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First Move with Julia Chatterley
Mark Zuckerberg Responds to the Whistleblower's Allegations; Taiwan's Defense Minister Warns China; Oil and Gas Prices Spark Inflationary Fears. Aired 9-10a ET
Aired October 06, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:06]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley, this is FIRST MOVE, and here is your need-to-know.
Facebook face off. Mark Zuckerberg responds to the whistleblower's allegations.
Taiwan tensions. The island's Defense Minister warns on China.
And energy eek. Oil and gas prices spark inflationary fears.
It's Wednesday, let's make a move.
Welcome once again to FIRST MOVE. We've got another jam-packed show for you this Wednesday with an A-list or should we say D-list of great guests.
Dell founder and CEO, Michael Dell will join us to discuss "How to Play Nice, but Win." That's the title of his new book, of course.
Plus, Jim Fitterling, the CEO of chemical giant, Dow, that's the other D on his push for sustainability and how this plays into rising energy costs and
the worst inflation spike in decades.
One more D, and that's defiant. Mark Zuckerberg fights the devastating whistleblower allegations against his firm. He insists Facebook is a friend
not foe. Facebook investors pretty defiant, too, or at least resilient. The shares rose two percent Tuesday, but is still down some two and a half
percent since that "60 Minutes" documentary expose, and let's not forget Monday's service outage. The latest on all of that coming right up.
Actually, D stands for drop. Take a look at that. The tech heavy NASDAQ taking back a lot of Tuesday's gains premarket. Europe, also a sea of red.
Soaring energy costs and rising global bond yields, I think reflect a renewed concern about stagflation -- stag, as in no growth, but higher
inflationary prices or weaker growth.
Oil is trading around seven-year highs. Brent above $80.00 a barrel. U.K. gas prices, natural gas prices also hit records and it is all spilling into
bond markets. U.S. 10-year bond yields are back above the one and a half percent level. At some point you have to assume the Federal Reserve has to
remove support sooner to tame rising prices.
Shorter term yields jumping as well, a reflection of the still unresolved battle over the U.S. debt ceiling.
Oh, it's a busy Wednesday. Let's get to the drivers.
And that Facebook faceoff. Mark Zuckerberg is pushing back against claims by whistleblower, Frances Haugen saying accusations that Facebook puts
profit over people are simply not true.
Among other things, the company is accused of knowingly putting children at risk.
(BEGIN VIDEO CLIP)
FRANCES HAUGEN, FORMER FACEBOOK PRODUCT MANAGER: I believe Facebook's products harm children, stoke division, and weaken our democracy. The
company's leadership knows how to make Facebook and Instagram safer, but won't make the necessary changes because they have put their astronomical
profits before people.
(END VIDEO CLIP)
CHATTERLEY: Donie O'Sullivan is on the story for us. Donie, great to have you with us. This was a message to the workers. But obviously, Mark
Zuckerberg said he wanted to make it public and share it with people. And I've pulled out two quotes because I want you to react to them.
The first: "Many of the claims don't make any sense. If we want to ignore research, why would we create an industry leading research program to
understand these important issues in the first place?" Just because you create research doesn't mean you follow it and act on it. Donie, what do
you make of this line?
DONIE O'SULLIVAN, CNN CORRESPONDENT: Yes. Precisely. And I mean, it's about cherry picking what research results they want, right? We saw a very
clear example of that just a few weeks ago,
Facebook released these numbers for the second quarter of 2021, sort of painting a rosy picture that showed the best performing links and posts on
the platform were about nice things like your pets and cooking and family outings and things like that.
But some people started to ask well, what did quarter one look like? What did the first quarter -- the first three months of this year look like? And
eventually that report, which Facebook chose not to release was leaked to "New York Times" and it showed one of the top performing links on the
platform in the first quarter of this year was a piece undermining the vaccine -- COVID vaccination.
So in that case, Facebook executives actively worked to withhold research from the public. Well then, for the second quarter pushing out something
that painted a rosy picture. So I mean, they had -- it's impossible at this point to really trust Facebook to portray their own research accurately,
which is a shame because they do have so many good people working there I mean, very talented researchers working there.
But in terms of how the company executives portray us, it's impossible to trust them at this point.
CHATTERLEY: I mean, you can create lots of research, to your point, I think cherry picking there was the phrase.
The second thing that stood out to me, "The argument that we deliberately push content that makes people angry for profit is deeply illogical. We
make money from ads, and advertisers consistently tell us that they don't want their ads next to harmful or angry content."
[09:05:19]
CHATTERLEY: Donie?
O'SULLIVAN: Yes, well, I mean, this also goes back to the cherry picking of facts, right? I mean, they'll always come out with these numbers saying
we have removed 99.999 percent of hate speech, et cetera, but then you go on the platform, and you can find it pretty easily.
This week, Senator Blumenthal, over the past week revealed that his team had set up an account as a 13-year-old girl started following some pages
about eating disorders. And Instagram's own algorithms then started pushing promotion, more and more and more and more pro-anorexia, pro-eating
disorder accounts to this 13-year-old.
So I mean, one, I think advertisers probably don't know what the half of what their content is showing up against. And also this point was made last
year during the hate -- Stop Hate for Profit campaign where there was a brief boycott by some major advertisers.
But some brands feel like they can't avoid Facebook, right? Because Facebook is the Facebook platform. It's Instagram, its WhatsApp. Folks --
some advertisers feel like Facebook cannot be avoided.
CHATTERLEY: Yes, advertisers don't want to be placed next to angry or harmful content. Fine. You place them somewhere else. There's plenty of
content. What advertisers pay for is eyeballs, and Facebook has so much of that and great at drawing them for better or for worse.
Hmm, Donie, we've got to wrap it up. We will reconvene on this conversation, my friend, as we continue to do.
O'SULLIVAN: Thank you.
CHATTERLEY: Donie O'Sullivan, thank you.
Taiwan is telling the world China could be ready to launch a full scale military attack on the island within the next four years. The warning comes
amid a rise in Chinese military flights over the island in recent days.
Ivan Watson joins us now. Ivan, it may not be a sign of an imminent threat, but it is a pretty potent intimidation technique.
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, yes, and you're quoting this Defense Minister who had been briefing lawmakers in Taiwan,
and I'll just clarify his quote. He said that today, China could invade Taiwan, if it so wished, and it would have to pay a price as a result of
the Taiwanese military. But by the year 2025, that price would be considerably lower.
And some of the context of this is that the Defense Minister had been speaking with lawmakers about a new budget for Taiwan's military, about
$8.5 billion to do things like build more long range missiles to try to exact a price if in fact, it came to blows.
And this comes down to the fundamental disagreement where the Chinese government insists that Taiwan is a breakaway renegade piece of its own
territory, even though the Chinese Communist Party has never ever ruled Taiwan in its history, and refuses to accept any other government or
institution recognizing Taiwan as a sovereign democratically ruled island.
And the Taiwanese have been hard pressed. Certainly, their Air Force, in recent days, it was a holiday weekend in China where you had a record 150
Chinese war planes that flew into Taiwan's Air Defense Identification Zone with some 56, I believe planes, fighters and bombers, approaching Taiwan on
Monday alone. That number tapered off on Tuesday, but it prompted the U.S. State Department to issue a statement expressing concern about China's
military maneuvers.
CHATTERLEY: I was going to ask you that. Where does the United States stand here? Because I think to your exact point, every time a nation in the
West shows any sign of treating Taiwan more like a sovereign nation rather than a sort of rogue breakaway, as China sees them and views them, then
China is irritated.
Where does the United States stand because Taiwan is strategically important for many reasons?
WATSON: Yes. President Biden actually spoke about this to journalists recently. Take a listen to what he had to say.
(BEGIN VIDEO CLIP)
JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: I have spoken with Xi about Taiwan. We agree we will abide by the Taiwan agreement. That's where we
are. And we made it clear that I don't think he should be doing anything other than abiding by the agreement.
(END VIDEO CLIP)
WATSON: Now, we think he is referring to possibly the phone conversation he had with Chinese leader, Xi Jinping on September 10th, and follow up to
that conversation is a planned meeting between Biden's National Security adviser, Jake Sullivan and Yang Jiechi. He is a top Chinese official
planned for Zurich with some hope that this is going to reduce some of the tensions between Washington and Beijing, which have continued ever since
the Trump administration, and Taiwan is certain to be one of the many issues of contention that these two officials may discuss -- Julia.
[09:10:30]
CHATTERLEY: I am glad we've got you because I was a bit confused by what he said there. So yes, watch this space. Thank you. Ivan Watson, great to
have you with us.
Okay, soaring energy prices and spiking bond yields sapping the energy from global stocks. Fed Chair Jay Powell's assurances of transitory inflation
looking a little delusionary, at least at this point.
Christine Romans joins me now. I mean, Christine, there is a lot going on, as you and I have discussed. The debt ceiling negotiations, what's going on
in D.C.? Repayments of U.S. debt, quite frankly, but we can't escape the supply chain pressures and what we see going on in energy costs and of
course, OPEC+ deciding to do nothing for now.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Yes, that OPEC+ decision, I think really kind of sealing the path of least resistance
in the near term being higher for the energy complex. I mean, a little bit step back this morning. But you know, look, this is about demand and
supply, simple economics, and you've got economies around the world that are emerging from the COVID crunch and demand is soaring, and suppliers
just can't keep up.
You know, we know that there are these ships, and there's so many -- your right, so many different threads to this, right? We know there are these
ships off the West Coast of United States that are literally backed up in a parking lot waiting to unload all of their goods. The American consumer is
clicking and buying like crazy, toys and athletic equipment and the like, you know, demand is back, and the supplies are just crunched in the supply
chain around the world.
And then you have the energy picture, you know, the OPEC+ picture, which means simply that, you know, supply can't keep up with demand here and
you've got the highest oil prices in the U.S. since 2014. Gas prices are likely moving higher.
You know, when you think about it, what that means for American consumers at least, is that the average tank of gas is going to be you know, $10.00
or $15.00 higher this year than it was last year, and that's a real inflationary measure every single week for American consumers.
So this inflation watch we thought was going to be short term is turning out to be a little more, you know -- it's still here. It's still here and
will be here I think for months to come.
CHATTERLEY: Yes, we're struggling with that transitory word here.
ROMANS: What is the definition of transitory? I thought, it was something a little briefer than this. This is a little sticky to me. It feels a
little sticky.
CHATTERLEY: Yes. Longer than we thought. Transitory. Yes. Thank you, Christine Romans.
Later in the program, we'll be speaking to the CEO of chemical and plastics giant, Dow, on how the energy crunch and rising inflationary pressures are
affecting his firm's bottom line.
In the meantime, coming up on FIRST MOVE, it's D-day. The CEOs of Dow, as I mentioned, and Dell are both on the show.
Michael Dell tells us how he started a computer empire from a dorm room at university. He will also explain how you can both play nice and win. That's
coming up. Stay with us.
(COMMERCIAL BREAK)
[09:15:55]
CHATTERLEY: Welcome back to FIRST MOVE. My next guest built his billions by building PCs. Michael Dell had a knack for making money from a very
early age, and while other children were playing sports and riding bikes, Michael's curiosity had him devouring tech publications, dissecting
computers and anything else he could find actually, even his own prized Apple II computer.
And later, when he was at university, he would buy surplus computers at a discount, deliver them to needy retailers, touring the state in a rented
van. He is a man who understands supply and demand, but also doing business the right way.
Michael pictured here in 1968 says his mother always told him to play nice, but win. A mantra which helped him build a firm that thrives today. "Play
Nice, but Win" is the title of Michael's second book, and I am very pleased to say, he joins us.
Michael, great to have you on the show.
MICHAEL DELL, FOUNDER, CHAIRMAN, AND CEO, DELL TECHNOLOGIES: Thank you very much. Great to be with you.
CHATTERLEY: It is great to have you here. This is so much better than the first book. It is human and it is funny and I didn't really understand the
title until I read it and understood sort of the relationship that you had with your mother. Are you proof that you can play nice, but win?
DELL: Yes. I believe so. I mean, look, I think competition is a great thing and it's a natural thing, but it's also got to be balanced with civility
and I think, you know, building a reputation takes a lot of work and -- but winning in the right way is something I fundamentally believe in. It is
something we talk a lot about inside our company, and it has served us well.
CHATTERLEY: As one of the quotes I pulled out where you said, "Entrepreneur is the air my family believed." And the book, and people have
to read it, but it is full of examples. You were this three-year-old stealing your father's wallet, you went to buy candy. You were found by
somebody, you were brought home, and you buried the wallet because you thought, I probably have done something wrong here.
You know, buying your own computer for the equivalent of $5,000.00 at just 14 years old from money you raised. $18,000.00 in one summer selling
"Houston Post" subscriptions and the funny ways that you go about it. I mean, you did have a knack for making money. There was something unique
about you.
DELL: You know, it felt like a fun game and a puzzle where I had to sort of figure it out and, yes, I was interested in business and technology and,
you know, fortunately I was around at the dawn of the microprocessor age and I was really lucky in my junior high school that , you know, there was
a teletype terminal and I found "Byte" Magazine and was able to learn about all of these things at a really young age when I was able to soak it all in
and I just loved it.
And you know, that kind of launched me on this path that I've been on, you know, now for -- our company is 37 years old.
CHATTERLEY: Yes, and you know, I have to keep checking back as I was reading about how old you were. At certain points, you were working in a
Mexican restaurant as a maitre d' because you were so good defending immigrants, and you were 12 years old.
Fast forward to 20 and you were actually running a company, and you decided actually that the component pieces that you were getting for these
computers in order to upgrade them were coming from places that you weren't there. I mean, they were coming from South Korea, coming from Japan, and
you got on a plane and went there.
I mean, you were sort of brave in taking risks and this was a very different Asia then.
DELL: Yes, it sure was. I remember going there in 1985, twenty years old and it was just a complete eye opener, and, you know, we set up our -- the
beginnings of our supply chain, which really became an incredible strength and still is today, particularly given some of the challenges that exists
in the world. I think one of your last segments was just talking about that.
[09:20:02]
DELL: But, yes, I think -- I think people should take more risks and I think a lot of human potential is left on the table, because people are
afraid to fail, and you know, I've been willing to take risks, and it certainly will, I've made plenty of mistakes, too. I mean, I talk about
those in the book. And you know, there are lots of learnings and experiments and things that didn't go right, but all of that led us to even
greater successes later on.
CHATTERLEY: I mean you -- as you said, you picked up and you got involved at a very nascent stage in computer technology. You built this company, you
took it public, you went private, you had a very public battle with activist investor, Icahn, of course, and at one point in the book, you
described being scared even when you were private again, and you had more flexibility to run the business, and you could see the changes, but you
were like, this is scary.
How do you overcome that fear as a founder and as a leader and to keep fighting? Because there was plenty of fight in this book.
DELL: Well, yes. And I wanted to really explain, you know, everything I was feeling during those times because, you know, if you sort of look from
the outside in, you might say oh, well, all these things just happened and everything was just great. Well, yes, it could have turned out very
differently and these things just don't happen by themselves.
You know, during those moments, you focus on the things you can control and take it a piece at a time and just wake up every day and figure out what is
the most right thing that you can do today that is going to move you forward to tomorrow.
CHATTERLEY: I mean, Dell might never have happened because your parents wanted you to be a doctor and you were at university studying. You were
pre-Med, and your parents came to visit and you were obviously involved with computers and upgrading them, and you were shoving pieces of computers
into your flat mate's bathroom cupboards in order to hide the evidence.
And you describe a very emotional period where you said okay, I'm going to stop this and I am going to do what you want me to do and you had 10 days
where you didn't touch a computer and actually, it consolidated your belief that this is what you needed to do, and this is another component, I think
of the book which is trust your gut.
How important is that in building a business, in life, quite frankly?
DELL: Yes, I mean, I think that's a pretty fundamental one, and I have followed my inner voice. But, back to that story, I mean I think the
interesting thing is that if my parents had not insisted that I, you know, stop, it might have just continued as a hobby.
I don't really know. Right?
But it was during those 10 days that I, you know, went into sort of deep reflection about all of this and it was at that moment that it really
decided to turn this into, you know, a serious business. And, you know, that was when I was 18 years old and, you know, launched the company from
my dorm room.
CHATTERLEY: I mean that's a big deal. how would you advise people today, you know, a lot of young people today want to create a business, have a
good idea, but the idea to give up your education, irrespective of what you're studying, I mean, you have children yourself. What's your advice for
those in a similar situation perhaps not having something as lucrative?
DELL: I don't think dropping out of college is good generic advice.
CHATTERLEY: Okay, good.
DELL: Your mileage may vary on that one, you know, depending on your circumstances. I mean, in my case, you know, I had already kind of ramped
the business up to about $80,000.00 a month. And so, it felt like a, you know, very obvious thing to me to get an office and expand the business and
I had the -- you know, this situation at the University of Texas in Austin where I could take a semester off and come back.
So, if the business didn't work out, you know, I'll just go right back to college.
So to me, it really didn't feel like a big risk. And, you know, fortunately everything worked out pretty well.
CHATTERLEY: Yes. They got over it. The other thing, and I wanted to talk to you about this was meeting your wife because actually in the book you
say sort of marrying her was the most important decision of your life beyond anything else that you had going on, and that you've done
subsequently.
[09:25:07]
CHATTERLEY: And you do a lot of walking and talking in the book at times when you couldn't speak to anybody else. And Susan, was sort of pivotal to
many of those decisions and your path and obviously your children. Do you think you could have done this without her?
DELL: No, I mean, you know, to have a life partner and a thought partner, to be able to reflect on all these things has just been amazing. And, you
know, we've been very blessed. And, you know, we'll celebrate 32 years of marriage here later this month.
CHATTERLEY: Congratulations on that. I know, the two of you are now advising other entrepreneurs, and I know you're also very cautious about
saying anything about other people's businesses and giving advice to other leaders.
But obviously, we've all been watching.
DELL: Well, I'm happy -- I'm happy to do that. Just usually not, you know, on national television, but I have watched --
CHATTERLEY: Yes, I know.
DELL: Obviously, with others.
CHATTERLEY: Or Apple? Or is it anything about Apple. Actually, it's Facebook. So it's equally as sizable.
The whistleblower that we've all been, I think watching this week. She said to Mark Zuckerberg and to Facebook, "Declare moral bankruptcy and admit you
need help." And I just -- again, as a founder and a big CEO and having read the book, and those moments where you were like, look, I need help. I'm
young. I need more experienced people. Is there a moment where you go, actually, I'm growing so fast, this is actually out of control, and the
best thing is to ask for help, and actually mean it?
DELL: Oh, yes. I mean, I asked for help all along the way. And I think -- I think it's really important. And you've got to find the right, you know,
resources and teams that can help you for sure.
You know, I can't really do much of anything by myself, but you know, by organizing the right resources and teams, you know, we are able to
accomplish a lot. So, you know, don't go at this all on your own.
CHATTERLEY: So hypothetically, that would be good advice if you were in the game of advising someone like Mark Zuckerberg.
DELL: Yes, for sure.
CHATTERLEY: Yes. When do you think you went from founder to leader? Because that's actually the title of the book. It's the journey from
founder to leader. And there's one point when again, you're around 20 to 21, and you're furiously reading all books on leadership, because you're
like, I've got this massively growing company, I need to hire people. But I -- you know, you're not a leader. And I do think that transition from
founder to leading a giant company, what -- with more than 100,000 workers today. When did you go, okay, I'm actually -- I'm a leader now -- I feel
like a leader; I am qualified as a leader.
DELL: Well, I was I was kind of thrust into leadership because the company grew, you know, 80 percent a year in its first eight years and 60 percent a
year for the six years after that compounded, so put any number in that math and you get, you know, 10 billion plus which that happened.
But I would say it was gradual, and fortunately, I was able to attract a number of people that helped me along the way. I described them in the
book. But yes, I mean, it was a gradual building of capability and confidence to be able to lead our teams, and I really didn't have any
choice.
I mean, I had to -- I had to lead, because, you know, otherwise -- yes, there's nobody else to do it.
CHATTERLEY: Yes. But it's funny because you were writing sort of lists, even from when you were 23 of how you wanted the company to be run, the
culture, the things that were important to you. And obviously, you've carried that forth, and it's been adapted over the years. But you were
doing that right from the get go, which is something else that stood out to me.
Talk to me about today, because I should talk to you about something about the company today and how you're doing and also about the future of work,
because you talked about this at the end and you said, look in the space of a weekend, you managed to get 100,000 workers working from home, which is
phenomenal.
Actually, technology is one thing in the past 18 months that did work, and now you're trying to find a balance between sort of flexible working, the
innovation that's created by people being together. How do you see that playing out because I think it is a challenge for us all to understand
what's the best way to work going forward?
DELL: I think every organization will find the right balance for itself, but I think when we talk with our customers, it is pretty clear that hybrid
is here to say and you know people are -- people have had this shared experience over the last 18 months where so many things worked well during
the lockdowns, you know, because of technology.
[09:30:21]
DELL: And so, you know, in many ways, I think this was a glimpse of the future. And we're not going to go back to the way it was, and there has
been this kind of massive acceleration in the use of digital technology across the world. And certainly, that's been a great benefit to our
business, our business is doing very well. We had $50 billion in revenues in the first half of the year of 15 percent in the last quarter.
So, you know, records all around and, you know, business continues to look quite strong, because I think all of society is being transformed with all
this data that's being created and the opportunities to reimagine so many industries and so many parts of our world, that you know, technology is the
fulcrum of progress.
CHATTERLEY: I couldn't agree more, and actually, I was just -- we were just showing the share price there, and I think the share price reflects
everything that you were saying there, which in light of reading the book, as well, is quite fascinating to see.
I have a final question, then I have to let you go. And I wanted to ask you, given what we're seeing in terms of the political environment in the
United States, but obviously around the world, too. How you both, you and Susan, because I do feel like, again, having read the book, it would be a
joint decision. How you feel about perhaps going into politics at some point in the future? Is it a possibility? Would you rule it out?
DELL: You know, I would say, there's less than a zero percent chance of that.
CHATTERLEY: Why?
DELL: I wouldn't be a good politician. I don't have any interest in it. It's just not my -- it is just not my thing. So no, thank you very much.
CHATTERLEY: Yes, you know, that's a shame, because we need good leadership. We desperately need good leadership.
Michael, as you can tell, I love the book. So I'm honest.
DELL: Politics is -- I guarantee you, will not be me.
CHATTERLEY: Okay. I think that's pretty definitive.
DELL: Sorry.
CHATTERLEY: It was great to chat with you. Thank you. And you know, there was a great bit as well, and I don't want to make you emotional, but your
mother and you. You talked in the book about the speech that you gave at her funeral and I'm not going to quote it directly, but you basically said
she taught you not what to think, but how to think, and I think that's a great gift, and I think that's something that came out of the book, too, in
the way that you lead.
Michael, great to have you with us.
Michael Dell, founder, Chairman and CEO of Dell Technologies. Thank you.
Hopefully, we'll speak again soon.
(COMMERCIAL BREAK)
[09:36:04]
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stocks are up and running this Wednesday. And as expected, it is a slightly weaker open, a
continuation, I think of the intense volatility we've seen over the past week. The S&P falling, rising at least one percent in each of the last four
trading sessions. It reflects the uncertainty.
And new numbers out Tuesday show continued strong growth in the U.S. services sector, meanwhile. Plus, fresh data today showing stronger than
expected private sector jobs growth with more than 560,000 positions added last month. But investors are growing more fearful over how rising
inflation and higher energy costs might eat into corporate profits and of course, hit future growth.
Take a look at these huge jumps in commodity prices. Already this year, coffee up more than 50 percent, cotton, up 42 percent to 10-year highs.
Poultry, up 34 percent. Coal up more than 230 percent as demand soars due in part to natural gas shortages.
Energy shortages hitting China and now India, particularly hard. Oil and natural gas are pulling back slightly today. But Brent crude still up 58
percent year-to-date. U.S. crude up more than 60 percent and natural gas spiking over 140 percent. Wow, that was a lot of percentages. But you get
the picture.
And among the companies closely watching the situation is Dow, one of the world's largest chemical producers and of course highly dependent on fossil
fuels. Today, it is announcing major investment plans and a strategy to cut carbon emissions to zero across its operations and value chain by 2050. The
goal: To be the world's most sustainable materials company.
Joining us now is Dow CEO, Jim Fitterling. Jim, always great to have you on the show. I think I get the message today. The message seems to be, look,
we can increase the performance of the business. But we can do it in a more sustainable way. And for you. That's no mean feat.
JIM FITTERLING, CEO, DOW: Yes, it's nice to be with you, Julia. And we announced today our investments to increase our underlying EBITDA by
between $3 billion and $3.9 billion, while at the same time reducing our scope on into CO2 emissions, and creating in Alberta the world's first zero
carbon ethylene production facility by more than tripling our capacity there and taking the off gas from both the new cracker and the existing
cracker, converting them into circular hydrogen, which will fuel that operation.
So I think it's a big step forward. It gets us into a future where you could see polyethylene with a zero carbon footprint, and I think that'll be
a game winner for the packaging industry.
CHATTERLEY: Yes, a game changer. I mean, you spend a lot of time, too, and we've talked about it in the past. This sort of circular economy that we
need where waste is concerned. And I think with all of us, when we're looking at our plastic usage, we always wonder when we're recycling, how
much will actually be recycled?
And I know, in the United States, the E.P.A. has said, look, they want 50 percent of this recycled, which suggests a lot less is. I mean, this is a
crucial part of this, too, and it's not just an individual company that that has to tackle this. It's a bigger issue.
FITTERLING: It's a big issue, and it entails the entire value chain.
CHATTERLEY: Right.
FITTERLING: We have to work with waste companies and local municipalities to get the demand and create the supply, you know, that can feed that
demand. But to give you an example, this year, our sales of products which contain post-consumer recycled materials have more than tripled. And so the
demand pull is there.
All the brand owners around the world are wanting more and they want, obviously the ability to get it faster, and we're trying to keep up with
that and their investment is going. We agreed, by the way, with targets. We have supported targets that we believe should be set to have as much as 30
percent recycled material in every package that's out there, and we work with the other plastics producers and value chain members to kind of drive
those standards.
But it takes investment and it takes a lot of small local investments to create the supply that we need to feed that growing demand.
[09:40:10]
CHATTERLEY: You know, again, I go back to plastics, because it is such a specific part of your business and a significant part of your business.
What would happen if we just turn around in a similar way that we're trying to shift the energy industry, suddenly to renewables? And said, look, no
plastics. You have to use glass, and you have to use paper. What would happen to our waste? What would happen to our CO2 footprint? Have you
looked at this?
FITTERLING: Oh, your waste would go up dramatically, so the volume of waste that would go to landfill would increase by 40 to 50 percent.
CHATTERLEY: Wow.
FITTERLING: Paper and glass have four to five times the CO2 footprint of plastics, and that's before we take plastics to a zero carbon footprint. So
plastics have been successful because they are the most sustainable packaging product out there. They also replace a lot of other materials,
because they can be stronger and lighter. And that ability to do more with less is what drives, you know, more of your automobile to be lightweight
plastics.
In fact, as we go to electric vehicles, you'll use more plastics in there because electric vehicles have a weight problem as well, from all the
weight of the batteries. Wind turbines use a lot of plastics and composites. Solar panels use a lot of plastic. So banning is not the
answer. I think you have to have policies that support all of them, but you also have to have policies that support moving them to low carbon
emissions, and that's what we're doing up in Alberta.
CHATTERLEY: Yes. Obviously, it's got to be a private and public sector deal. There has got to be coordination, because otherwise, I fear that
we're going to get this wrong.
Jim, what do you make of what we're seeing in terms of the energy complex and the rising prices and the implications for your business? Because I go
back to the point that I made before, like, if we don't get the sequencing right on this, we're introducing policies to push people to more
renewables. We're going to create, perhaps a crisis for business, for consumers as well of rising prices.
I'm just not sure we're sort of reflecting the economic realities with public policy today. How do you view it?
FITTERLING: When we talk about policy in the United States, we always advocate for an all of the above energy policy.
CHATTERLEY: Right.
FITTERLING: And that is because solar and wind are important, and I don't want to knock that at all. We sell a lot of material into solar and wind,
and we buy a lot of solar and wind power.
We just announced today, three new partnerships will be over 850 megawatts of solar and wind. So it's a considerable contribution to our own CO2
reductions. However, it doesn't have the scale to be able to replace natural gas, and natural gas is needed to replace coal if we want to move
down in CO2 emissions.
If we want to move to a hydrogen economy, the most affordable way to do it is through natural gas. Green hydrogen is a long way away. And by the way,
it is 20 times the cost of natural gas. So we need to be well-planned and well-thought out about this transition and it will be a transition.
But because we use natural gas, it does not mean we can't be low carbon. The United States have that CO2 emissions by moving from coal to natural
gas. We can do it again. And other countries can do it as well, and they will all need access to clean and abundant natural gas like we have here.
And what you're seeing right now is countries that don't have other alternatives, pulling hard on coal and on natural gas because it's
wintertime. There are not enough inventories, and they're making a big pull to try to keep their people warm during the winter. That's what's
happening.
Now, we are well positioned to be able to navigate through that. We've got our footprint in the Americas, North and South America, as well as in the
Middle East, and those will be advantaged through this, and we'll get through this, but not unlike other supply chains. Energy demand is ahead of
energy supply right now. Supply will catch up. We won't be in this state forever. And I think we just have to make sure that we don't put policies
in the way that make the problem even worse.
CHATTERLEY: Yes, a warning perhaps about the future if we get it wrong. Jim, great to chat with you. Have a good day to day and we get the message,
2050 is the date, if not before, I'm sure with your plans.
Jim Fitterling, the CEO of Dow. Thank you for joining us, sir.
FITTERLING: Great to see you.
CHATTERLEY: Good to see you, too. All right, still ahead. In the middle of a chain reaction, we look at how global supply issues are affecting the
world economy as we were just discussing.
(COMMERCIAL BREAK)
[09:47:19]
CHATTERLEY: Welcome back to FIRST MOVE. There are growing fears about the impact of the supply chain crisis and the impact it could have on the
global economy. Demand for products and resources is surging after COVID-19 and that's leading to a crunch everywhere from Beijing to Berlin.
Kyung Lah has more on the perspective from here in the United States.
(BEGIN VIDEOTAPE)
KYUNG LAH, CNN SENIOR NATIONAL CORRESPONDENT (voice over): To understand the problem on the ground, you first need to see it from the air.
COMMANDER STEPHEN BOR, U.S. COAST GUARD: We are flying right over the anchorages just south of the ports of Los Angeles Long Beach.
LAH (voice over): This is where the global supply chain meets the U.S. economy, says Coast Guard Commander Stephen Bor.
BOR: This is record breaking. It is unprecedented. There are more ships than there are parking spots. We are effectively operating a sort of
waiting lot in the Pacific Ocean.
LAH (voice over): This bottleneck of container ships as far as the eye can see carries more than half the Made in Asia items purchased by the American
consumer.
BOR: You're looking at all of the electronics. You're looking at all of the home goods. You're looking at all of the things that people are looking
forward to by this coming holiday season.
LAH (voice over): Zero ships usually stay parked here, but on this day, Commander Bor counts 55 in the ports and more drifting further out in the
Pacific. While worst here, the backup is at all West Coast U.S. ports.
LAH (on camera): What does that indicate to you about what's happening in the supply chain?
BOR: You know, I think everybody can see that things are slowing down.
LAH (voice over): Slowing down and piling up at sea, and at the ports of entry. This is what happens when a global economy snaps back after the
COVID slump of 2020. American consumers are back buying with force, but the supply chain is struggling to catch up.
MARIO CORDERO, EXECUTIVE DIRECTOR, PORT OF LONG BEACH: We need to have an Amazon state of mind in this industry. And by that, I mean Amazon changed
everything.
LAH (voice over): While shoppers clicked 24 hours a day, factories in Asia are still stopping due to COVID. Then, in the U.S., national labor
shortages and limited work hours. The Port of Long Beach is just now experimenting with round the clock operations.
CORDERO: What this is, is a wake-up call for all of us in this industry. We should realize, you can't operate with a model of yesterday.
LAH (voice over): The goal: Cut the wait time for truck drivers, the next link of the supply chain, moving containers out of the port.
UNIDENTIFIED MALE: Every day, like five, six hours in the harbor.
UNIDENTIFIED MALE: You have to wait like six hours.
LAH (on camera): Six hours?
UNIDENTIFIED MALE: Six or eight.
RUBEN PONCE, TRUCK DRIVER: I was in there for nine hours.
LAH (voice over): Nine hours, Ruben Ponce lost that he could have been moving merchandise.
PONCE: It means, I'm making less money, yes, because I can't do as many rounds.
LAH (voice over): National data shows there is a truck driver shortage. But Ponce says the problem is even more basic than that.
[09:50:07]
PONCE: So, now the port is backed up. Us, were backed up. The truckers were backed up. Everyone's backed up -- and it's just a big problem.
LAH (on camera): So it's like a chain reaction.
PONCE: Exactly, exactly.
LAH (voice over): Delayed trucks means delays at warehouses, like Canton Food Company in Los Angeles.
CHO KWAN, CEO, CANTON FOOD COMPANY: I have about eight containers out in the harbor somewhere from China and Vietnam --
LAH (on camera): Filled with food.
KWAN: Still just waiting.
LAH (voice over): That means for this warehouse, empty shelves with no date to fill them. Basic economics are at play, scarcity drives up prices.
LAH (on camera); So it's almost doubled in price.
KWAN: I would say maybe at least 70 percent.
UNIDENTIFIED MALE: One of the cheese is ready.
LAH (voice over): Prices for ingredients restaurant owner Ricardo Mosqueda has to pay.
RICARDO MOSQUEDA, CO-OWNER, LA TAQUERIA BRAND: All those different products that you have to substitute, you have to change. Now, 30 percent
more, 50 percent more, 100 percent more.
LAH (voice over): This La Taqueria Brand location operates in a renovated shipping container. The supplies Mosqueda needs sit out at sea in the same
metal bins. A cruel irony after barely keeping his restaurant open through the pandemic.
MOSQUEDA: We worry as far as -- because you don't know what's going to happen, right? You don't know what's next.
LAH (on camera): How long are these ships going to be floating out here?
BOR: I really can't say how long they're going to be like this. I think we're all going to wait and see how long this shakes out.
(END VIDEOTAPE)
CHATTERLEY: More FIRST MOVE after the break.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE.
Expo 2020 in Dubai is offering more than just the next big thing. It's also potentially a way to shape the mindset of its millions of visitors. CNN's
Eleni Giokos explains.
(BEGIN VIDEOTAPE)
ANNOUNCER: The 1933 Chicago Fair lived up to its billing as a Century of Progress.
ELENI GIOKOS, CNN BUSINESS CORRESPONDENT (voice over): Expos or World Fairs have helped revolutionize everything from transport to commerce. They
have led to lasting inventions from the mobile phone to live TV, and even ketchup.
ROBERT RYDELL, PROFESSOR OF HISTORY, MONTANA STATE UNIVERSITY: Other innovations ranged from pick your favorite car, your automotive
technologies, x-ray machines, Campbell's Tomato Soup, these are all innovations that debuted at World Fairs.
GIOKOS (voice over): Today, they are no longer just about revealing the next best thing. They are also being used to drive critical change in the
mindsets of its millions of visitors. And it's in the Opportunity Pavilion where changing attitudes are set to be explored.
ANOOSHA AL MARZOUQI, DIRECTOR OF OPPORTUNITY PAVILION: Expo is my happy place. I cannot wait for visitors to come and experience stuff.
[09:55:03]
GIOKOS (voice over): As Director of the Opportunity Pavilion, Anoosha has a clear mission -- showing the potential of individuals and communities to
shape the future when it comes to things like water, food, and energy.
AL MARZOUQI: These are the basic needs of human beings. To be able to make it more available to people, we found three people in their communities who
have made the change.
GIOKOS (voice over): Several miles away on the outskirts of Dubai, one of those people Mariam Al Juneibi, a farmer turned community activist is busy
changing the mindset of her fellow growers.
MARIAM AL JUNEIBI, FARMER TURNED COMMUNITY ACTIVIST: We grow citrus we grow figs, all kinds of vegetables we can grow here.
Mariam says her mission is to get her fellow farmers to embrace organic and sustainable practices.
AL JUNEIBI: Welcome. I will show you now the sample of hydroponic system.
GIOKOS (voice over): She says she has trained hundreds of farmers and educated schoolchildren throughout the United Arab Emirates. Now, her story
is among several being highlighted at the Opportunity Pavilion at Expo 2020.
AL MARZOUQI: These stories are important because it shows us that there are people out there who are making a change, and this change has a huge
impact on the community.
AL JUNEIBI: Water, water, water.
GIOKOS (voice over): It's one of those key goals of Expo 2020, trying to get its millions of visitors to become agents of change in their local
communities.
Eleni Giokos, CNN, Expo 2020 Dubai.
(END VIDEOTAPE)
CHATTERLEY: And that's it for the show. "Connect the World" with Becky Anderson is next.
Stay safe and I'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
