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Quest Means Business
Theresa May Promises to Give Lawmakers a Vote on Whether to Hold a Second National Referendum on Brexit; Formula One Legend Niki Lauda Dies at Age 70; Celebrity Chef Jamie Oliver's Restaurant Chain Collapses. Aired 3- 4p ET
Aired May 21, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ISA SOARES, CNN INTERNATIONAL CORRESPONDENT: Stocks are rebounding slightly after the U.S. grant a temporary reprieve to Chinese tech giant,
Huawei. It is Tuesday, May the 21st. Four-time lucky. Theresa May tries again offering MPs a vote on a second referendum if they back her new
Brexit deal. A warning from the OECD. The trade war is dragging down global growth. And unappetizing news for Jamie Oliver. The celebrity
chef's U.K. restaurant empire collapses.
I am Isa Soares, in for Richard Quest and I too, mean business.
A very good evening to you. A final roll off the dice by the British Prime Minister. Theresa May unveils what she is calling a new Brexit deal and
warns MPs they have one last chance to leave the European Union.
Now the bill contains a raft of concessions to try and break the deadlock in Parliament. And chief among them, the promise to give Westminster a
vote on whether to hold a second referendum. Theresa May laid out fresh pledges on workers' rights, environmental provisions and the backstop
arrangement over the Irish border.
She also calls for a temporary customs relationship with the European Union. Now, the Prime Minister was unequivocal saying there is no option
before lawmakers to meet her in the middle. Take a listen.
(BEGIN VIDEO CLIP)
THERESA MAY, BRITISH PRIME MINISTER: I say with conviction to every MP of every party, I have compromised. Now, I asked you to compromise, too.
We've been given a clear instruction by the people we are supposed to represent. So help me find a way to honor that instruction, move our
country and our politics forward and build a better future that all of us want to see.
(END VIDEO CLIP)
SOARES: Well, Phil Black is here. He was listening to that speech. And Phil, what did you make of it? Because here, she is saying, "I've made
compromise. This is your time to also make a compromise." From what you're seeing, are MPs backing her deal?
PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: So it's her last chance because she already said she was going to go after this vote. It's a
desperate attempt to try and win support across the House. She's presented little morsels. That's what these concessions are to try and build cross
party support, in the hope also losing some of the support she already has.
So that's the delicate, if not almost impossible balance that she's trying to manage here. And certainly it seems that from within her own party, the
hard Brexiteer wing, they're pretty outraged. They're saying that this is even more confusing. More of a mess, more of a dog's breakfast.
I think we can, as an example of this show a tweet here from Boris Johnson, the former Foreign Secretary, the man who was highly tipped to replace
Theresa May, this is what he said, "With great reluctance, I backed meaningful vote three, now we are being asked to vote for a Customs Union
and a second referendum. The bill is directly against our Manifesto. And I will not vote for it. We can and must do better and deliver what the
people voted for."
What he is saying there is that these concessions are simply a bridge too far, even though that these concessions are not what the people who are
looking for these sorts of concessions ultimately want. So for example, on another referendum, those who want another referendum, they want the
guarantee of another referendum, not just the chance to vote on another referendum.
SOARES: Okay, so you've talked a bit about where some within her own party stand. Where does Labour stand on this, because it seems she's making a
lot of concessions to almost help Labour to kind of almost go half way.
BLACK: So the leadership of the main opposition parties, including Labour, they're sort of -- they haven't responded to this in a very warm way, but
this wasn't really designed to attract the support of the leadership, it is about peeling off individual Labour members or other party members in the
hope that she can build a majority that is just big enough to get the withdrawal agreement out of the way.
SOARES: It's a huge gamble thought.
BLACK: It is indeed, at this late stage, having had her deal voted down three times in its very pure form when she was just trying to attract
really just Conservative Party supporters, the support from the more traditional political allies, she now says she knows she can't do it that
way. The only chance she has is to build a wider base of support, something that just gets it over the line.
SOARES: Okay, and if it doesn't get over the line, what are we looking at here?
BLACK: Then, well, as I say, she has already said she is going to go, there would be even greater pressure for her to go and to go quickly,
because that's also one of her other challenges in pulling this off now. Her authority is already deemed to have been eroded. The fact that she has
already said she is on her way out. There are members of her own party who wants her gone tomorrow.
And so there's a theory that some of them are going to vote this down quickly and hard in the hope of really speeding that process along so that
they can get one of their own hardline Brexiteers into the leadership of the party and as the new Prime Minister.
[15:05:04] SOARES: For our viewers watching from right around the world, and haven't been following three years of negotiations and indecisiveness,
not going anywhere, who benefits from this? Because we've heard from some MPs within her party, the kind of hardline, they don't want this. Labour
might play tough on this, because maybe they want a general election. And those who want a second referendum and like you clearly said, they might
not even get a chance with a second reference. So who benefits here?
BLACK: Well, in theory, only Theresa May.
SOARES: Her legacy.
BLACK: Her legacy. She wants to secure her legacy, secure the fact that she delivered on the mandate of the referendum that was held years ago now
and she wants to be able to do that, and then move away.
But you're right, it's in the interest of many people here not to vote for this, particularly the people in her own party who want to see her gone and
replaced with someone who is going to take a much stronger line on Brexit, who has much greater chance of delivering the sort of Brexit, the purer
Brexit they want.
And for the opposition party, they don't see how supporting Theresa May in this way, gives them what they want, which is a general election and a shot
at power.
So it is a last minute desperate attempt by Theresa May and at this stage, there is no reason to believe it's going to work. But she has got about a
week to try and sell it and she just has to try and pull away enough votes to get it over the line.
SOARES: How many times have we said, "It's the last ditch attempt by Theresa May. How has she been able to --"
BLACK: Too many times.
SOARES: Too many. We're probably going to be again for the next few weeks. Thank you very much, Phil Black.
Now the Organization for Economic Cooperation Development says Brexit will be a major negative shock to the British economy. The organization's
Secretary General, Angel Gurria told me why the chances of a no-deal Brexit are looking increasingly likely. Take listen.
(BEGIN VIDEO CLIP)
ANGEL GURRIA, SECRETARY GENERAL, ORGANIZATION FOR ECONOMIC COOPERATION DEVELOPMENT: I'm on record as having gone out there to campaign against
Brexit. I produced a whole book about the consequences. And I said what's the worst thing I can think about in terms of how to call it and I said,
okay, it's a Brexit tax, which it is, of course. It's a tax on the British people, and on Europeans.
And to some extent, on the rest of the world. It's very unfortunate. But the process has also been very difficult, very cumbersome. And the problem
is that it has created instability beyond the fact that the U.K. will eventually leave the European Union. It has created a lot of uncertainty
at the political level and the governance level. And of course, in terms of the economic consequences.
And this question that you asked me, "What about a new deal Brexit?" Well, this is something which looks like it may be, you know, increasingly
possible, simply because the alternative is not happening.
SOARES: And briefly, I'm just going to ask you this because you probably won't give me an answer to it anyway. Are you still hopeful? Do you still
think that U.K. will leave the European Union?
GURRIA: No. Listen. We have to believe that there will be, that there can be, that there should be, and, frankly, it's in everybody's best
interest. But let's also put the thing in context.
The U.K. will always be there. The U.K. will always have very important commercial and investment links with the rest of Europe. It's a natural
ally. If there never would have been an integration between the U.K. and Europe, it would still be a very important business partner and investment
partner.
So let's not, you know, overdo the consequences. Europe will still be there. It will still be afloat, and the U.K. will still be there and will
still be afloat. The only question, then, you know, it's no longer the question of asking, "Why did this happen?" Well, it happened, okay, we
live with it.
Now the question is, "How do we live with the consequences and how do we smooth the process? How do we make it not seamless, but less bumpy, so
that it's less costly? How do we reduce the costs of this divorce?"
(END VIDEO CLIP)
SOARES: Angel Gurria there, the Director General of the OECD. Well, Quentin Peel is an Associate Fellow with the Europe Programme at Chatham
House, a well-known face on the show. He joins me now. Quentin, I don't think many people saw this carrot and stick approach from Theresa May
coming. How she made it worse, do you think?
QUENTIN PEEL, ASSOCIATE FELLOW, CHATHAM HOUSE: A fish probably has, yes, I mean, we do seem to be going around in circles.
SOARES: You and I have been talking about this for some time now.
PEEL: There were awful lots of people she had to get over the line. And every single one of them now seems to have said, "No, we don't like it."
It's the hardline Brexiteers in the Tory Party. They seem to even more go against it.
The Labour people who wanted a second referendum they say, "This is all a fudge. We've got no guarantee we'll get it." Then there's the Labour
Party itself, which you've had Jeremy Corbyn saying it's the same bad old deal. And finally, the Democratic Unionists from Northern Ireland say, "It
looks like the same deal and we're not going to vote for it."
[15:10:05] SOARES: But it's interesting with Labour, because she seems to have made more concessions that would, one would suspect appeal to Labour,
but they are looking for reasons not to support it.
PEEL: Yes, I think that's fair, because they reckon that well, when they have a major problem, which is given that she's already promised to go.
They don't know whether her successor who is probably going to be a harder line Brexiteer will actually deliver on anything that she's promised.
So that's really why the talks broke down between Labour and the Conservatives. But I think also, there is a suspicion or belief on the
Labour side that the Conservative Party are going to get far worse punished by this whole -- first than they are.
SOARES: So you think you're -- when you looked into your crystal bubble, it is to really get a sense that when it comes to voting, the numbers will
be much, much worse.
PEEL: I think it will be worse fourth vote than they were at the third vote. It sounds like she hasn't won any significant allies.
SOARES: So what's the strategy then? So --
PEEL: I think she wants to go out saying, "I did my best."
SOARES: And that's the kind of tone that we heard from her today, wasn't it? She was definitely more emotional. She was basically saying, "Look,
I've made concessions, you have to do the same thing. You have to meet me in the middle."
PEEL: Yes. I mean, it is really -- she is rather a tragic figure there because the other thing, she's done everything to try and hold her party
together by actually delivering on a pretty hard Brexit and she's just failed.
The really hardline Brexiteers in her own party have undermined her from the start. So there she goes, actually, she is leaving her party in a far
worse place than it was when she took over. They are getting to get decimated in the European elections just the day after tomorrow.
SOARES: And this announcement coming before that, and that will make it worse, no doubt having heard what she had to say that would go against them
again.
PEEL: Well, I mean, I think she may have thought that, "Oh, well, I'll prove that I'm still trying." But in actual fact, given that it looks --
everybody said it's no good that I think it will make no difference whatsoever. The Tories are already going to get 9 percent perhaps in the
European election compared with 40 percent in the general election two years ago.
SOARES: We'll see how the vote goes because we have been surprised so many times, haven't we? Thank you very much, Quentin Peel.
PEEL: Very good.
SOARES: Now global economic growth is slowing thanks to trade tensions right around the world. Why the OECD downgraded their financial forecast
for the year. We have Angel Gurria back after a short break.
And from a full belly to belly up. Jamie Oliver's restaurant group enters bankruptcy protection and look at his leftovers later in the program. Do
stay right here with QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[15:15:25] SOARES: The United States is waging economic war against Iran. That's what Iran's Foreign Minister claims. Mohammed Javad Zarif has been
speaking exclusively to CNN's Fred Pleitgen in Tehran. Take a listen.
(BEGIN VIDEO CLIP)
MOHAMMED JAVAD ZARIF, IRANIAN FOREIGN MINISTER: We are not willing to talk to people who have broken their promises. Because we talked to people,
they did not believe that our nuclear program -- our nuclear energy program required us to provide any concessions or provide any confidence building
measures. But we engaged, we acted in good faith, we negotiated, we reached a deal.
What the United States is saying is that we make a deal, whatever we can get you in the negotiations through the deal is fine. Whatever we cannot
get you, we will come back to try to get you. This is not the way serious countries deal with each other.
The United States may be used to doing that with clients, but they cannot do that with Iran.
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: How dangerous do you think the situation is currently in the Persian Gulf with the U.S.
aircraft carrier on its way, B-52 bombers and at the same time from your side saying, "Look, we don't want an escalation, but it will be painful if
there is one."
ZARIF: Well, there will be painful consequences for everybody if there is an escalation against Iran, that's for sure. The United States is engaging
in an economic warfare against Iran, it has to stop. Economic war means targeting Iranian people that has to stop.
The United States does not have the legal position, it does not have the moral position, it does not have the political position, it does not have
the international position to impose economic war on Iran.
Iran is not interested in escalation. We have said very clearly that we will not be the party to begin escalation, but we will defend ourselves.
Now, having all these military assets in a smaller waterway is in and of itself, prone to accident, particularly when you have people who are
interested in accidents. So extreme prudence is required. And we believe that the United States is playing a very, very dangerous game.
(END VIDEOTAPE)
SOARES: Well, Iran is not the only geopolitical risk weighing on the global economy. The OECD is lowering its outlook for global growth this
year down to 3.2 percent. Now it says key risks are further increased in trade restrictions, including a sharp slowdown in China; as well, I should
point out as private, often risky debt piling up to around $13 trillion in terms of private sector debt.
Now the OECD Secretary General, Angel Gurria told me why things could get worse for the global economy.
(BEGIN VIDEO CLIP)
GURRIA: What has already happened, just to give you an idea of the possible consequences of a hardening; now, what has already happened is
that we have shaved off almost 1 percent in our projections of GDP growth of less than one year ago. We thought that by this time, we were going to
be getting pretty close to the 4 percent cruising speed that we have before the crisis.
And now we're forecasting 3.1 percent, 3.2 percent actually, officially the number is 3.2 percent. Maybe a little better next year, but we're nowhere
close to the 4 percent that we thought we would be at this time because of these trade tension.
So I got my chief economist, and I said, you know, these things don't change so fast. And he said, yes, they do, when everything that could go
wrong, actually has gone wrong. And that is directly related to the question of a trade tension.
So now, could it get worse? Yes, because create tensions could get worse. The sanctions could get worse. This is only about merchandise. People are
focusing on imports exports in a more traditional sense, but what about this, you know, this tensions on the technological side?
SOARES: I know you're going to tell me Mr. Gurria that everyone will lose when it comes to these trade tensions. But if we look at the United States
and China, who would you say has more to lose here?
GURRIA: The world. And, yes, you told me that that's what I was going to say. But I still have to say it. China will lose. The United States will
lose. The world will lose and the multilateral system will lose. You have a global issue, you deal with it globally. You deal with it multilaterally
with international institutions.
[15:20:10] GURRIA: It may take longer, however, it tends to stick longer to be better received because it's owned by everybody, but all the parts
involved, rather than being a unilateral solution. So what I'm saying is, let's go back to the multilateral path and well, if there are institutions
or institutional arrangements that need to be updated and upgraded or fixed at the WTO for example, let's do it. But let's use those channels that
we've created, and that have served us so well over the last few decades.
(END VIDEOTAPE)
SOARES: Angel Gurria there speaking to me earlier. Now, Donald Trump is ever so slightly taking his foot off the neck of Huawei. The U.S. Commerce
Department loosened some restrictions they placed in the Chinese company last week.
If you remember, many rural American internet providers rely on Huawei technology. They are now getting a 90-day reprieve. Samuel Burke is here.
Samuel, this 90-day reprieve. Let's break it down. Who benefits from this?
SAMUEL BURKE, CNN BUSINESS TECHNOLOGY CORRESPONDENT: It's not necessarily a reprieve for Huawei, you can look at this through two very different
lenses. On the one hand, if you believe that this is truly a national security threat for the United States of America, this 90-days may just be
for the businesses whose stocks were going down dramatically yesterday when I was on this show. And so this is just a period to help them adjust to
the rules.
And it may be that the Trump administration didn't realize just how deep these changes would be for these companies or you could look at this
through the other lens that this is all about the trade war, U.S.-China tensions, and Trump was just doing this to get Xi back to the negotiating
table much like what happened with ZTE. Trump brought that China telecoms company to its knees, got Xi to the table, they made a deal and kept on
going. So there's precedent for that lens, or maybe both are true.
SOARES: Okay, maybe that's part of the strategy, or maybe they didn't know what the impact of that could be on U.S. jobs. I mean, in terms of a
report I was looking at and you've got this report, export controls could cost up to $56.3 billion in damage to the U.S. economy.
BURKE: It's amazing. We've been talking about the fact that last year, Huawei spent $11 billion on American products. Imagine it vanishing from
the American economy every year for years. So that's how you get to these huge numbers at $50 billion.
And again, I'll go back to the ZTE President. I later learned that it was really the chip manufacturers that went to the Trump administration and
said, you've essentially closed this business, they bought our product, so you're killing our business as well. So you see, there is a real
reciprocal relationship here between the Chinese and American tech companies.
SOARES: And I'm sure the U.S. administration will be looking at this, you know, if we are losing what this report says $56 billion and potentially
74,000 jobs. President Trump who was made protecting America jobs very part -- very much part of his mandate, that very much goes against Huawei
what he set out in terms of reprieve.
BURKE: I mean, the argument that you could make that it's much harder to walk back these Huawei rules than is the ZTE decision because Huawei is so
much bigger. You've got the Commerce Department, you've got Congress behind you. You've been making this case publicly to the media, to your
allies for the past year, if not more, so this would be much more difficult to walk back. But Trump has walked back some pretty big things before.
SOARES: Very true. And now, I'm being told to wrap, but I want to ask you this quickly, does Huawei benefit at all? Does this give them any
breathing room?
BURKE: They could become even more self-reliant during this time, and if they're not already self-reliant like they were saying they are today,
they'll be self-reliant or be on that path very soon.
SOARES: So it can make them potentially stronger.
BURKE: It could be.
SOARES: Samuel Burke, thank you very much. Now footwear brands are voicing their opposition to Donald Trump's tariffs on China. Nike, Adidas
and Under Armour are among 170 companies who wrote the U.S. President warning of an existential threat to their industry. Matt Priest has the
presidency of the Footwear Distributors and Retailers of America. He says that tariffs will be catastrophic for consumers. Take a listen.
(BEGIN VIDEO CLIP)
MATT PRIEST, PRESIDENT, FOOTWEAR DISTRIBUTORS AND RETAILERS OF AMERICA: The fact of the matter is China still provides a vast majority of
children's shoes, almost a hundred percent of children's shoes sold in the U.S. are made in China, vast majority of the shoes that are sold at places
like Walmart and Target.
And so you can't just pick that up overnight, move it like you could for other types of products, and that's where the big concern is. If this
switch gets flipped on over the summer and consumers are going to start feeling that price pressure almost immediately and that's a big concern for
us.
(END VIDEO CLIP)
SOARES: In the U.S. State of Maine, lobster fishermen are feeling the trade war pinch from two directions. Canada designed a deal with Europe
making Canadian lobster cheaper then China slapped a tariff on American lobsters making their product more expensive.
[15:25:06] SOARES: They say their livelihoods are on the line Miguel Marcus has a story from Porpoise in Maine.
(BEGIN VIDEOTAPE)
MIGUEL MARQUEZ, CNN NATIONAL CORRESPONDENT: Siblings Chelsea and Cody Nunan, their family plucking lobsters out of the waters off the Maine Coast
for five generations, now worried they might be the last.
(BEGIN VIDEO CLIP)
CODY NUNAN, FIFTH GENERATION LOBSTER FISHERMAN: It's scary. You know, I have an eight-year-old daughter now and it's hard for me to want to bring
her into this industry.
MARQUEZ (on camera): Did you ever think that you would be sort of caught up in an international trade war?
CHELSEA NUNAN, FIFTH GENERATION LOBSTERWOMAN: Nope, I never did. I guess that's up to the President.
(END VIDEO CLIP)
MARQUEZ (voice over): The President's trade war slamming the Maine lobster industry after China retaliated last July with a 25 percent tariff.
(BEGIN VIDEO CLIP)
SHAWN MCEWEN, CO-OWNER, SEA SALT LOBSTER: Any one of the dealers here in the state of Maine, including myself, was shipping, you know, tens of
thousands of pounds per week to China. And that went to almost zero.
(END VIDEO CLIP)
MARQUEZ (voice over): Wholesalers like Shawn McEwen, with Sea Salt Lobster says these days, business treading water.
(BEGIN VIDEO CLIP)
MCEWEN: I would have at least another five to seven employees running my export, which would be a second and third shift and --
MARQUEZ (on camera): Full-time jobs?
MCEWEN: Yes. Full-time jobs.
MARQUEZ: How much an hour?
MCEWEN: Anywhere from $15.00 to $25.00 an hour.
MARQUEZ: So these are decent jobs?
MCEWEN: Yes, it's a living wage.
(END VIDEO CLIP)
MARQUEZ (voice over): Maine Coast moves 7 million pounds of lobster a year. They've aggressively pursued other markets when exports to China
collapsed. They'd like to expand more. But --
(BEGIN VIDEO CLIP)
SHEILA ADAMS, VICE PRESIDENT, MAINE COAST LOBSTER: The uncertainty is what's hard. I think it's trying on all of our employees. We exited the
year performing basically on target. We didn't grow as much as we would like to grow or historically have grown, but we didn't lose.
(END VIDEO CLIP)
MARQUEZ (voice over): The industry holding on for now has a simple message for the President.
(BEGIN VIDEO CLIP)
ANNIE TSELIKIS, EXECUTIVE DIRECTOR, MAINE LOBSTER DEALERS' ASSOCIATION: This is American jobs. It's rural jobs. These are industries that are
really, really important for rural America.
(END VIDEO CLIP)
MARQUEZ (voice over): For lobster men like Cody Nunan who likes the President, the tariff war, wearing thin.
(BEGIN VIDEO CLIP)
CODY NUNAN: He made it sound very good, you know, when he was running.
MARQUEZ (on camera): How much is he hurting you personally right now or this tariff war hurting you personally?
CODY NUNAN: It's hurting. It's hurting.
(END VIDEO CLIP)
MARQUEZ: Miguel Marquez, CNN, Cape Porpoise, Maine.
(END VIDEOTAPE)
SOARES: Some of the people feeling the impact of those tariffs. And up next, right here on QUEST MEANS BUSINESS, 25,000 jobs hang in the balance
as bankruptcy looms over one of Britain's biggest steel makers. We will the details for you just ahead. Do stay right here with QUEST MEANS
BUSINESS.
(COMMERCIAL BREAK)
[15:30:00] ISA SOARES, HOST, QUEST MEANS BUSINESS: Hello, I'm Isa Soares, there's more QUEST MEANS BUSINESS in a moment when on an upbeat day
for markets, U.S. retailers are taking a beating. And Jamie Oliver's restaurant chain shuts its doors in U.K., but before that, we have the
headlines for you at this hour.
British Prime Minister Theresa May is promising to give lawmakers a vote on whether to hold a second national referendum if they approve her latest
Brexit proposal. Today, she laid out a new plan for leaving the EU which makes concessions to the opposition Labor Party.
A U.S. congressional committee investigating President Donald Trump was faced with an empty chair after former White House counsel Don McGahn
ignored a subpoena. The White House told McGahn not to testify, saying that as a former presidential adviser, he was not obligated to appear.
Nearly two dozen tornadoes have slammed into the central U.S. over the past 24 hours and more could be on the way. The storms also caused devastating
flooding across the states of Oklahoma, Texas, Missouri and Arkansas.
Racing legend Niki Lauda has died. Lauda famously came back from a nearly -- a near fatal crash to dominate Formula One racing world, winning three
world titles. We will have more on the story of course in sports a bit later on in the show.
Now British steel is teetering on the brink of bankruptcy, leaving 25,000 jobs hanging in the balance. The U.K. government says it's in talks with a
company which blames Brexit uncertainty for its plight. Joining me, Gareth Stace; director general of the industry's trade body, U.K. Steel.
Gareth, thank you very much for coming here. Explain to our viewers right around the world how we got here because I -- and correct me if I'm wrong,
in Autumn, they were thinking of expanding the production line. So what has changed?
GARETH STACE, DIRECTOR GENERAL, U.K. STEEL: Well, I think what we're seeing here with British Steel is one company reportedly in difficulty.
That's not the same for the rest of the sector. The sector is quite buoyant, it's quite confident. However, for all of manufacturing companies
in the U.K., Brexit is the uncertainty that is looming above us, it's increasing our costs, but it's certainly creating uncertainty for those
companies to plan going forward. And that's the same for the steel sector.
SOARES: Let's talk about Brexit because there's lots for us to talk about, we can talk about the industry, but let's talk about Brexit. This -- we
now heard from Theresa May, there is going to be another vote. All this uncertainty, they're not knowing where we're going.
What does that do to steel makers here in the U.K. in terms of selling, of expanding, what are they thinking of what the challenges?
STACE: Well, the challenges are that their customers get worried, there's no reason for their customers to get worried. But it all boils down to
what we don't want to happen is a no-deal Brexit. That cliff edge, that would be damaging to our sector, but actually damages as I say, to the
whole of manufacturing.
What we now need is for politicians to understand the damage this has caused in the steel sector and the manufacturing sector. Come to an
agreement, move on so then we can plan for the future going forward. But actually, you know, we talk about the problems that we've seen today in the
steel sector in the U.K., but we do have some aside from Brexit, that's not --
SOARES: Yes --
STACE: The only issue. Another issue is that we have in the U.K. an uncompetitive business landscape. On one example of that is, say, for
electricity. We're highly electro intensive sector, but we pay more than a double what our competitors in France just across the channel, they pay for
electricity, that makes us uncompetitive.
SOARES: On Brexit, though, are European orders down because of this uncertainty? Is this something -- is this -- is there a trend that you're
seeing?
STACE: No, we saw a wobble before there was -- you know, the end of March, that's all back on track. Those orders were then replaced as far as I'm
aware of for most companies, but it is that continuing uncertainty, and we're going to see that right through to October --
(CROSSTALK)
SOARES: And I'm guessing sterling as well, that's impacting, a falling sterling.
[15:35:00] STACE: Well, yes, but you know, a weak hand helps exports, however --
SOARES: Yes --
STACE: We buy our raw materials in dollars so that doesn't help.
SOARES: How -- I know -- let me interrupt you here. China-U.S. trade war, how is that impacting, if it is at all, the British steel industry?
STACE: Well, we are seeing in Europe anyway --
SOARES: Yes --
STACE: An increase in imports and a decrease in exports. And why is that? Well, you know, Donald Trump's section 232 of trade tariffs on steel have
damaged that. But actually, what we need to think about -- you know, I'm glad you mentioned China and the U.S. because it's easy to think of the
reports that we've had of the British steel sector today as that's the end of the steel sector in the U.K. or steel is not for --
SOARES: Yes, it's not the nail on the coffin, is it?
STACE: But actually, demand -- the global demand for steel is increasing. And actually, why can't our members in the U.K. benefit from that? Because
what we've seen in the U.S. sector, the Chinese sector, steel sectors, they're both expanding. Why is that?
SOARES: But can you compete? Can the British -- I'm now talking about, can you compete with the likes of China?
STACE: Well, yes, you can compete with free and fair trade when they dump on to our markets illegal against arbitrary rules, then you can't, but
that's not free trade.
SOARES: Yes --
STACE: But what we're seeing is, those governments and Donald Trump here is supporting his sector. A strong steel sector means a strong
manufacturing sector, it means a strong economy, and that's what the U.K. government needs to understand and live by its commitment to an industrial
strategy and place steel at the very foundation of that industrial --
SOARES: Yes --
STACE: Strategy to build a strong economy in the U.K.
SOARES: Well, the British government says it will leave no stone unturned when it comes to this company, but it's still saying no to nationalization,
is that correct?
STACE: Well, yes, and I don't think nationalization is the answer here. You know, we may need to see some short-term government support. And I was
really pleased to hear the minister, the business minister today talk about no stone unturned --
SOARES: Yes --
STACE: Doing everything in the government's power to help at the moment that one particular company in trouble. But what they need to do is help
the sector become more competitive, a better policy landscape and then we can --
SOARES: Paint broader picture.
STACE: Exactly. We trade -- we trade with the rest of them at that point.
SOARES: Gareth, thank you very much, pleasure --
STACE: Thank you very much --
SOARES: Thank you for coming in. Now tonight, more evidence of hard times for U.S. retailers despite robust consumer spending, the rise of online
shopping is really taking a toll on bricks and mortar stores. That's especially hard for Dressbarn, as parent company as seeing retail is
winding down the chain.
A new research shows more U.S. retailers have closed so far this year than for all of last year. And shares in Khol's and JC Penney both tumbled
after their results disappointed. Our Paul La Monica joins me now from New York. And Paul, let's start with Kohl's because sales of stores like we
said opened in the last year dropped for the first in almost two years, that sound like almost two years. They also are trimming their guidance.
What is behind it?
PAUL LA MONICA, CNN BUSINESS REPORTER: It's really a bit of a mystery because I guess why I think people are so concerned with Kohl's and the
stock is tumbling on this news.
Kohl's had done a good job of portraying itself to Wall Street and consumers as a company that got online retail, it was partnering with
Amazon, says you could bring returns to these stores and that was something that people were hoping would be a good thing for the company.
They also had been doing these deals where they were leasing unused space to places like Planet Fitness and weight watchers, but none of this seems
to have worked in the quarter with sales going down, it really does show that Kohl's is facing a lot of tough competition not just from Amazon, but
Wal-Mart, Target, also TJX, the owner of TJ Maxx and Marshalls which actually reported really strong results today.
SOARES: I'm glad you mentioned Amazon because the Kohl's specific -- they're banking on its returns program with Amazon. But explain to me how
are they going to convert traffic into sales?
LA MONICA: Yes, that is the great question. I think that you may wind up having this sad case for Kohl's where shoppers decide, yes, this is great
to have a physical location to go return something to. They return it and then they walk out without buying anything else.
And that's going to be the big challenge for Kohl's to getting those Amazon customers to actually come in the store, look around at Kohl's and buy
something there instead of just dropping something off that they bought at Amazon and don't want anymore.
SOARES: I want to bring up if we can, I'm just forgetting, my producer, bring it up, the Dow because what a different picture for the last 24 hours
we're seeing. Dow is up as you can see there almost 1 percent. This is completely different from what we were seeing yesterday. What's behind the
rally?
LA MONICA: Yes, I think that what's going on here is that at least for today, it's always the latest headlines with the U.S.-China trade tension,
and you know, tech stocks really took it --
SOARES: Yes --
[15:40:00] LA MONICA: On the chin yesterday, they're rallying today and I think a lot of that has to do with this hope that U.S., you know, is giving
companies a bit of a reprieve that they're buying --
SOARES: The 90-day reprieve --
LA MONICA: Equipment from Huawei --
SOARES: Yes, right, OK, well, let's talk about something, I want to bring in Tesla because while the Dow is doing very well and some of the tech
stocks might be doing well, Tesla's share price has actually taken quite a beating. We're seeing it now, not down for too much, two-tenths of 1
percent.
But we're seeing in the last couple of weeks, really taken a beating. What's behind this drop from Tesla -- in Tesla's share price, Paul?
LA MONICA: Yes, there are growing concerns about Tesla's ability to lead the electric car market. There are signs of weaker-than-expected demand in
the U.S. and Europe for the Model 3. Tesla still hasn't really come up with a plan to be profitable for the long-term that Wall Street can buy
into.
So some of the biggest bulls on the stock are increasingly now cutting their price targets including Morgan Stanley who in a bear case scenario
said that Tesla could fall all the way to 10. To be fair, they say their bull case scenario is over$390 a share which is almost double where the
stock is trading now.
But I think a lot of investors see more downside for Tesla than upside at this point.
SOARES: And that's something that we've been hearing for quite some time, isn't it? Paul La Monica, thank you very much, thanks for joining us. Now,
it's been a real pleasure serving you, those are the somber words of Jamie Oliver after most of his U.K. restaurants closed and entered bankruptcy.
Anna Stewart will have that story for you next.
(COMMERCIAL BREAK)
SOARES: Welcome back. Now, apparently being on a crew safe for healthier food wasn't enough to keep Jamie Oliver's U.K. restaurant chain in
business. The celebrity chef's group has gone into bankruptcy protection and 22 restaurants have been shuttered along with 1,000 jobs.
Now, in the past, Oliver has described a perfect storm of rising rents, wages, food costs and the impact of Brexit. Anna Stewart is here, she was
trying, hoping to bring some Italian food to us and I was waiting for my linguine. That, you can't find it because it closed --
ANNA STEWART, CNN REPORTER: You must be starving because I promised we would say good-bye to Jamie's Italian and tri-star with some of their last
bits of food on set. Unfortunately, the administrators have been very quick, they're already shut up. You will see from some photos I took,
there are signs on the door, there's no one there and no one came to work.
And the sad news is --
SOARES: This is sad, it's very troubling, we're talking about thousands of jobs --
STEWART: One thousand people --
SOARES: Yes --
[15:45:00] STEWART: Who work there suddenly without a job, and devastating of course for Jamie Oliver who actually put in 30 million
pounds himself last year to try and stave off its collapse.
SOARES: So why -- is it a surprise that we are even here?
STEWART: No, it's not a surprise. And frankly, if you look at this in the environment we're in and the fact --
SOARES: Yes --
STEWART: That you've seen, oh, other chains like Call-it-Cheers(ph), Gourmet Burger --
SOARES: Yes --
STEWART: Byrons, Spada --
SOARES: Yes --
STEWART: You name it, they're all closing down. And there are several reasons for this. You mentioned the purpose, yes, you've got rising rent -
-
SOARES: Rent --
STEWART: You've got rising wages, you've got rising food costs. You've also got dampened consumer appetite from Brexit and you've also just got a
structural shift. People aren't going out as much, when they do go out, they want to have a premium experience and of course, all those delivery
apps, they can get the same food, they can get any restaurant at home.
SOARES: Did he expand too quickly? Because he's got his hands in so many pies, doesn't he?
STEWART: And that's actually an argument some analysts went with today that a lot of these chains had massive expansion in 2016, some of them
through lots of private equity investments, they expanded too fast and didn't maybe focus enough on the quality of each restaurant.
And the problem with these chains as a consumer --
SOARES: Yes --
STEWART: As you know if you go to one of those restaurants and you decide you didn't have a good experience, you are unlikely to go to another one.
SOARES: Yes, and I think it's keeping in touch with changing tastes and changing habits. We don't want to go to a restaurant simply just to have
an ordinary carbonados(ph) because we can get that as a takeaway, correct?
STEWART: Correct. And the ones that's surviving is interesting. This is a surprise to me, so speaking to analysts earlier, the ones that are
surviving are Wagamamas, Nando's, they are well established --
SOARES: Exactly --
STEWART: Brands, they've adapted and they're doing something different. The ones we're seeing today, they're going under are all Italians, all
burger restaurants. You know, they are --
SOARES: Yes --
STEWART: Speaking to a very large demographic there --
SOARES: Yes, and it's also such a crowded market as you pointed out. What did Jamie have to say because this is something that he likely he invested
so much money behind and he clearly loves, is so passionate about food and trying to show us healthy food, really good quality food. How has it --
how has it affected him?
STEWART: He says he's absolutely devastated. And when he tweeted today, he also thanked everyone that has been a part of this project because it's
a big project. And as we said, 1,000 people are losing their jobs over this. But for Jamie, he's always said that, you know, a vast proportion of
his ventures fail.
So this isn't the first, we saw his cookery shops they went under --
SOARES: Yes --
STEWART: We saw some of those items go under. He's not done well in every venture. The biz that are thriving are his cookery books and his TV shows.
So they need to focus on what he does well.
SOARES: I'm a big fan of all his cooking books, especially the 30-minute meals. It works --
STEWART: They're never 30 minutes --
SOARES: I know --
STEWART: They're never 30 minutes --
SOARES: And they never have everything in stock, right? I always have to make a list or I have to go and buy. Anyway, Anna, thank you very much.
STEWART: Now, Coca-Cola is hoping a failed product from the 1980s will help it go viral in 2019. Nearly 35 years ago, the company was left
apologizing to customers after it changed its recipe and introduced new coke. Take a look.
(BEGIN VIDEO CLIP)
DON KEOUGH, FORMER LATE PRESIDENT OF COCA-COLA: I'm Don Keough; president of the Coca-Cola company. When we brought you the new taste of coke, we
knew that millions would prefer it and millions do. And we knew that it would beat the taste of our major competitor and it does.
What we didn't know was how many thousands of you would phone and write, asking us to bring back the classic taste of original Coca-Cola. Well, we
read and we listened and you know the rest. They're both yours, the new taste of coke and Coca-Cola Classic. Your right of choice is back.
(END VIDEO CLIP)
SOARES: Now, it was one of the great debacles in branding history, still taught in business school as a cautionary tale against tampering with a
successful product. Now the company is teaming up with Netflix and the '80s throw-back show "Stranger Things" to bring back new coke for a limited
too.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Hey, Tracy.
UNIDENTIFIED FEMALE: Hey, Steve.
UNIDENTIFIED MALE: You're late.
(END VIDEO CLIP)
SOARES: And still to come right here on QUEST MEANS BUSINESS, three-time Formula One champion, fearless competitor survivor Niki Lauda dies at age
70. We take a look back at the life of a motor sport legend. That's next.
[15:50:00] (COMMERCIAL BREAK)
SOARES: Now the racing world is mourning the loss of one of its greatest champions Niki Lauda who won 25 Formula One races and three season
championships died on Monday at the age of 70. His story was so amazing Hollywood made a big budget movie about it. With more on Lauda's life,
here is CNN's Amanda Davies.
(BEGIN VIDEOTAPE)
AMANDA DAVIES, CNN CORRESPONDENT (voice-over): A legend is sometimes too often thrown around in sport. Not with three-time Formula One champion
Niki Lauda. He defied his wealthy VNA's family expectation to go into business, opting instead for life in the fast lane.
By 1974, he'd earned a seat as a driver at Ferrari. He won his first world title just a year later. But at the German Grand Prix in 1976, in the heat
of battle with great rival James Hunt, a fiery crash nearly cost him his life.
NIKI LAUDA, FORMER LATE FORMULA ONE DRIVER: When I came to the hospital, you know, you feel a kind of very -- you know, you feel like you are very
tired and you would like to go and sleep. But you know it's not just sleeping, it's something else.
And then you just fight with your -- with your brain. You hear noises and you hear voices and you just try to listen what they're saying, and to try
to keep your brain working.
DAVIES: Incredibly, having been read his last rights, he was back in his race car just six weeks after the accident. Lauda fought hard for driver
safety, but knew that part of Formula One's appeal came from its risk.
LAUDA: Why are we watching? Good racing, a bit of danger always there, and unbelievable driver performance to keep these cars under control.
DAVIES: It was his rivalry with James Hunt that was turned into a 2013 movie "Rush" starring German actor Daniel Bruehl as Lauda.
UNIDENTIFIED MALE: To be a champion, it takes more than just being quick.
DAVIES: In later years, he became a successful entrepreneur and started an airline. Most recently before a lung transplant in 2018, Lauda was ever
present in the Formula One paddock in his role as non-executive chairman of Mercedes. In a statement, they said his passing leaves a void in Formula
One.
We haven't just lost a hero who staged the most remarkable comeback ever seen, but also a man who brought precious clarity and candor to modern
Formula One. He will be greatly missed as our voice of common sense. As team chairman, Lauda used that common sense to help navigate Nico Rosberg
to his world championship title in 2016.
NICO ROSBERG, FORMULA ONE DRIVER: I will always remember Niki as someone who has given my life a lot, so I'm very thankful and who also was a huge
inspiration to me and to all of us out there. I think all of you as well Formula One fans and Niki Lauda fans. First of all, with his fighting
instinct to never give up.
[15:55:00] DAVIES: His death is mourned by the sport that he dedicated his life to. Amanda Davies, CNN, London.
(END VIDEOTAPE)
SOARES: Well, as mentioned, Lauda had a long history as an airline entrepreneur and Ryanair CEO Mike O'Leary was among industry leaders paying
tribute. "Niki was an exceptional entrepreneur whose courage and fighting spirit inspired millions.
While we are devastated at his untimely passing, his spirit and vision will live on in Laudamotion, which proudly carries his name", he said. Also
paying tribute was American filmmaker Ron Howard who directed the film "Rush" about Lauda's life.
He tweeted this, "the F 1 world knows of his grit an intensely competitive spirit, but that matched with his keen intelligence and wisdom made him a
distinctive remarkable man." And I've got the tweet we've had from Lewis Hamilton; the world champion who worked with Lauda as part of his Mercedes
Benz tweet -- Mercedes F1 team.
He tweets "I'm struggling to believe you're gone. I will miss our conversations, our laughs, the big hugs after winning races together. God
rest your soul. Thank you for being a bright light in my life. I'll always be here for your family should they ever need me. Love, you man."
Of course, they had a very close relationship, both working as part of the Mercedes F 1 team. And we'll be right back after a very short break with
the numbers from Wall Street.
(COMMERCIAL BREAK)
SOARES: At the last few minutes of trade on Wall Street, let's check how it's doing. Dow Jones doing quite well, very different scene from what we
saw yesterday, out here on the show yesterday. Tech stocks fueling a rebound, they were really under pressure yesterday.
This is after the U.S. temporarily eased restrictions on Huawei with that 90-day reprieve. The Trump administration says the Chinese telecom's
equipment maker can buy U.S. goods until mid August, and that's giving chip makers, you can see a real strong day, Qualcomm up 1.3 percent, Intel more
than 2 percent.
Look at Xilinx up almost more than 4.5 percent. That's a very different session for two of the biggest U.S. department stores though, we talked
about here on the show, falling sales at Kohl's and JC Penney have sent their stocks sliding. Look at Kohl's, down more than 12 percent, JC Penney
more than 7 percent lower.
And that's of course adding to worries of bricks and mortar retailer. And that does it for us here on QUEST MEANS BUSINESS, I shall leave you with
the closing bell this Tuesday. Thank you very much for watching, I'll see you tomorrow, bye-bye.
(BELL RINGING)
END
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