little tighter at Continental? On July 16, the company reported its second quarter earnings fell 72 percent from a year ago, but still beat Wall Street expectations.

Just ahead on BUSINESS UNUSUAL, the latest spin on the laundry detergent wars. Unilever has high hopes for this tiny tablet. But can it succeed in a saturated market? We've got the dirt when we return.

(COMMERCIAL BREAK)

LISOVICZ: Unilever is giving a new twist to its latest weapon in the laundry detergent wars. The company is expanding its line of Wisk laundry tablets to include a version with bleaching action. They're on supermarket shelves this summer.

It's the most recent move in Unilever's contest with Procter & Gamble for control of the laundry detergent market. We took a closer look.

(BEGIN VIDEOTAPE)

LISOVICZ (voice-over): Just across the Hudson River from the skyscrapers of Manhattan is an ordinary looking office complex where the consumer products giant Unilever is pushing laundry detergent to its limit. This is the company's laundry institute in Edgewater, New Jersey. DEBBIE COCCARD, VICE PRESIDENT, UNILEVER: Here in this facility, we're responsible for the development of consumer products for the laundry. We're responsible for the formulation, the development of the process, and the development of the package.

LISOVICZ: It's here that Unilever hammered out its new weapon in the fight for the $6 billion U.S. laundry market, Wisk Double Action Tablets, scoops of powder in solid form. They're dropped down, shaken up, and tested out on a range of gunk you've probably wrestled with yourself.

COCCARD: Grass and salad oil and jelly, coffee, blood, hamburger blood, that sort of thing.

LISOVICZ: The purpose, not just washing whiter, but grabbing a few precious inches of supermarket shelf space. That means more visibility, more potential sales, and less room for the competition. For Wisk, the competitor to beat is Procter & Gamble's Tide.

COCCARD: Every time you introduce a new form or a new product, there is a fight for shelf space because there is a fixed amount of shelf space in the laundry aisle. It's also important that you can differentiate your product from the existing products on your shelf. So we try to make the graphics on our carton very impactful (sic).

LISOVICZ: Tide leads the detergent pack with a laundry list of more than 60 variations, including its own tablets. P&G's heavy spending on product development helps create all those spin-offs.

And that saturation has paid off at the cash register. For the 52 weeks ending in mid-June, sales of Tide in its liquid and powder forms totaled nearly $2 billion, up more than four percent. Wisk, the underdog, was down a little over one percent on the year, with sales of just under $300 million.

But Unilever is out to turn the tide, putting more money and muscle behind Wisk. And selling the detergent in tablet form is part of that push. Wisk tablets trace their roots back to 1998. That's when the company brought outs its European Persil brand detergent in tablet form. Here, the ads hinted, was a laundry product even a slacker could love.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Are they better than what you used before?

UNIDENTIFIED MALE: Yes and no.

UNIDENTIFIED MALE: Why? What did you use before?

UNIDENTIFIED MALE: My mother.

(END VIDEO CLIP)

LISOVICZ: The tablets did so well in Europe that Unilever brought them to the United States. And the laundry lab taught them to clean with an American accent.

COCCARD: The conditions that the consumer washes in in Europe and the U.S. are quite different. So we had to adapt the tablet formulation and also the size of the carton to the American consumer.

LISOVICZ: Yes, clothes get grubby differently in America, caked in grime like dirt from baseball diamonds and red Georgia clay. Unilever's laundry boot camp keeps both on hand and more.

COCCARD: What stains are you putting on here?

UNIDENTIFIED FEMALE: Chocolate ice cream right now.

LISOVICZ: At the laundry lab, stuff like this is just part of the palette for these DaVincis of dirt. And after proving themselves against the lab's arsenal, the tablets hit the U.S. market late last year under a new name.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Introducing Wisk Dual Action Tablets, a new form of detergent so infused with stain-fighting enzymes it's as if dirt never happened at all.

(END VIDEO CLIP)

LISOVICZ: But dirt happens. And so does the drive to boost a brand's presence in your supermarket. That's why Wisk is bringing out a new take on the tablet with bleaching action as the selling point. It's yet another bid for control in one of corporate America's cleanest fights.

(END VIDEOTAPE)

LISOVICZ: In case you were wondering where Unilever gets the dirty clothes for its New Jersey-based laundry institute, well, the company actually buys piles of dirty clothes from employees, local restaurant and factory workers, and other members of the community. A pair of socks soiled evenly usually goes for about three bucks.

Still to come on BUSINESS UNUSUAL, new life for the London company that's decked some of the most famous halls in the world. And baseball is bringing the crowds back to Coney Island. But will they stay? We'll take a look after this.

(COMMERCIAL BREAK)

LISOVICZ: In the high-tech world of design, handmade wallpaper lost its luster. Cole & Son, a British company that specializes in handmade wallpaper, narrowly escape extinction when interest in wallpaper waned.

But under new management and new ownership, the company is hoping the retro revival will shed new light on an ancient craft. Tom Bogdanowicz reports.

(BEGIN VIDEOTAPE)

TOM BOGDANOWICZ, CNN CORRESPONDENT (voice-over): The White House, Buckingham Palace, the Houses of Parliament, and 199 Eat Street (ph), the factory of Cole & Son. What they all have in common is this.

(on camera): Wallpaper. It hangs in the stately homes and the palaces, but it's made at this north London factory, some of it entirely by hand.

(voice-over): Cole & Son, formerly Perry's (ph), has been making wallpaper in the traditional style for more than a century. Hand blocking the paper is painstaking work. This action can be repeated hundreds of times for a single roll.

UNIDENTIFIED MALE: If you need 10 rolls and say you've got 12 colors in it, it can take three or four weeks to complete.

BOGDANOWICZ: In the Victorian era, block printing was so popular, there were dozens of factories in London alone, all with their own selection of carved wooden blocks. Today, there's just a handful of commercial block printers worldwide. What's become Cole's were atop the blocks as rivals went under.

(on camera): There are more than 2,500 wooden blocks for making wallpaper in this factory cellar. Some, like this one, date back to the 18th century.

(voice-over): Cole's reprinted this paper from Monticello, the home of U.S. President Thomas Jefferson, this one for the Houses of Parliament. But the company recently bought by U.S. and UK investors knows it cannot survive on its former glory. Its turnover today is a modest $3 million a year. It wants to boost that by 50 percent in 2002.

ANTHONY EVANS, MANAGING DIRECTOR, COLE & SON: If we live off our history, we'll go bust in a couple of years' time. The most dangerous thing you can do. What we're interested in is combining the history of what we have to offer in modern, up-to-date colors, service, and all the other bits and pieces together.

BOGDANOWICZ: This original factory has now been sold, and 100- year-old machines relocated to new, more efficient premises. Cole's is experimenting with new designs and vinyl coatings. The catch is that handmade wallpaper can be very expensive.

(on camera): Some hand blocked papers like this one, called Hummingbird, cost more than $1,000 a roll.

(voice-over): That can be a shock to ordinary consumers.

UNIDENTIFIED MALE: $1,000. For one roll?

(LAUGHTER)

UNIDENTIFIED FEMALE: You're kidding. And who is inside? BOGDANOWICZ: But often, there is a noted name like painter Graham Sutherland (ph) or designer Augustus Peugon (ph), all carefully catalogued.

KAREN BEAUCHAMP, COLE & SON: These designs were designed by Peugon for the Palace of Westminster. Barry (ph), the architect, designed the Palace of Westminster. And Peugon did all the interior things. And he designed all the wallpapers.

BOGDANOWICZ: Wallpaper at $1,000 a roll, or even $50, is not for everyone. But interior design experts say paper is experiencing a revival in the top end of the markets, notably in America.

GILES KIME, HOUSE & GARDEN: People are finding again pattern and color, which is creating a whole new look. And, obviously, part of that is wallpaper.

BOGDANOWICZ: The revival is what Cole's and the few remaining block printers are counting on. Otherwise, an age-old art may disappear altogether.

Tom Bogdanowicz, CNN Financial News, London.

(END VIDEOTAPE)

LISOVICZ: Coming up next on BUSINESS UNUSUAL, a Brooklyn neighborhood gets a facelift. But will it be enough to give businesses a boost? We'll take a look when we return.

(COMMERCIAL BREAK)

LISOVICZ: And finally, 44 years ago, the Brooklyn Dodgers left New York for Los Angeles. And fans never quite recovered. But this summer, Brooklyn baseball lovers are getting riled up again over a new team at Coney Island, the one-time vacation hot spot that has fallen on hard times.

On opening day of the minor league Brooklyn Cyclones, crowds welcomed New York Mayor Rudy Giuliani as he paraded down Cirque Avenue (ph) into brand new KeySpan Park.

(BEGIN VIDEO CLIP)

MAYOR RUDY GIULIANI, NEW YORK CITY: It's great to have baseball back in Brooklyn where it belongs. It's even better to have it inside this beautiful ballpark and originally the most famous amusement park in the whole world -- and we hope it is going to be again -- Coney Island.

(END VIDEO CLIP)

LISOVICZ: But can baseball alone spark a comeback for Coney Island? Sasha Salama has a look.

(BEGIN VIDEOTAPE) SASHA SALAMA, CNN CORRESPONDENT (voice-over): The Polar Bears' annual icy dip. The July Fourth hot dog eating contest. And now Minor League Baseball joins these events in what could be the rebirth of Coney Island, once considered the world's largest amusement area.

GIULIANI: This is the way we've turned around 42nd Street. It's the way we've turned around 125th Street. It's the way we're going to turn around Coney Island.

SALAMA: KeySpan Park, named for a local utility, is built on the site of the old Steeplechase Amusement Park. Nearby is the landmark Cyclone roller-coaster. Operating since 1927, it's the inspiration for the baseball team's name. The Brooklyn Cyclones are a Minor League team for the New York Mets.

JEFFREY WILPON, COO, BROOKLYN BASEBALL COMPANY: This is putting the neighborhood back on the map. And I really believe that people in Coney Island and Brooklyn are feeling good about it again.

You know, to bring 250,000 people back to this neighborhood that maybe haven't been here or wouldn't have come here is something that will show them that the neighborhood is good and that there's some more development here.

SALAMA: Old-time Brooklyn Dodger fans snapped up tickets and merchandise with the Dodgers-inspired logo. But a quick look down Surf Avenue shows plenty of room for improvement in the surrounding area.

In addition to the $39 million the city spent building KeySpan Park, $11 million has been earmarked for neighborhood facelifts. Subway improvements are already underway.

Just up the road from the ballpark at Totonno's Pizzeria, talk centers on baseball and nostalgia.

SALAMA: Owner Louise Ciminieri's grandfather Totonno Paro (ph) opened the family business in 1924. She grew up in Coney Island during a simpler time.

LOUISE CIMINIERI, OWNER, TOTONNO'S PIZZERIA: No one had to worry about us. You know, parents didn't have to worry. When we came home, we came home. They knew we would be fine. We knew everyone in the neighborhood.

SALAMA: She and her son Lawrence still use her grandfather's original pizza recipe, but other things in the neighborhood have changed over time.

DICK ZIGUN, DIRECTOR, CONEY ISLAND USA: The Coney Island I moved to had a self-esteem problem. Coney Island had been through a very rough period. There had been fired; there had been urban decay. And nobody knew what to do with Coney Island.

SALAMA: Dick Zigun runs this traditional sideshow near the boardwalk. Upstairs, the Coney Island Museum houses relics of the Steeplechase Park era. Zigun's not-for-profit Coney Island USA is leading a cultural renaissance of the neighborhood.

The Mermaid Parade brings thousands of people to Coney Island to celebrate the summer solstice. It started small back in 1983.

ZIGUN: It was about -- even in the midst of broken-down, funky but wonderful sun and fun Coney Island, putting on a parade, getting hipsters to make homemade float, make mermaid costumes. Getting the trendsetters from Manhattan to come to Coney Island at least one day a year. We gave Coney Island its self-esteem and spirit back, then the business community saw light at the end of the tunnel.

SALAMA: Dianna Carlin was looking for the ideal location to sell her carnival-inspired T-shirts, and found the time was just right for the boardwalk.

DIANNA CARLIN, OWNER, LOLA STARR SOUVENIRS: I think people really want Coney Island to be a thriving, successful place. They want to come here and find cool stores and interesting things.

SALAMA: Carlin opened Lola Starr Souvenirs this summer, and found a niche selling Kitschy keepsakes and old-fashioned reminders of Coney Island's heyday.

CARLIN: I think a lot of people come for the beach, and a lot of people come just for the history that's here. A lot of people come to see where Luna Park used to be.

ZIGUN: The Coney Island I haven't personally experienced, but I read about in history, is large. It's several amusement parks. It's a lot of capitalism. It's all about entertainment, though; it's all about tourism.

And I've never experienced that. And the idea, you know, as I get older, that a sense of that's going to be going on -- that there's a baseball game and there's professional boxing, and there's new rides and there's more than you could possibly do in a day, and it's overwhelming in terms of its sensory delights and the sounds and the lights and the activity. Yeah! That's what we want to do here.

SALAMA: The Brooklyn Cyclones are putting the spotlight back on Coney Island for now, but it will take a few seasons to determine if this comeback will bring it to tourism's big leagues.

For BUSINESS UNUSUAL, Sasha Salama, CNN Financial News.

(END VIDEOTAPE)

LISOVICZ: The Cyclones' KeySpan Park was originally designed to hold 6,500 seats, but 1,000 extra bleacher seats were added due to overwhelming demand for tickets. Approximately 80 percent of seats for the season were sold by opening day. Prices range from $5 to $10.

And that is BUSINESS UNUSUAL. If you missed any of today's program, you can catch it on the web. Just go to CNNFN.com/BUSINESSUNUSUAL.

I'm Susan Lisovicz. Thanks for joining us. Goodbye from New York.

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