Return to Transcripts main page
QUEST MEANS BUSINESS
Economic Signals Swing to Positive; Interview With Ford's CEO
Aired April 1, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: A surge in activity. The economic signals swing to positive.
Ford's chief executive tells us consumers are back and they're buying.
They're too fat to fly? Air France is grappling with a sensitive issue.
I'm Richard Quest, and for the next hour I mean business.
Barely into the second quarter, just by a day and you'd be forgiven for thinking the world is enjoying an economic boom. From Tokyo to Washington, new figures released over the past 24 hours are painting a surprisingly upbeat picture.
Let's start with the most data of the last few hours. The U.S. manufacturing sector, the ISM Index, expanding at its fastest rate in six years, the number released in Washington, exports are rising, wholesalers are building up inventories from low levels. The ISM rose to 59.6 last month. Now, never mind the actual number, it is a rise and that is significant.
But it is not the only thing. Over in the U.K., U.K. manufacturing grew at a fastest pace in nearly 16 years. The U.K. has been-enjoying a sharp recover in manufacturing, admittedly from a low base. But with an election less than five or six weeks away that is a statistic worth noting.
Go to Asia, across the continent, and the Tankan Survey, not strictly a measure of output, it shows confidence among manufacturers is on the up. It is published every quarter, and the latest on Thursday, was the fourth rise in succession. We can't leave economic growth there. We have to got to China. And there, you see, manufacturing accelerated in March. It's factories are humming. The two surveys show purchasing managers rose, whichever way we look at it, anything above 50 shows activity is growing. And what the story overall shows is that around the globe there is more activity than we had first thought.
Now, the encouraging data helped lift European stock markets. The main indices finished gains of well over 1 percent; raw materials companies amongst the best performers. The big companies-the big companies that actually invest in the emerging markets. A good week and a good end as we head into Easter, and the Passover holidays. European markets will resume trading on Tuesday.
To the markets that are open at this moment and doing business. Have another bell on me.
(DESK BELL CHIMES)
Up 46; what is interesting is 10, 11,000, less than just over 80 odd points away from that. A strong performance in New York as well.
Now, with all this in mind, earlier I spoke to Bob Parker, always worth hearing from, senior advisor at Credit Suisse. We talked about the manufacturing numbers from the U.S. I wanted to know, frankly, if the positive figures were evidence of a bounce back, or something more serious.
BOB PARKER, SENIOR ADVISOR, CREDIT SUISSE: It is a very strong recovery. If we look back at 2008, let's not forget, that we had the worst recession since the 1930s. The world came out of recession in the second quarter of 2009. Since then we have had a very strong recovery. For example, if we look at the United States, that ISM number at 59.6, is consistent with growth in the first half of the year, running close to 4 percent annualized.
QUEST: Well, we know what the number was in the fourth quarter, in the United States. That was confirmed last week.
QUEST: So, you then I would imagine are looking for a fairly strong Q1 number in 10?
PARKER: Absolutely. And in the first quarter of this year, I think, growth will be, plus or minus, 4 percent. Now, the problem could well be later in the year and going into 2011, when a weak consumer, the impact of fiscal policy starting to ease off, you could see a moderation in growth.
QUEST: But that tells me that those growth numbers we're seeing, and the ISM number that we saw today, are relatively artificial because they are propped up either by inventory build up or by government spending. They are propped up by very low interest rates, government spending and also by the provision of a huge amount of liquidity still being provided by the central banks. It is not just the Federal Reserve. It is the ECB and the bank of England, as well.
QUEST: So, to come to this full circle, I would be more cautious by seeing good numbers and thinking they were off to the races?
PARKER: I wouldn't use the phrase, "we're off to the races". I think we are going to have out of the state solid growth in the first half of this year. I think your caution-I think you are too early. You should be cautious probably in 2011. I think in the near term markets, and riskier assets such as equities, such as emerging debt. Will actually show very solid gains over the next six months. I think if we are going to have a cautious conversation that should be towards the end of this year.
QUEST: Now, let's talk then, about those riskier assets. You're a risky chap, aren't you?
PARKER: Well, there are times to take risks, there are times, when obviously, you want to minimize risks.
PARKER: For example, December and January, we reduced risk. So far, in February and March, we have actually been increasing risk again. We have been increasing our exposure to global equity markets.
QUEST: And you're-is that balanced, third, third, third?
PARKER: No, its more complicated. We have increased our exposure to the Japanese equity market. We think the Japanese equity market is for the first time, in many years, attractive. We've also increased our exposure to major companies, American, European, Japanese, which do a lot of their business in emerging markets.
QUEST: So, it is a very targeted approach into this risk area?
PARKER: Yes, I think one other final point is that we have increased exposure to what we call high quality companies. Last year it was a liquidity lead rally, everything went up. This year you are going to see companies which pay high dividends, have low borrowings and are fairly defensive. They will outperform.
QUEST: So, I think you are familiar with the traffic light?
QUEST: If we take-and I'm going to bring you back to the ISM number?
QUEST: If you take the ISM number, bearing in mind the caution later in the year, would you want a red, amber, or green?
PARKER: For the next six months I would be green, on the ISM. I think I'd want to move at the end of this year, towards amber and potentially red. But certainly, for the next six months, we're on green.
QUEST: You have very cleverly managed to make me push all the buttons.
PARKER: Well, let's focus on the green, i.e., the next six months.
QUEST: Well, we're focusing on the next six months and there is the green from Bob Parker, fascinating stuff. Just at the end of the first quarter, into the second quarter, and now we've got some good ideas from people like Bob, over the next few days, we'll be hearing from. Particularly, which I think is really important, that we get and idea of where markets are going in the weeks ahead.
Now, the news headlines demand our attention. And Fionnuala Sweeney is at the CNN News Desk.
QUEST: Now, when we come back in just a moment, not so much like a car, more like a computer on wheels. Ford says its joining hands with Microsoft, and we'll ask the chief exec at Ford, if it is a quick fling or a long-term relationship. Alan Mulally after the break.
QUEST: U.S. car sales have rebounded last month. The numbers shot up during March. If you remember how bad things were this time last year, anything less than a big rise, could have been disastrous.
Now, interestingly, look at this, Toyota says U.S. sales jumped 41 percent. It had suffered a 9 percent drop in February, but Toyota in March, went for broke, a raft of incentives to get buyers back into the showrooms. Credit, free credit, all sorts of things, free maintenance, long maintenance periods, all sorts of things from Toyota, who recalled 8 million cars.
Ford had a very substantial rise in sales, up 43 percent. It wasn't as much as some had been seeking. General Motors says sales jumped 21 percent Ford and GM both said they were pleased with the result. At the New York Auto Show, Ford has just announced a new strategic partnership. CNN MONEY.COM's Poppy Harlow caught up with the chief executive Alan Mulally to find out why this partnership with Microsoft is so important.
(BEGIN VIDEO CLIP)
POPPY HARLOW, CNN FINANCIAL CORRESPONDENT (on camera): I want to start first with the announcement, between Ford and Microsoft, today. It is an energy collaboration, so people can literally, if they have electric cars, monitor the electricity they are using for that, and throughout their homes? What is this? And why announce now?
ALAN MULALLY, CEO, FORD MOTOR COMPANY: Well, that is exactly right, because I think as we all know, for us to move to more of an electric world, we are going to all have to participate in that. We are going to want to know how much energy we use, in our home, in our car. We are going to want to know when should we charge our car? When is the best time, on the off-peak hours? So, this collaboration between Microsoft, that has some application programs to assess the electricity, Ford, who knows everything about the vehicles, and the energy companies, they are going to share with us, this is the right time to do it. This is a collaboration that we're going to bring to the consumer.
HARLOW: So, what's the American car buyer telling you right now, not just the American, really the global consumer, because Ford is a global brand? More and more what is interesting to see is the Fiesta and some of the other cars, you are making the same cars to sell around the world, which is not something we have seen from a lot of the big automakers.
MULALLY: No, absolutely. And that is really a key to our strategy to exceed the customer's expectations, because they want the very best cars and trucks. But we can use our scale, because we serve all the customers, and we also customize them to the unique areas. So, we bring even more value because of our scale.
HARLOW: Are they ready to spend a significant amount of money? Has the recession waned enough in this country that the consumer is ready to go out and buy a new car, possibly an electric?
MULALLY: We are starting to see the consumer come back. Now, of course, it is a fragile time, because unemployment in the slowness of the economic recovery.
MULALLY: But we have such a pent up demand because people have been delaying their car purchase. So, remember when we talked a couple of years ago, we actually accelerated our investment in new vehicles. So, we probably have now, arguably the finest vehicle line up, available, as we come out of this recession, to be there for the consumer.
HARLOW: What do Toyota's troubles, Toyota's recall, although we did see a big pick up in their sales, in March, but their recall has hurt their sales. You see GM and Chrysler still struggling with market share Ford is picking that up. What does it mean for you long-term?
MULALLY: Well, clearly, our market share has been increasing 14 out of the last 15 months.
HARLOW: Can you hang onto it?
MULALLY: The residual values have been going up. People are paying for the value because they love all of this technology. Because we have- you take any of these cars, and we have more technology in these cars, that are useful to the consumer, than anybody else out there. So people value that. So, I think that Ford is going to continue to profitably grow here.
HARLOW: And what about-you know, Washington, the U.S. taxpayer has a major investment, still, in Chrysler, and in General Motors. Do you ever feel like you are competing with Washington? And that they want to see, obviously, GM and Chrysler pay them back and Ford didn't get any bailout?
MULALLY: Well, we think of really satisfying the consumers. And of course, this is a very competitive, all around the world, those two that you mentioned are two of them. But we're competing with the best in the world and so the best thing we can do is focus on the customer, what they really value, like quality, fuel efficiency and smart design, like we talked about. And deliver that. What they want, more efficiently than our competitors.
QUEST: Allan Mulally, chief exec of Ford.
Now, the kudos of having the Car of the Year at New York won't be going to Ford or indeed to any U.S. carmaker. Volkswagen's Polo, the VW Polo takes the title, World Car of the Year. Nothing like a pretentious name. It won the prize on Thursday, in New York. It is the second time VW has won, in as many years. The Golf got it last year. Now it is, you are seeing it there, the Polo, Blue Mountain. Volkswagen, of course, Europe's largest carmaker. It's shares have been rated buy, in resumed coverage, by Bank of America's Merrill Lynch's Global Research.
Now, top Toyota's Prius was one of the top three contenders for the award. Toyota's chief Akio Toyoda, of course, went to Capitol Hill in February, to testify about safety issues. But the Prius, notwithstanding those, still made it into the short list for a best car of the year. You don't need to be a genius to work out the Mercedes E Class was also amongst the top three. The award is voted for by a panel of 59 automotive journalists.
Now, whether it is Prius, Polo, or Mercedes Benz, what does the actual-why the trend in the car industry? What does it all mean? Joining me now, the motoring journalist is Chris Harris. Chris, you are not particularly impressed by the fact that a car wins car of the year, are you?
CHRIS HARRIS, AUTOMOTIVE JOURNALIST: Well, they just seem like slightly insular awards, don't they? I do wonder what it stands for, what they're looking for? It just seems like quite a sort of a random announcement to make. (AUDIO GAPS) What's it all about? It seems to me like it has (UNINTELLIGIBLE) World Series is an international baseball competition.
QUEST: Right, but I suppose if you do have to have barometers of cars, whether it be quality, fuel efficiency, drivability, comfort, talk, whatever you like, this is a good a way as any, is it not? Or do you suspect it is just a bit of marketing nonsense?
HARRIS: I probably think it is the latter myself. Read the releases, I wonder how rigorous it all is. I don't often think that the wrong car wins. I think last year's Golf win was absolutely spot on, because Golf is a fantastic car. This year's entry is pretty limp, really. And yes, the Polo is about as good as it gets.
But it is called a World Car of The Year. I wonder how many markets voted for it, that the Polo is actually available in. I mean, is it available in India? I'm not sure it is. Or in China? I'm not sure. Does that make it a global car of the year?
QUEST: That is a core point. Are you surprised at the Prius made it at all? Bearing in mind the difficulties that it has had on its mechanical front?
HARRIS: I think the Prius is always worthy of being there, because it does package some very worthwhile technology. Am I surprised that it didn't win? No, not at all. I thought the Mercedes was a good shot, myself. But no, I think the Prius' difficulties probably preclude it from taking this one.
QUEST: I'm going to take me life in me hands with this next question. It could be expensive, luckily I don't have-imagine I've got my checkbook, Chris, in my pocket. And I can write a check for any car in the world, for you. This is the QMB-nominated car of the year. Chris, assuming you don't have shares in the company involved, which company would you like me to buy for you?
HARRIS: It was on the short list for World's Performance Car of the Year. It didn't win, and it has called a Porsche 911 GT3. I just think it is a sensational car. The R8V10 won, which I think-it's an Audi, which is a fantastic car as well, but for me, 911 GT3 is just the car.
QUEST: How much will it cost me? Roughly?
HARRIS: About 98,000 pounds, with the bits and bobs that I'd want on it, I'm afraid.
QUEST: Thank you very much. Don't call us, we'll call you when we're ready to buy it. Thank you very much, Chris. Good night.
QUEST: Oh, boy, 98,000, you could buy house for that much. Maybe in a previous century. In a moment, weighty issue, if a passenger on a plane needs more room than the average customer, who should the pick up the bill? Airlines are changing the rules. We'll talk about too fat to fly in a moment.
QUEST: Welcome back.
When it comes to aircraft and airplane seats, airlines take the view that one size fits all. Larger travelers know that isn't the case. For some people getting into the air might mean booking two seats, one for you and one for the rest of you. Not to mention paying twice the price or at least a premium. Today Air France changed the policy on overweight passengers. Ayesha Durgahee joins me now.
Look, charging extra for passengers is-for overweight passengers, is not new. So, what is different about what Air France has done?
AYESHA DURGAHEE, CNN INT'L. CORRESPONDENT: The main difference is with Air France you have to pay it upfront for a second seat on the plane. Most airlines offer larger passengers a free second seat free of charge. But Air France is the only airline to offer a 25 percent discount on the second seat.
QUEST: So, if you had to take the seat in advance? What if you just turn up a the airport, you know, you are a large passenger, and you think, well, I'll chance it?
DURGAHEE: Well, if there is no room for you, i.e., you need a second seat, you will be moved onto the next available flight, so you'll have to wait.
QUEST: Right. What if you paid your 25 percent, or you paid your extra seat, and you've got your discount, but you get onboard and find the plane is 60 percent empty. You have literally paid for an extra seat when there were spare seats.
DURGAHEE: Well, if there were spare seats, then you will get that refund. It is just the guarantee for that second seat.
QUEST: Right. Let's put this into perspective, because by now, I suspect, you may be wondering how big is too big? First of all, Ayesha, show me the size of the average width of the Air France seat?
DURGAHEE: OK, so, Air France, is 17 inches wide. There we go.
QUEST: Right. So, that is how wide, hang on, that is how wide the average seat is. You get the idea. Right? Now, to put this into perspective again, how big-yes?
DURGAHEE: But remember it is also about the seat belt.
DURGAHEE: You have a maximum-waist-maximum waist, girth.
QUEST: Right, girth.
DURGAHEE: That is the word I was looking for.
DURGAHEE: Of 53 inches.
QUEST: Right. So, that is with the seat belt. So, the girth of the seatbelt.
DURGAHEE: It's 53 inches.
I mean, I don't want to be unkind about this, but you have got to be pretty large.
QUEST: So, it is-hold on, so you are saying if you are bigger than that, that is when you have got to start thinking about buying-right.
Is there much anger about this?
DURGAHEE: Well, passengers believe that they have a right, to have the privacy and space of the seat that they paid for.
QUEST: Right. And what this really comes down to is the contradiction between the overweight passenger and the passenger next to them. Have you ever been sitting next to somebody who spilled over into a seat next you?
DURGAHEE: Unfortunately, not. No.
QUEST: I have, and I can tell you that it is-well, there we are-53, many thanks, Ayesha. 53 inches.
Now, most airlines have policies, formal or otherwise, for dealing with this problem. Here are a few examples. Southwest says customers of size should plan on purchasing an extra seat, or they may be asked to do it, if the flight is not sold out. Passengers can then of course, claim a refund. That is the Air France scenario.
United began a policy last year requiring obese customers to buy a second seat unless vacant seats are available. In which case they would be seated next to one for free. American has a similar policy and JetBlue requires overweight customers to buy a second seat in JetBlue's case, no matter how empty the plane, there are no refunds.
People have been overweight for a very long time, that much you and I can agree on. So, I asked the founder of SeatGuru.com, a veritable useful web site, that shows you the nature of aircraft seating plans; he's Matt Daimler. I asked him why Air France was doing this now?
MATT DAIMLER, FOUNDER, SEATGURU.COM: One of the things we see on SeatGuru, actually, is for some of the larger passengers, what they are looking for are seats that have armrests that move up and down, not armrests that are in a fixed position. And what that kind of basically means, is that the overweight person is planning on putting the armrest up and maybe spilling over into the seat next to them. And I think it basically became uncomfortable for other passengers that were sitting near these larger passengers. And so, it really felt like something had to be done. And so, asking them to buy a second seat seems like the best possible solution. Giving them their money back, if it is not a full flight, seems like another fair way to treat this particular issue.
QUEST: Right, but if there is a-if it is a full flight, and there isn't a spare seat available for you to buy, then you are off the plane, then, aren't you?
DAIMLER: That's correct. Well, you can make your seat reservation in advance, so hopefully you would have booked that second seat and they would have left that seat open for you. So, really only if you show up at the airport and realize that you are too big to fit in a seat, are you going to have the problem that you are describing.
QUEST: Is it that you have got to be physically too big for the seat, so that your spilling over? I mean, what is the limit, if you like, for when this policy kicks in? Because that is really the difficult bit, isn't it? Where people say, oh, no, I can get shoehorned into a seat.
DAIMLER: Yes, so Air France wasn't very clear in their announcement today. They basically said, you know, if you have a waist that is larger than this, you know, then you should probably consider buying one of these seats. But we've seen, on some airlines in the United States, here, the policy has been you have to be able to put both the arm rests down and not really spill over into the seat next to you. And also, if you need a seatbelt extender, they'll let you have one seatbelt extender, but if you need two seat belt extenders to fit into your seat, then you are two big for that seat, and you need to buy the second seat next to you.
QUEST: Let's talk about the U.S., because in many ways, the U.S. had lead the way in this. And there have been civil liberties questions. There have been public advocacy questions. There is not consensus yet.
DAIMLER: Yes, it is really a tough issue. You know, Southwest Airlines was the first one to offer your money back if the flight wasn't full. So, Air France is imitating Southwest Airlines, in that sense. But Southwest is the only policy, here in the United States, that acts that way. Everyone else makes you buy the second seat. They don't have a clear policy on their web site. Maybe they'll make you buy it at the gate, maybe you should buy it in advance. It is really kind of murky.
QUEST: The head of SeatGuru.com, talking to me earlier. And a fascinating idea, that I know you've got plenty of views on. When we come back in a moment, Shell digs deep. It is the oil giant with new oil from the Gulf of Mexico. We're going to discuss the implications of that, in just a moment. This is QUEST MEANS BUSINESS. Good evening to you.
QUEST: Hello, I'm Richard Quest. QUEST MEANS BUSINESS, this is CNN.
A world's record for Shell, and what the energy giant is calling a plus for the American economy.
Shell is to produce oil and gas from the deepest-ever offshore oil well, the Perdido platform in the Gulf of Mexico is expected to supply energy to nearly three million American households.
Now, of course, producing that much oil and gas from one of the most inhospitable and difficult areas is the technological and economic achievement.
And I'm joined by Shell's president, Marvin Odum, who joins me from Houston.
Marvin, congratulations, first of all, because whatever we may think about deep water -- ultra deep water drilling, this is an achievement.
Where do you expect the whole thing to fully come on-stream?
MARVIN ODUM, PRESIDENT, SHELL OIL COMPANY: Well, it's -- thank you, Richard.
Good to be with you again.
We'll actually see this -- this new platform now ramp up over the next couple of months to its full production capacity. So it's an exciting project. And like you said, really a technological marvel in many ways.
QUEST: What's the most difficult part of getting oil out and gas out from that deep?
Is it just the waves, the water, the -- what is it?
ODUM: Well, let me just describe a little bit of this. So imagine trying to drill wells and then produce this oil and gas from about 2,500 meters of water depth. So in just that alone, it gives you a sense of the technology that's involved. And then we drill several miles below that to actually get to where the oil and gas is.
But I think the -- you know, that you have to keep in mind on a production system like this is not only is it operating in that sort of environment, but this is also a place where we have hurricanes and other dramatic weather. And it has to be able to withstand those kind of conditions, as well.
QUEST: So you've not only got the first 2,000 or 3,000 meters of water, you've then got to get down all the way.
What is the price of oil that makes this deep -- ultra deep water drilling -- I was going to say profitable, but let's settle for viable?
ODUM: Well, that's -- you know, that's actually one of the -- the marvels of this thing, because you look at the -- the extreme environment. It's 200 miles offshore, not a lot of other things around it, so very, very remote. And even, you know, certainly at today's prices and even lower than today's prices, this is a very economic commercial project.
So the technology is not just about making it big and -- and deep, it's all about can we bring it to the market at a -- at a commercial price?
And we can do that with this type of development.
QUEST: Now, President Obama has announced -- and we've talked about it on this program -- more offshore drilling in -- for gas in parts of the East Coast and up in Alaska. Obviously, I -- I assume you are supporting that in the sense of the needs of the -- of the U.S. Economy.
But is it possible, do you believe, to -- to do this economically, environmentally and are you prepared to stake your reputation on that or is it all going to end in tears?
ODUM: No, actually, we -- we do stake our reputation on it every day and the work that we do in the Gulf of Mexico and virtually everywhere else in the world.
But specific to President Obama's announcement, it's not only a significant step for the industry and for the country in terms of developing more of its resources, you know, right here in the U.S., it's also a very significant announcement for us as a company, because one of the primary aspects that he focused on was the offshore of Alaska.
ODUM: Now, that's a place where we happen to own most of the leases. And the president, you know, is -- as was said in the speech yesterday, expects drilling could begin there as early as 2010. So we're very much looking forward to that and we're ready to go.
QUEST: So you -- you believe, obviously, on good geo -- geological basis, that there is -- there is oil and gas there, that it will be commercially viable.
Is this a -- I suppose what I'm really asking you, is this a racing certainty, you know it's there, it's just got to get out of the ground?
ODUM: Well, we know -- we know for a fact because there have been some wells drilled up there already. So we know there's hydrocarbons there. What we have to prove is the actual size, scale and commerciality of that through the exploration wells that we -- that we will drill.
But we're, you know, the confidence is reasonably good. It is still exploration. That's why we call it exploration. But this area off the coast of Alaska is presumed to be the most prospective, meaning it has the most resources of any given area off of any part of the United States.
So important for the country and -- and obviously important for us, as well.
QUEST: Marvin, many thanks, indeed.
Lovely to have you on the program.
Come back again and talk more about these issues. We know that they're important issues.
Thank you very much.
Marvin Odum of Shell joining me there.
When you and I come back together in just a moment, job seekers in the U.S. are praying that the employment market is finally turning the corner. Wall Street traders are taking what comfort they can from the latest jobs data. We'll have that in just a moment.
QUEST MEANS BUSINESS.
QUEST: The market in New York is up just around 20 or so -- 30 or so points, up 20 -- now how about that -- up 29.1. We're not -- well, if you were with us at the beginning of the program, we were over 10-9. Now we're (INAUDIBLE) that just a tad. So it's giving back some of the gains.
Wall Street takes the day off on Friday for the Easter holiday. By the time traders return on Monday, they'll have had plenty of time to process the government's jobs report for March. Anything less than a strong number would come as a disappointment.
Maggie Lake is in our New York newsroom to make sense of this.
First of all, I suppose the -- I'm slightly surprised that the number comes out -- I know it does, but I've never quite understand -- stood, the number does come out on the Friday when the market's closed.
MAGGIE LAKE, CNN CORRESPONDENT: Yes, it is a -- it is unusual, Richard. Most of the time, they switch it for holidays. Not this time.
But listen, and that's going to make it more difficult, because the market expecting a very nice looking number. And, boy, the bulls came out swinging this morning, full of optimism. But definitely a little bit of caution seeping in here. It's because it's a little confusing.
Listen, the forecast is for 190,000 non-farm jobs to have been added. We haven't seen a number like that since about March, 2007.
And so what's going on with the economy?
Why the big rebound in jobs -- or at least the big hoped rebound in jobs?
I have the answer for you right here in my hand. It's called the Census. In fact, it says right on the outside -- this is what I -- the form I'm supposed to fill out: "an equal opportunity employer." And the -- the government jobs added because of the...
QUEST: All right...
LAKE: -- the Census, the counting, is expected to really contribute to the job gains.
What we don't know is what about the rest of the economy?
What about those private sector jobs?
And this is the reason that we're worried. We got a couple of other reports out this week, one yesterday and one today, that are pretty disappointing, that show that, in fact, companies are still...
LAKE: -- firing people or letting people go.
QUEST: Maggie, hang on. Time out, as you might say. We -- the Census is going to be a major factor in this jobs number.
QUEST: Since it is not permanent, since it is not highly paid, why won't the market just discount the number for the -- for the meaningless cyclical nature of what it is?
LAKE: First of all, if you're getting a paycheck and you didn't have one before, there's nothing meaningless about that, Richard.
LAKE: And, secondly, because they don't know how much of it is the Census.
We know it's going to contribute, but how much of it is that and how much of it is private sector gains?
You know, we've been hearing some positive sort of anecdotal -- a lot of people talking about the fact they feel the turn is coming, businesses can't keep doing this without adding head count. So just where the mix is, that's what's confusing.
QUEST: All right.
LAKE: And this is why the market is a little bit worried. You do bring up a good point, though, because they were counting on private sector contributing, as well. But we had those figures up before. I don't know if we're going to put them back up. But ADP said that, in fact...
LAKE: -- private sector cut by 23,000; Challenger Gray today, this morning, saying that the planned lay-offs were about 67,000.
Now, interestingly, some of those are government. The postal weekends are getting laid off, so the government giveth and taketh. It -- it's all going to sort of even out here.
But we really don't know about businesses, as you say, that give high paying wages, that give some job security and stability. That's the part we don't know about.
LAKE: So there is a little bit risk with this jobs number tomorrow.
QUEST: Well, Maggie certainly putting -- you're putting me in me place tonight on this jobs question.
What it comes down to, though, is whether or not these government created jobs, the -- the obfuscation of the private sector job position, whether or not the U.S. economy is digging itself out of a jobless hole.
LAKE: Oh, and we have a hole to dig out of, Richard. And this is the other thing. The market is anticipating the recovery, pricing in that recovery. But there's a big reality check. We lost, what, eight million jobs in the recession. And there's no doubt from one of our -- one of the economists on your show frequently, Peter Morici, who says that we need to add 13 million jobs just to get the unemployment rate back to 6 percent by 2013. We're not talking down to 4 percent. That's just down to 6 percent. That is a lot of job growth you need to see month after month after month just to get ourselves back up to par.
So we've got a really big hole to dig out of. Still, psychologically, if you start to see job gains, that is going to be a positive, both for the consumers and for Wall Street -- Richard.
QUEST: Maggie Lake, who is in New York.
Many thanks, indeed.
Hmmm. Maggie, who'd been suffering from the flu. She seems to have made a rather startling recovery.
Now, more than 5,400 employees at California's only auto plant are now out of work. Serious business. The last car is rolling off the production line at Fremont, near San Francisco on Thursday. The factory was a joint venture between Toyota and General Motors, making Corollas, Tacomas and the Pontiac Vibe. G.M. pulled the plug on Pontiac when it went bankrupt last year and left the partnership. Toyota said it simply couldn't keep the plant going on its own.
The people employed directly at the factory aren't the only ones affected. Fifty thousand work for the companies who supplied the parts and services. One is Injex, a plastics company.
Hear how the staff are bracing themselves for their road ahead.
(BEGIN VIDEO CLIP)
EBI MOGHAREI, INJEX PLANT MANAGER: Well, we were established 25 years ago. And we were basically formed to supply Nummi plant, which is 13 miles down the road from us. We've been supplying them all the interior plastic parts for all the vehicles they built there.
And currently, we have about 400 employees. As of Thursday, the majority of them will be laid off and have to go home.
UNIDENTIFIED FEMALE: Right now, I am putting together the termination package for non-union employees. I put my label on my own termination packet. I think about the employees that have been here for years and years. And this has been the only job some of them have ever had.
So them not working now, how are they going to support their families?
MOGHAREI: We have a lot of people who have been here for a long time. It is a good indication of the work environment and the type of pay and the type of job. And they started very young, they got married while working here. They -- they had their children and now their children are working here.
When you hear some of the details, we want to just take these jobs and have other jobs replace them. They really don't understand how much manufacturing contributes to the economy of the area, state and the country. To rebuild the -- the company and the business will take time. And, unfortunately, we ran out of time as far as these people.
JOHN CROKER, INJEX MACHINE OPERATOR: I'm now an operator here. I work here for seven years. I'm sad because the company will close. For me, it's hard to find a new job. So I don't know where I will go.
(END VIDEO CLIP)
QUEST: A different form of World At Work when the work ceases to exist.
One part of the jobs market that is growing is temporary employment. And not everyone is keen on this trend.
As CNN's Richard Roth now tells us from New York, a large freelance workforce could be here to stay.
RICHARD ROTH, CNN SENIOR UNITED NATIONS CORRESPONDENT (voice-over): Clients of this Brooklyn trapeze academy dangle without a net. But it's freelance worker Jethro Rebollar who's in a precarious position.
JETHRO REBOLLAR, FREELANCE WORKER: Good morning. Service (INAUDIBLE).
ROTH: It's not exactly like getting shot out of a cannon, but Jethro's desk job is his fifth freelance assignment since losing a full- time job more than a year-and-a-half ago -- not much stability and no benefits.
REBOLLAR: It -- it's been a struggle to either decide to move back home, which I -- is really the last thing I want to do or -- or do this.
ROTH: Jethro also freelances at this architectural design firm -- the one that laid him off as a staff employee during the recession.
ANTONIO ARGIBAY, EMPLOYER: We were approximately 30 some odd people and now we're about 12 plus freelancers.
ROTH: Welcome to Freelance Nation -- the latest U.S. jobs report showed the fifth straight monthly increase in temporary workers. Some say they will be a more permanent fixture in this economy.
SARA HOROWITZ, FREELANCERS UNION: This recovery is going to show that this is the future. The people are going to start. They're going to do whatever work there is and there will be traditional jobs. Of course there will. But there's -- this group is never going away and it's only growing, in fact.
MELISSA MCELROY, FREELANCE DESIGNER: Hi, Susan.
It's Melissa McElroy.
ROTH: Melissa McElroy uses her home as her base of work operations. She lost her job at an interior design company two years ago. She's done short-term projects since, but her income has been cut in half and she's trying to make ends meet.
MCELROY: I don't know what I'm going to do for health insurance. I have a -- you know, absolutely no idea. I can't even like focus on that, because I'm still worried about how am I going to pay rent and thinking about like how am I going to survive the next three months.
ROTH: The not for profit Freelancers Union helps this changing labor force. It provides health insurance at a group discount rate for freelancers -- 30 percent less than comparable individual plans, they say.
HOROWITZ: We really want to build the next safety net, so that as people go from job to job and project to project, they have a whole safety net that makes them feel secure.
ROTH: It's a net that needs to cover more people left hanging by a thread in these shifting economic times.
Richard Roth, CNN, New York.
(END VIDEO TAPE)
QUEST: Interesting stuff.
Time flies on a program like this. You've got to pay attention if you want to keep up.
So does the woman we'll meet after the break, the chief executive of Timex -- that's the watch maker -- and it's showing its best face to the world.
QUEST: Now we've seen a fair bit of consolidation in the luxury sector. The global downturn was a real slap in the face or, some might say, the wrist for watch makers.
Monita Rajpal met up with the exclusive of Timex to find out what she's doing to keep up with the times.
HANS-KRISTIAN HOEJSGAARD, CEO, TIMEX: We have a (INAUDIBLE) possibility. Now, the biggest challenge is to get the young people to start wearing watches, the combination of aspirational and also technology. We really have to make sure that the different brands are in touch with the market, that they see the trends and that they see what is happening with the customer because it's really all about the customer.
From a customer's point of view, we see that we need to focus a lot on the Far East and Asia. But Asia is a difficult market and you have to really build it up very carefully and take it a step at a time.
MONITA RAJPAL, CNN CORRESPONDENT: Is it because that you don't want the brand to be diluted?
Is that why?
HOEJSGAARD: I think that the important thing is to make absolutely sure that you do it right in Asia. So I think there are plenty of companies in the luxury area that -- that have done a lot of (INAUDIBLE). And for -- for the watch brand, we want to make sure that when an Asian customer, for example, a Chinese customer, goes into a store in China and buys a watch, they feel the security that that watch is really not a contraband, but is a true brand that (INAUDIBLE) watch.
RAJPAL: Are you looking at brands from Asia-Pacific, from South Asia, from the Middle East and -- and -- in terms of potential investment opportunities?
HOEJSGAARD: I -- I think that in the future, this will happen. But it's a little premature at the moment.
(END VIDEO TAPE)
QUEST: The chief executive of Timex talking to Monita Rajpal.
Now, last night, we were talking about showers and April showers. Well, I can tell you even before Mr. Arduino joins us, that in Britain, France, Spain and Portugal, those showers keep falling.
GUILLERMO ARDUINO, CNN METEOROLOGIST: Big time.
ARDUINO: Big time.
QUEST: Yes, big -- big time. Well, I could have told you that.
ARDUINO: Yes. Oh, I know. I know, the perfect meteorologist. We tested those words with Victoria and you were very good.
Let me tell you one thing, I was talking to Brandon Miller, our senior weather producer. And -- and I said what is different in April in Britain?
And he tells me, well, the explanation that I gave you before about the jet stream that drags and becomes like a highway for these systems, but also it's the contrast, Richard, with nice part of the day and boom, intense rain showers, while in other times of the year it's continuous mist, you know, and a bad and gray day and uncomfortable.
Well, in this case, you're going to get a little bit of nice weather and then boom, a big shower. That is because of the jet. I'll explain again for our viewers who are interested in that -- in them. And, also, interested -- I mean if they want to understand the science behind. And, also, we have the winds that come along with this. It's transitional weather.
But you know what?
Now we see this storm that is actually pushing away right now. But another one is coming behind, the same thing, because the jet is positioned over here and these lows say hey, let's go there, like planes, and let's ride along. And that's what happens.
I was up checking the observations. I don't see so much snow now. I see a lot of rain showers. London is -- the airport was not reporting rain showers. I think the problem is a little bit north of it. That's where we have that.
Also, in France, we -- I saw some snow showers reported into here, the south-central parts of the country.
All right, this is the jet. This is a typical setup for the winter. And then the jet moves northward, because you want that nice weather condition later in the summer, right?
Well, in the meantime, in April, it goes through Britain and it stays here for a little bit and the storms happen.
But soon, they're going to -- it's going to move northward and then you will enjoy the nice weather.
The snow that I talked about in France into the Alpine Region, Innsbruck was reporting some snow showers. And then Germany is in good shape in general, especially the west is getting better; in the Czech Republic and in Austria; Innsbruck with the snow. We see some bad weather. No significant delays despite that snow in Munich there. So I don't think there's going to be deicing delays, you know, those awful things that you have to put up with when you're at the airport.
Temperature wise, going up slightly and nicely. Eighteen in Bucharest, 11 in Paris for tomorrow, 17 in Madrid.
India, though, our viewers who are going to India, the heat wave continues here, Richard, in northern sections. So careful with that. And, also, a cooling trend in general for Shanghai, Beijing, all the way down into Hong Kong. So our viewers who are going there need to know that -- back to you.
QUEST: Thank you, Guillermo.
I love the way you say you'll revise or you'll -- you'll repeat the explanation on April showers for those viewers who might not be -- and I -- a clear indication to -- to those like me...
QUEST: -- who are perhaps a bit dense of science.
All right, many thanks to you.
ARDUINO: Come on. You (INAUDIBLE).
QUEST: You're not going to believe me, but it wasn't (INAUDIBLE).
Well, OK, Guillermo, many thanks.
We'll talk about that again soon.
When I come back, you and I will have a Profitable Moment together.
QUEST: Tonight's Profitable Moment.
The argument over charging overweight people for extra seats on planes has merit on both sides. Having sat next to passengers who've spilled over into my seat, it's not something that is pleasant for either side. Making them buy a second seat solves the problem.
Of course, if you are that extra large passenger, is it fair that you should have to pay more because you happen to be large?
Even more so if this is because of a medical condition.
That is why the airlines have struck this happy balance by refunding the charge if there were empty seats on board.
The two sides will never agree on this, but in the end, it comes down to which solution is least offensive to most. And, frankly, to me, this seems to be it.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I do hope it's profitable.
"AMANPOUR" is next, after the news headlines.