Return to Transcripts main page
Quest Means Business
Murdoch Reassures UK Staff; Journalists' Union Chief Says Murdoch Threw Journalists to the Wolves; Germany's President Resigns; Greek, German, Italian Leaders Hopeful on Bailout Deal; Greek Artifacts Stolen from Olympic Museum; UK, French Leaders Strengthen Ties; European Markets Up; Dow Reaches Highest Level Since May 2008; Investigators Seize $6 Trillion in Forged US Bonds; Value of Fashion; Strange Economic Indicators; Interview with Doug Oberhelman; The Ostrich Industry in South Africa; Interview with Gavin Raja
Aired February 17, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NINA DOS SANTOS, CNN INTERNATIONAL HOST: Howling at the "Sun." A union leader tells me that Rupert Murdoch has thrown his staff to the wolves.
Lone Wulff. Germany's president resigns, leaving Merkel in the lurch.
And sheep's clothing? Not a chance. We're on the hunt for real growth potential at the London Fashion Week.
Hi, there. I'm Nina Dos Santos in for Richard Quest, and this is QUEST MEANS BUSINESS.
Good evening. Rupert Murdoch has told his staff at the "Sun," the boss is on your side. "Sun" journalists had feared a witch hunt against the paper or even plans to close it altogether after several members of staff were arrested.
And now, Murdoch says that News Corp will do everything it can to try and help those being questioned over suspected illegal payments. That includes lifting their company suspensions and paying their legal fees, as well.
And for those who feared that the "Sun" would go the same was as the "News of the World," well, Rupert Murdoch says that he'll actually be expanding his empire, launching a new "Sun on Sunday," quote, as you can see here, "very, very soon" to replace the tabloid that he cut during last year's phone-hacking scandal.
Our senior international correspondent Dan Rivers is actually outside the News International headquarters in Wapping, East London right now. Dan, how palatable has the anger been throughout the course of the day?
DAN RIVERS, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, to be honest, I think there's probably a sense of relief, because the more dire speculation before he turned up was that there was a possibility he may just go, "Look, I'm going to get rid of all my UK newspaper holdings altogether," or possibly close the "Sun."
He's not done that. In fact, he's done the exact reverse, which is expand the "Sun" into the Sunday market to replace the "News of the World." So, there will be relief that those jobs will effectively come back into the News International stable.
Also, he announced that those journalists that had been arrested who had been suspended by the company pending the police investigation, that suspension is now lifted. He said they're innocent until proven guilty and they can come back to their jobs.
And that will go a long way, I am sure, to help those members of staff who feel that they've been sort of hung out to dry by management and that they're not getting the backing they want.
What hasn't been addressed, I suppose, in some sense, is the idea or the feeling that they have had their journalistic sources compromised, that sensitive contacts have been handed over to the police by the management at News International.
But basically, Rupert Murdoch sets out very clearly in a letter and to staff that we've got to cooperate with the police, we've got to follow this through properly, and that's exactly what we're doing, and we cannot tolerate any kind of illegality at the paper.
So, certainly we've been seeing a few of the "Sun" journalists in the pub around the corner, here. They look like they were a bit more relaxed, and we'll have to see how it plays out over the coming week, whether there are any more of these angry columns in the paper criticizing management of News International.
But so far, I think everyone is now very firmly focused on a new Sunday edition of the "Sun," which they say will come out soon.
DOS SANTOS: Ah, now Dan, that brings me to our next question, because skeptics would say that he was planning on launching the "Sun on Sunday" anyway.
RIVERS: Well, they had. I remember being here when the "News of the World" got shut down amid the phone-hacking scandal, and they were already speculating then that they had registered the domain name of the "Sun on Sunday," that they were already planning it. This was all part of a wider strategy that had been put in place by Rupert Murdoch.
The key thing with all this, I think, Nina, is that the advertisers have not deserted the "Sun" in the same way that they had deserted the "News of the World."
And ultimately what precipitated the decision to shut down the "News of the World" was that the advertisers were walking out in droves and that that brand had become totally toxic for advertisers and it wasn't a commercial proposition anymore.
The same has not happened with the "Sun" so far, and they feel that the "Sun" has weathered this storm so far, despite nine journalists being arrested. Therefore, they feel, perhaps, that they can move into that Sunday market without advertisers leaving them in droves.
DOS SANTOS: Dan, even if the advertisers aren't leaving the "Sun" in droves, the sources may well be. It may be just a question of them having compromised their sources too much that they're not going to bring them stories anymore.
RIVERS: Well, it certainly -- you certainly, if you were a potential source with a good story to tell, you're going to certainly think twice, aren't you, about talking to a journalist from News International, given what's going on at the moment? Given that the police are coming through three million e-mails looking for evidence of the "Sun" and other papers having paid public officials.
The police are putting it like this. They're saying, off the record, this is not a question of buying police officers a lunch or buying them a few drinks. It's a question of systemic bribery involving tens of thousands of dollars, almost like the police and public officials were on retainers with the newspaper.
And I think that's the kind of thing that they're trying to target. Of course they're not trying to discourage from going out and doing their job, talking to people and getting genuine stories.
But from the police's point of view, what they're trying to do is to stop police officers supplementing their income in a major way from a newspaper and therefore, of course, compromising their position as public servants.
DOS SANTOS: All right, Dan Rivers, our man on then scene outside News International headquarters in East London. Many thanks for that.
Now, the head of Britain's biggest journalist union says that Murdoch's announcement will do nothing to calm the staff at News International. Michelle Stanistreet has been speaking to me, and she's been saying that they've been thrown to the wolves by Murdoch to protect his favorites inside News Corp. I asked her earlier today if the situation was now beyond repair.
(BEGIN VIDEOTAPE)
MICHELLE STANISTREET, GENERAL SECRETARY, NATIONAL UNION OF JOURNALISTS: It's hard to see where the company goes from here. I think if Rupert Murdoch had announced today that actually acknowledged that actually they'd made a mistake, that they're handling this situation wrongly, that they've let people down, that he was going to call off the management and standards committee and prevent them from carrying out their business in the manner in which they've been doing so, I think there could've been an opportunity to defuse the anger and the sense of betrayal felt at Wapping.
He's deliberately chosen not to do that today. So whilst he's saying he shares their great pain, he's not doing anything about making them feel better, and I think that sends a very strong message in itself.
DOS SANTOS: From a business and employment perspective, though, how comforted are you by the fact that they're going to be opening up the "Sun on Sunday"? Presumably, that'll keep more people in jobs.
STANISTREET: Well, the announcement today is obviously, again, very deliberately times and is intended, no doubt, to act as a bit of a sop to journalists on the titles to ensure them that there is a future there for the titles and that there's forthcoming investment into a new edition.
But of course, this is no surprise that the "Sun on Sunday" was going to launch. They were planning this in the run-up to the closure of the "News of the World" and even in the immediate days following the closure of that newspaper title.
Yet, all of those workers, all of those journalists and members of staff who worked on the "News of the World" were cynically betrayed and offered up, again, another act of corporate and self-preservation.
At that time -- and they lost their jobs and their livelihoods. It will be precious little comfort to them that there's now going to be a new edition of the "Sun" at Wapping.
DOS SANTOS: What's particularly interesting about the way how Rupert Murdoch and his family run his business is that number of the top executives there often treated like family. Is what we're seeing, to a certain extent, a breakdown of that Murdoch family-like management style? And also, where does it take us from here?
STANISTREET: Well, I think what we've seen over the last year or so, and certainly since the hacking scandal exploded, is Rupert's put his own immediate family, his son, and those executives who are like children to him foremost in everything that he's done since, and the future, the very future of that family's role with in News Corp and the future of the business.
He's made it perfectly clear where is loyalty and his feelings lie, and every action and every step that's been taken in the months since then, he's thrown out -- thrown the journalists to the wolves. He sought to defend those at the top whatever the means and to try and assuage, whether it's the American investors or whether it's public opinion, with a few scalps of individual journalists.
He's tried consistently to pin the blame on those lower down the tree within News International and to try and defend and sustain the reputation and the future of those right at the top. It's been a consistent corporate strategy, and we're seeing it again this week.
(END VIDEOTAPE)
DOS SANTOS: Well, from arriving under a cloud of scandal to leaving under a cloud of scandal. We'll be taking a look at why the German president, Christian Wulff, says he can't go on. Stay with us.
(COMMERCIAL BREAK)
DOS SANTOS: Germany has lost its second president in two years. Today, Christian Wulff announced his resignation, saying that he can no longer devote himself to the job. Christian Wulff who, like his predecessor, was endorsed by the chancellor Angela Merkel, is under increasing pressure for investigations of alleged bribery and political favors. From Berlin, here's Diana Magnay.
(BEGIN VIDEOTAPE)
DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: Germany's front pages have been full of the various scandals surrounding Christian Wulff since last December, when allegations emerged that he had received a home loan on very favorable terms from a businessman friend of his.
Wulff had always maintained his innocence and had seemed intent on holding onto power in the hope that these various scandals would eventually blow over.
But on Thursday, the Hanover state prosecutor applied to the German parliament to have the president's immunity from prosecution lifted which, if it had been approved, would have been a first in German constitutional history.
And then, on Friday, the resignation came. A resignation which, for many Germans, the opinion polls would suggest, was long overdue.
CHRISTIAN WULFF, FORMER PRESIDENT OF GERMANY (through translator): Germany needs a president who is supported by the trust, not just of the majority, but of a wide majority of citizens.
The developments of the past days and weeks have shown that this trust and, therefore, confidence in my ability to serve, has been adversely affected. For this reason, it is no longer possible for me to continue in my role as president.
MAGNAY: Christian Wulff is the second president in less than two years to resign. Both he and his predecessor, Horst Kohler, were German chancellor Angela Merkel's favorite candidates for the job. On Friday, she thanked Mr. Wulff for the job that he had done.
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): The president has said that it is no longer possible from him to perform his duties. In fact, it is a strength of our legal system that it treats everyone equally, regardless of which position he's taken.
With his resignation, President Wulff reiterated his conviction that he has always in a legal manner while in office and in service to the people of our country. I express my utmost respect for this position and, in this spirit, the parties of the federal government CDU, CSU, and FDP, will consult now, and then go directly to the Social Democrats and the Greens.
We propose leading discussions with the goal of finding a joint candidate for the election of the next president of the Federal Republic of Germany.
MAGNAY: Angela Merkel's popularity is at a two-year high, and the majority of Germans believe that she is doing a good job in protecting their interests in her handling of the eurozone's debt crisis.
Although her president's resignation may come as some embarrassment domestically, it is unlikely to make any difference on the course that she must chart to save the eurozone from its troubles.
Diana Magnay, CNN, Berlin.
(END VIDEOTAPE)
DOS SANTOS: Angela Merkel canceled a trip to Rome after Wulff announced his resignations. The two leaders held a conference call instead with their Greek counterpart, Lucas Papademos. The Italian and Greek governments say that all three participants are hopeful, now, that an agreement on Greece can be reached at Monday's eurogroup meeting.
Speaking of Greece, a major robbery in Olympia added to this country's troubles. Two men tied up a guard and stole dozens of precious artifacts of the Museum of Olympic History.
The president of Greece's archeologist society has been saying that the government budget cuts have made it just that little bit easier for such robberies to take place these days, while Greece's cultural minister has offered to step down as a result of the theft.
The British prime minister, David Cameron, is strengthening his ties with France. At a summit in Paris, he and the French president, Nicolas Sarkozy, unveiled a nuclear energy deal worth no more than $800 million. They also announced stronger military ties and called for tougher action against the Syrian government.
Well, Cameron and Sarkozy clashed last year over a proposal for a European financial transaction tax. Today, instead, the pair said that they are working together towards a common goal for a stronger Europe.
(BEGIN VIDEO CLIP)
DAVID CAMERON, PRIME MINSITER OF BRITAIN: We do sometimes have our disagreements on some of the European issues. They're not disagreements between, necessarily, two individuals. There's just been differences in some of the French approaches and some of the British approaches, and we need to understand that.
But our economic collaboration is actually extremely strong. France is the biggest recipient in Europe of British investment, we are a huge recipient of French investment, and we both want to see strong growth policies in Europe. We both want to see a stable and successful eurozone.
(END VIDEO CLIP)
DOS SANTOS: Well, Europe's main stock indices have ended the week on something of a high note. Take a look at this. This is Friday's performance. The DAX ended the week at a six-month high, as you can see there, rising to the tune of about 5 percent.
When it comes to Athens' rally, that extended into a second session on Friday, with one stock in particular, EFG Eurobank, up to the tune of 22 percent.
For the week as a whole, as you can see, we had some of these markets really putting on a significant gain, which is positive in the long run, as you can see, the Athens general index putting on a gain about three and a third of one percent. FTSE 100 not managing to make it up above the one percent plus mark, though.
Over on Wall Street, the Dow is at its highest level since back in May, 2008. Alison Kosik is standing by at the New York Stock Exchange, and she joins us now, live. Alison, how's it been looking? Final trading day of the week.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Final trading day of the week, and stocks are mixed. As you can see, the Dow is up 40 points, the NASDAQ is down about 9, and the S&P 500 is up about 2 points.
We're watching the Dow as it inches ever so closely and slowly to 13,000, but it doesn't look like it's going to reach that today.
It looks like European finance ministers could meet Monday. It is expected -- they are expected, rather, to sign off on Greece's latest reform proposal, and that is really one of the big reasons you're not seeing investors make any big moves on Wall Street.
There is also a long weekend ahead of us, the US market is closed Monday for a national holiday. So, once again, those are some of the factors that are limiting today's gains.
There is one economic report in focus, today. Inflation at the retail level came in a little hotter than expected, and it could start rumblings that the Federal Reserve will be less accommodating. CPI rose 0.2 percent in January, and it's the first rise in consumer prices since September.
A sharp increase in gas prices was a major factor. Food costs were also to blame, and prices are now up almost three percent over the past year. Producer prices also edged higher in January, meaning more price pressures could be in the pipeline. Nina?
DOS SANTOS: OK, have a great weekend. Alison Kosik, there, standing by at the New York Stock Exchange to tell us how trading is poised to finish the day and also the week.
Well, with the US recovery marching along nicely these days, the Fed chairman Ben Bernanke says that he doesn't see the need for another round of quantitative easing, at least not yet. That hasn't stopped some Italian counterfeiters, though, from starting their own unconventional monetary policy. Take a look at this.
Italian prosecutors are questioning eight individuals over these forged US bonds. A mafia probe led investigators to a warehouse in Zurich, where these bonds were found in cases. The papers added up to some $6 trillion. And just to give you an indication of how big that is, it's almost half of the US's totally national debt.
Now, it might seem frivolous to some, but style sells. London Fashion Week kicks off. We'll find out just how much it's worth to the UK economy. That's next.
(COMMERCIAL BREAK)
DOS SANTOS: London Fashion Week kicks off today in the midst of some pretty encouraging retail sales figures. They're up for a second month in a row, boosting the hopes that Britain may yet skirt a recession.
Fashion is the 15th largest industry across the United Kingdom, worth around $33 billion a year. Emily Reuben takes a look behind the air kissing and paparazzi flashing to a serious business with a sizable bottom line.
(BEGIN VIDEOTAPE)
EMILY REUBEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): You might think fashion is frivolous. All that fuss about hats, frocks, and shoes in their many forms. But the industry wants you to think again.
HAROLD TILLMAN, CHAIRMAN, BRITISH FASHION COUNCIL: There's got to be some frivolity attached to it to create awareness. Underneath all of this is some very serious business.
REUBEN: The big names gathered at the start of London Fashion Week to launch the British Fashion Council's strategy into how the industry can go.
According to a report commissioned by the British Fashion Council, in 2009, the UK fashion industry directly contributed about $33 billion to the UK economy. That's around 1.7 percent of GDP. The industry employs 816,000 people. That's more than works for the UK's entire motor industry.
Fashion is clearly big business. But how can it or, indeed, any industry grow at a time when some economists are predicting that the UK is headed fore recession?
REUBEN (on camera): These are pretty tough economic times. Is this a good time to be launching a sort of ambitious plan for growth and job creation in the fashion industry in Britain?
PHILIP GREEN, ARCADIA: Well, I think, as you've heard, it's the second-largest employer in the country. The answer is that we think, hopefully, we've got a business that is still developing, and we've got to go find the new talent, develop it, that's our job.
REUBEN (voice-over): The industry wants to increase training, establish apprenticeships, and build on the success of colleges like these. But it also wants to boost a side that's been neglected for years, textile manufacturing.
REUBEN (on camera): The retail side of fashion has been growing, but the same can't be said for manufacturing, which pretty much fell off a cliff in the last couple of decades. But that could all be about to change.
Fifty percent of designers showing here at London Fashion Week say that half or more of their collections are made here in the UK.
REUBEN (voice-over): It's not going to change overnight. Some of these designers told us that they're finding it harder to get UK factories to commit to their orders because so many fashion companies now want their goods to be made here, the factories can't cope with the demand.
With the queen's Diamond Jubilee and the Olympics this year, the spotlight is on London. The fashion industry will be hoping that, with that, comes more business, and that UK fashion TLC will continue to be appreciated for its contribution to growth as much as for its good looks.
Emily Reuben, CNN, at London Fashion Week.
(END VIDEOTAPE)
DOS SANTOS: Well, those kind of fashions could provide some interesting insights into the overall health of the economy. That's because things like hemlines often get shorter when consumer confidence is high and, as you'd expect, they get just a little bit longer when it's low.
There's a whole raft of interesting economic indicators out there. Take, for instance, this one. The former Fed chairman Alan Greenspan once said that men's underwear was an important barometer, because when money gets tight, men buy fewer pairs of underpants.
Another luxury item that often gets cut back on during times of recession is coffee and, for waitresses serving that kind of coffee, here's an interesting note for you. You sometimes get just a little bit more attractive during a downturn. The struggling businesses do all they can to try and lure customers through the door.
On an equally bizarre if not more somber note, experts have also found that the number of bodies in the morgue can be an effective barometer for gauging the health of the economy. That's because expensive death taxes and funeral costs mean that during lean times, fewer bodies are claimed and buried.
Up next here on QUEST MEANS BUSINESS, the happy homecoming for a Caterpillar as it announces plans to bring manufacturing and over thousands of jobs back to the United States.
(COMMERCIAL BREAK)
DOS SANTOS: Welcome back. More QUEST MEANS BUSINESS in just a moment's time, but first, let's get you updated with the news headlines.
Relentless shelling in the Syrian city of Homs for 14 straight days has taken place. Despite the onslaught, anti-government protesters took to the streets again, there, and in other cities across Syria, as well. Activists now say that at least 56 people have been killed this Friday.
News Corp chairman Rupert Murdoch has visited the "Sun" newsroom in London, hoping to calm the staff's anger there. Nine "Sun" journalists have been arrested in the investigation into alleged phone-hacking and bribery. Murdoch said that the "Sun" will add a Sunday edition, now, and that the arrested journalists can return to work.
The president of Germany is resigning amid scandals over alleged political favors and financial misconduct. Christian Wulff made the announcement after prosecutors asked the parliament to strip him of his political immunity. Wulff's resignation has been seen as an embarrassment for the German chancellor, who supported his bid to become president.
Western nations are welcoming a letter from Iran offering to restart stalled nuclear talks. Tensions over Tehran's nuclear program have been escalating with fears that Israel could launch a preemptive strike. Earlier, the UN Secretary-General said that the nuclear dispute could only be resolved by diplomacy.
Dutch Prince Johan Friso is in intensive care after having been buried in an avalanche in Austria. Authorities say that he was under snow for about 15 minutes before he was rescued and airlifted an Innsbruck hospital. The prince is the middle son of Queen Beatrix of the Netherlands.
Barack Obama has been pushing for manufacturers to keep jobs in the United States now. And Caterpillar certainly seems to be heeding that kind of a call.
This company has just announced plans to build a manufacturing plant in Georgia, bringing about 1,400 jobs to the state and at least 3,000 more to the entire country as a whole.
All of this follows a move in November to try and shift tractor production at this company from Japan and back into North America.
CNNMoney's Poppy Harlow spoke to Caterpillar CEO, Doug Oberhelman, earlier, and she joins us now live from New York -- hi there, Poppy.
What did he have to say?
POPPY HARLOW, CNN BUSINESS CORRESPONDENT: Hi, Nina.
This is very interesting news, especially for the U.S. market, which has seen so many manufacturing jobs go elsewhere. As you said, bringing those manufacturing jobs from Japan into the southern United States.
But what's also critical here is what Caterpillar thinks this means for the global economy. Do they see U.S. demand growing?
Where are they seeing demand growing?
And particularly, how do they view the state of Europe right now, in the middle of this debt crisis.
I asked the CEO of Caterpillar, Doug Oberhelman, all of that.
Take a listen.
(BEGIN VIDEOTAPE)
DOUG OBERHELMAN, CEO, CATERPILLAR: In 2012, we're seeing growth just about everywhere in the world. Certainly, the U.S. is recovering. I think that the fundamental economy here in the United States is stronger than -- then people think or have...
HARLOW: Yes.
OBERHELMAN: -- know about. I think that's going to go. Brazil is red hot, as you mentioned. South America is doing very well.
China is recovering and coming back from a slowdown last year and we see that happening. Europe is a mixed bag. Northern Europe is...
HARLOW: Yes.
OBERHELMAN: -- is OK. Southern Europe is in -- in deep trouble. I think Western Europe is in a recession.
The Middle East and Africa, very, very strong.
So lots of good news for us around the world right now.
HARLOW: I want to pick up on Europe, because that's an area of so much interest right now. Let's go a little deeper on Europe.
What are you seeing there?
You said Western Europe, in your opinion, is in a recession.
What is it meaning for your business?
How long-term do you think the slowdown there will be?
OBERHELMAN: Well, I think Western Europe, the classic definition of Western Europe, has entered into a recession. I think it will be a mild one.
HARLOW: Yes.
OBERHELMAN: We're all trained now to -- that a recession is going to look like '08, '09 and '10. It won't look like that, in my opinion, in Europe. But it is a slowdown.
Our business has done pretty well and held up, primarily due to a lot of things going on in Northern Europe and some special big projects around dirt moving and earthworks around -- around the continent.
So we're a bit more optimistic. But there's no question Europe -- Europe needs some -- some economic growth and recovery. And we think it's going to be a little while before that happens.
HARLOW: So you just told me that you think that China is picking back up from the slowdown that we saw in 2011. But I was speaking earlier this week with hedge fund manager Jim Chanos. He's a big China skeptic. And he mentioned Caterpillar to me. He said, look, even Caterpillar is building factories in China to export out of China.
Is that the case or are you building factories there because you're seeing demand increase exponentially in China?
OBERHELMAN: No, no. We -- we are actually a net exporter to China. And our exports from the United States have grown faster than our growth inside China.
We're really not taking anything out of China, because the market there has been so good. We have 16 plants today, another half a dozen in some sort of planning or in -- in build out.
The market did slow last year, where we were thankful for. I think I mentioned that to you earlier. That helped the market consolidate a bit.
And we're seeing now, after the Chinese New Year in January, a bit of a recovery, when I think will be healthy.
Year-on-year '11 over '10 for us in China was up significantly.
So we -- we had a good year in China in 2011.
(END VIDEO TAPE)
HARLOW: And he's bull on China going forward, Nina.
And I've just got to give you some of these numbers, because they're astounding. Capital, a 60 percent increase in Q4 earnings in 2011. Expecting 2012, this year, to be record year, expecting the earnings to increase 25 percent this year.
And you can thank a lot of that to markets like China, Brazil and the U.S., that's coming back.
DOS SANTOS: Yes, it's an interesting dynamic that things have changed so much that China is one of those main markets that they're exporting to, but, crucially, not exporting jobs, it seems...
HARLOW: Right.
DOS SANTOS: -- Poppy.
How is this going to work with the president's plan to try and create more jobs in America?
HARLOW: You know, it's a very good question. The announcement coming today from Caterpillar is obviously very welcome news to the Obama administration, I am sure, 1,400 direct jobs created at this plant, 2,800 more jobs supported by it.
What's interesting to see -- and you -- you see this clearly in the United States, is that as we push more for more manufacturing, a lot of these factories are getting built in the Southern United States, mainly non-union states, right to work states. This Caterpillar plan is going to be non-union. You saw it with VW, building a billion dollar plant recently in Tennessee.
This is happening with even foreign automakers, coming into the U.S. to create their cars, to build their cars, to create U.S. jobs. Most of those automakers are going to states like Louisiana, Alabama, going through the South. And that's something interesting to see.
But -- but, also this country desperately needs jobs, as you'll hear President Obama say, in states like Michigan, in the North, in -- in states like where I am, in New York, and less of those jobs are going there.
So there is this manufacturing jobs push, but a disproportional amount of those jobs are going to the Southern United States. It's going to be interesting to see how that is addressed. A lot of it has to do with state incentives to bring those jobs in, with taxes and the difference in the corporate tax state rates between, say, a home state like Illinois, or Caterpillar, which has a 9 percent rate, and a state like Georgia, which has, as the Caterpillar CEO told me, a more favorable tax rate. That's part of why Caterpillar made this decision -- Nina.
DOS SANTOS: And that's an excellent point. We're going to have Barack Obama speaking at a factory, a Boeing factory in Washington later on.
We'll be keeping an eye on that.
Poppy Harlow, as always, many thanks for that.
Up next here on QUEST MEANS BUSINESS, the most famous economist in the world who came from Harvard. We're not talking his theories that have got everybody watching. We're talking about his sport. Jeremy Lin winning streak goes online tonight. Get ready for Linsanity, in just a minute.
(COMMERCIAL BREAK)
DOS SANTOS: Tonight could be another chapter in the legend of Lin. The NBA's New York Knicks played the New Orleans Hornets and all eyes are firmly focused on New York point guard, Jeremy Lin.
You know the story by now, don't you?
In the last two weeks, he's gone from being just another player on the field to one of the most famous in the entire league. If his Knicks win tonight, well, it will take their winning streak to eight games. And it won't hurt the Knicks' financial fortunes, either, because since Linsanity got going, shares in the team's parent company, Madison Square Garden, as you can see there, are up almost 8 percent in total.
So you don't need a Harvard economics degree to see the power of the Lin effect, although Jeremy Lin, thankfully, does have one of those, as well. Tickets and merchandise prices have been soaring.
And, as Christine Romans now reports, the frenzy is quickly becoming a multi-million dollar phenomenon.
(BEGIN VIDEOTAPE)
(CHEERING)
CHRISTINE ROMANS, CNN CORRESPONDENT: Rabid fans, adoring headlines and shout-outs from late-night comics.
(BEGIN VIDEO CLIP FROM "LATE NIGHT WITH DAVID LETTERMAN," COURTESY CBS/WORLDWIDE PANTS)
DAVID LETTERMAN, HOST, LATE NIGHT WITH DAVID LETTERMAN: Well, we've collected for you the worst possible Jeremy Lin puns. Number six...
(LAUGHTER)
Newt Lingrich.
ROMANS: This is what, pardon the pun, Linsanity feels like in New York City right now.
UNIDENTIFIED MALE: Linsanity, baby, I'm loving it.
ROMANS: And sporting goods store, Modell's couldn't be happier.
MARK SAKS, STORE MANAGER, MODELL'S TIMES SQUARE: We got our Lin shipment, actually, about an hour ago. And it's already half way gone on the white.
ROMANS: Modell's workers have been delivering truckloads of Lin apparel to their New York stores this week and fans are snapping them up at point guard speed, including these tourists from Taiwan, who, one afternoon alone, spent hundreds of dollars on Lin shirts to ship back home.
UNIDENTIFIED MALE: Oh, man, you guys aren't saving anything for us real Knicks fans.
UNIDENTIFIED FEMALE: I have no money now. Poor old me.
ROMANS: Lin now has the best-selling jersey in all of the NBA.
(on camera): But clothing sales are just part of the business of Lin. Shares in Madison Square Garden, where the Knicks play, recently hit all- time highs. Knicks' cable TV ratings are up 70 percent. And the price of a ticket to see the Knicks play here is through the roof.
DAVID ABRUTYN, SENIOR VICE PRESIDENT IMG CONSULTING: Knicks ticket sales are up over 100 percent to get in the building for some game. On the road, a couple of nights ago in Minnesota, it was the fourth largest crowd in the history of that franchise.
ROMANS: Long-suffering fans are already talking back.
UNIDENTIFIED MALE: I was a season ticket holder for about 12 years and then they just weren't playing well. So I had to give up the tickets. And now that they're playing well again, you know, I'd think about doing it again now.
ROMANS: It's enthusiasm like this that has sports marketers tallying up the earnings potential for a player who only recently was passed over by two teams before landing with the Knicks.
SERGIO MORALES, SENIOR VICE PRESIDENT, HILL & KNOWLTON STRATEGIES: If he becomes an individual who continues to transcend the NBA, who continues to influence the Asian-American community, those numbers could be well into the $20 million range, if not more
ROMANS: Lin's only known deal right now is with shoe maker, Nike. But new firms will surely be knocking on the doors, not only in the U.S., but in massive global markets like China, where Lin's shirts are already selling fast online.
ABRUTYN: It's that all-American story of, you know, anything can happen if you work hard. And from a marketing standpoint, that's, you know, that's an unbelievable thing.
ROMANS: Marketers stress Lin must keep his game up to win the really big bucks.
UNIDENTIFIED MALE: We easily inflate our basketball stars in New York City, but they're easily deflated, as well.
ROMANS: But failure is farthest from the minds of fans now.
(SHOUTING)
ROMANS: At Modell's, tourists Eva (ph) and Shelley (ph) are back, paying cold hard cash for more Lin merchandise and earning the gratitude of the head of the company itself.
MITCHELL MODELL, CEO, MODELL'S: So 10 days ago, you didn't know who Jeremy is. And now everyone is in love with this guy. It's unbelievable.
ROMANS: A lot of people are hoping that the business of Lin has legs.
Christine Romans, CNN, New York.
(END VIDEOTAPE)
DOS SANTOS: Time for an update on the weather forecast for you now.
Jenny Harrison is standing by at the CNN International Weather Center -- Jenny, good afternoon to you.
First of all, tell us how things are looking in Europe, because we're a little bit closer to the weekend than you are.
JENNY HARRISON, ATS METEOROLOGIST: Yes, well, Nina, it's actually going to get a bit cooler for you across in the northwest of Europe, across in the UK. But I was also going to talk, of course, about the avalanche risk. You were talking about the Dutch prince who, at the moment, as we know, is in critical condition after getting caught in an avalanche in Austria. It's been a very unsettled picture across this portion of Europe for the last few days. We've seen quite a bit of heavy snow which has come in quite rapidly across that particular region. And that's the location or certainly very close to where he was.
And avalanches, of course, they can happen any time of year. We tend to hear more about them this time of year and I'm sure one of those reasons is because it is the typical time, certainly in Europe, to be out on the ski slopes.
Thousands of people do get caught up in avalanches every single year. And about 150 people died annually. And, in fact, that number has gone up over the last few years.
There are a number of factors. Obviously, the weather plays a big part. But the terrain, the type of snow, the wind, in particular, and the direction of that wind, as well.
And then, of course, it's where you are on the mountainside. And we do know that the prince was actually off piece. So always the recommendation is to be on piece. That is considered to be safer areas within these ski resorts.
And it was an avalanche warning there before that was posted. And the snow at that point is described as being poorly bonded. So you get the general idea, is that it's very unstable snow. And as you can see, five is actually at the top of the scale. So conditions were certainly ripe for avalanches.
And there are actually numerous warnings in place across in Europe. All these countries in blue have got some form of avalanche warning in place right now.
It's been mild across the northwest, mostly rain there. It will be continuing to snow just across into Scotland, this next system comes through. So although it's been very mild across the northwest and even the central areas, the cold air is soon coming in. You can see that it will be heading in toward the end of the weekend.
Temperatures in London and Paris not cold, cold in the overnight hours. But it will feel cool to what you've had for the last couple of days and certainly temperatures just below average.
Again, the snow, though, particularly heavy in Turkey over the next 48 hours.
Windy conditions, too, coming with that system. So do be very well aware of that. There could be some long delays at the airports. And, as I say, when it comes to temperatures for the weekend, fairly mild out toward the west. And we've got five and six there in Vienna -- Nina.
DOS SANTOS: OK. Jenny Harrison, many thanks for that.
And that's it for this edition of QUEST MEANS BUSINESS.
I'm Nina dos Santos in London.
MARKETPLACE AFRICA is next.
And whatever you're doing, have a great weekend.
(COMMERCIAL BREAK)
ROBYN CURNOW, HOST: You're watching MARKETPLACE AFRICA.
I'm Robyn Curnow at the Cape Point Ostrich Farm just outside of Cape Town.
Now, more ostrich are farmed here in South Africa than anywhere else in the world. It's big business worth hundreds of millions of dollars, most of that coming from exports of leather, feathers and meat.
Now, the industry itself, though, has been decimated, in part, because of an outbreak of bird flu. And in Otuan (ph), which is the center of the ostrich trade in the world, farmers are struggling to cope.
(BEGIN VIDEOTAPE)
CURNOW (voice-over): This was Highgate Ostrich Show Farm in its heyday. For nearly 100 years, tourists have been coming here to ride ostriches. Now, there are no birds, only an abundance of weeds.
ARENHOLD HOOPER, HIGHGATE OSTRICH SHOW FARM: We'd normally find, in this paddock here, would have about 30 -- 30 breeding birds, trained ostriches that would -- we would entertain the guests.
CURNOW: Arnold Hooper's family have been running this farm for five generations. After tests showed that the H5N2 virus had also spread to his farm, all 1,500 birds had to be culled.
HOOPER: Well, we don't have a business at this stage. Our business is closed.
CURNOW: His fields have been empty for eight months now and he is frustrated. He wants to be able to reopen his business and reemploy the staff he was forced to make redundant. But the authorities have banned restocking until the entire region is declared virus-free.
HOOPER: Tremendously frustrated. It's -- it's been a long battle of -- of unanswered question. It's been sleepless nights. It's been staff concerns. It's been financial concerns. We still don't have the green light. So the sleepless nights and the -- and the frustration, it -- it still carries on.
CURNOW: This meat exporting farm was not infected by the virus, so the ostriches were allowed to live. But it has been hit by the EU import ban on all ostrich meat from this area.
Officials say this was put in place to prevent the disease spreading to poultry and to protect consumers.
The results of these latest tests are crucial. If no trace of avian influenza is found, the government can deem the outbreak to be over. Only then can an application be made to the EU to lift their ban on meat imports and farmers can restock.
Since the outbreak, sales of ostrich leather goods have continued. But according to Anton Kruger, from the business body representing the ostrich industry, even if the ban is lifted, it will take years to recover.
ANTON KRUGER, SOUTH AFRICAN OSTRICH OSTRICH BUSINESS CHAMBER: It will take at least three years for industry -- for the industry to recover. But the impact of this on the -- on the industry is -- is severe because the ostrich meat contributes 62 percent of the income for ostrich, the leather about 3 percent and then the eggs and the feathers the remainder. This occurrence of the virus was at a very bad time. It was in the midst of a severe drought in the main ostrich production areas of South Africa. It was in the time where the after effects of the international economic recession were still felt.
CURNOW: Just in case the show farm never reopens, the staff at the Hooper's farm have started a government retraining program, while the people of Otuan wait for the test results.
But Hooper is determined that even if there are more delays, one day, he will be able to get tourists riding his ostriches again.
HOOPER: It's in our blood to do what we do and we'll keep fighting for that. I will not get out of this industry. I will keep fighting until we get birds back on our property again and -- and do what we have been doing for more than 100 years.
(END VIDEO TAPE)
CURNOW: Arenhold Hooper there on his hopes for rebuilding his business.
But there's more to the ostrich industry than just eating the meat or catching a ride on one of them. Find out after the break why everyone from Chanel to the Moulin Rouge relies on South Africa's ostrich industry.
(COMMERCIAL BREAK)
CURNOW: Chanel has just received their order. The Rio Carnival ordered 15 tons last year and the Moulin Rouge can't do a can-can without them.
What are they all clamoring for?
Well, it's these -- ostrich feathers. Now, even though the EU has banned South African ostrich meat, they haven't got restrictions on ostrich feathers. In fact, the demand has never been so high.
(BEGIN VIDEOTAPE)
CURNOW (voice-over): You can ride them, eat them and you can also wear them. And it's this versatility that is offering ostrich farmers some respite from the financial losses of the bird flu outbreak.
SEBASTIAAN MEYER, KLEIN KAROO INTERNATIONAL LTD: This is a special fringes that was made for Chanel, Paris. And there's a special technique to do it. Like this looks like zebra. It looks like a zebra.
CURNOW: Sebastiaan Meyer is the head of sales for the largest ostrich feather company in South Africa.
MEYER: They use it on dresses, making fasteners or shoulder flowers or -- yes. The last 12 months it became fashion again, like Chanel, Dior and Louis Vuitton have ordered from us. We've got also good, a not direct customer in London. (INAUDIBLE) the queen's head, from the (INAUDIBLE) head.
CURNOW: Dresses worn at the Moulin Rouge in Paris also use feathers from South Africa, according to Meyer.
But it's carnivals that are particularly lucrative.
MEYER: Carnivals is the biggest (INAUDIBLE) at the moment. Like the Rio carnival, it was like 15 tons from us for one carnival. And they replace it every year. And the same with the New Orleans and the Canarian Islands. Yes. And all the ostrich feathers is coming from our factory.
Oh, there's nothing like ostrich feathers, they're -- because it's got movement. All other kinds of feathers are stiff. There's no movement. The ostrich feathers just complete the outfit and it's got, obviously, movement, yes.
CURNOW: Things are quite so good for the ostrich leather industry.
ANTON KRUGER, South African BUSINESS CHAMBER: After the effect of the international economic recession affected the sale of ostrich leather and ostrich leather products, because those are luxury items. International demand for both of these products, especially the feathers, are very high. For the leather, the demand has dropped because of the international economic recession.
CURNOW: Sebastiaan Meyer believes his feathers are recession-proof.
MEYER: Because this is like a feel good (INAUDIBLE), a feel good product. And, yes, it's -- it's -- and during bad times, people like to feel good and do shows and they like feathers and yes, all the nice shows. In Paris, Toledo, the Moulin Rouge, everything is going from strength to strength, yes.
(music)
CURNOW: Fashion is the market the ostrich industry is determined to expand into, even sponsoring ostrich leather in Milan's fashion schools so designers of the future are familiar with the product and its potential.
(END VIDEO TAPE)
CURNOW: Well, one man who knows about raising awareness of South Africa's ostrich industry on the catwalk is Gavin Raja.
The Cape Town-based fashion designer has even held a fashion show in Paris using ostrich products.
Well, for this week's FaceTime interview, we sit down with Gavin to talk about feathers and changing perceptions of Africa and her designers.
(BEGIN VIDEOTAPE)
CURNOW: Ostrich, for you, is not just about fashion, it's about business, isn't it?
Gavin Raja, South African fashion designer:
Absolutely. You know, for us, I think one of the kind of competitive kind of advantages or the things that you can kind of put out there internationally is the fact that you have access to kind of exotic skins and -- and beautiful kind of hides. So it's something that we use a lot in our collections. And it impacts in terms of our bottom line in terms of like the collections we produce always have to have some exotic skin.
CURNOW: And you've actually shown in Paris, particularly with ostrich.
What was that like?
RAJA: I think, for us, it's always interesting coming, you know, from Africa, despite having to kind of overcome more stereotypes than the average designer has and also not really having access to everything that other designers have sitting very kind of comfortably (INAUDIBLE) in Europe or wherever they are.
So for me, it was about looking at what we had and seeing how we could refine that and develop that and take it to a new level.
So, you know, we showcased it in 2006 and it was the first time we premiered this kind of technique, which was foiling (ph) and ostrich skin. And, obviously, nobody believed it came from South Africa.
But at the same time, nobody believed that there is craftsmanship that exists within Africa, which is at a level which is as good as the couture produced in Paris, if not sometimes better, you know.
CURNOW: Because that's the thing, I think what you're alluding to is that there are stereotypes with the sort of tribal look, that these tribal skins...
RAJA: Of course.
CURNOW: -- are not very sophisticated.
RAJA: Yes. Of course it comes from Africa and they just have to have a leopard print, it has to have some leopard skin, it has to have a porcupine quill. And, you know, so those are things that you know of, you know, you work so hard in South Africa and Africa kind of just overcoming other stereotypes and other forms of discrimination.
So when you go on an international platform, you know, it's always, ah, such fun, it comes from Africa.
CURNOW: Let's have a look at this one. I mean this is a beautiful way to do ostrich feathers.
RAJA: Yes, it's very light and it's been done very nicely for us. And we've had it kind of custom dyed.
So, you know, again, we've been using this for a long time except that I know we have...
CURNOW: There's a lot of shimmer and...
RAJA: Yes.
CURNOW: -- shimmy in here, isn't there?
RAJA: Absolutely, combined with a bunch of (INAUDIBLE).
CURNOW: So what -- what have you done here?
RAJA: And so this is actually an ostrich skin. And the -- this was the first -- this is actually a piece from the 2006 Couture, which was just the skin, which had had, for the first time, the metal kind of foil technique that was used for it in Paris.
And this was a very interesting thing because before those people have only assumed that ostrich was pretty dull and this was, you know, it was just the kind of skin which had -- lacked luster, really.
And now, we've been able to look at doing...
CURNOW: Give it some bling.
RAJA: Give it some bling.
(END VIDEO TAPE)
CURNOW: Well, from all of us, that's this week's show.
I'm Robyn Curnow in Cape Town.
Goodbye.
END
