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QUEST MEANS BUSINESS
BP Board, Execs Meet, Tony Hayward's Fate Is On The Agenda
Aired July 26, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: Hayward trouble, oil and muddle, is it a matter of when not if, now that BP's chief executive is stepping aside. We'll try to get to the bottom of those rumors for you.
Back from the brink, Ford pins new hope on its new car. And the boss tells this program the U.S. economy is back on track for good.
And Ferrari faces sanctions for breaking rules in Formula One. Will the whole industry however, end up paying a price?
I'm Max Foster in for Richard Quest, and this is QUEST MEANS BUSINESS.
Hello to you.
BP's top executives are meeting in London, right now, just around the corner. Tony Hayward's job is hanging in the balance. There is a lot of speculation that he could step down as CEO tonight as a result of that disaster that was the Deepwater Horizon accident and the clumsy response to it from BP's leaders as some people see it. Our Jim Boulden is outside the oil company's London HQ-Jim.
JIM BOULDEN, CNN INT'L. CORRESPONDENT: Yes, Max, I think what we're going to find out is that in the next few hours the board will be finally deciding the fate of Tony Hayward the embattled CEO. He has been the CEO, of course, for three years and been under the gun, really, since the oil disaster started on April 20th.
Some of the ideas are that he could very well likely move after a few months. In other words there would be a transition period. And then, of course, there could also be the chance that he might go to Russia to work on the TNK/BP join venture. So there is speculation about that as well. And that would be a very big profile job for him. So, in some ways he would stay within the BP family but not as the CEO.
Now, Max, earlier I there was a lot of talk about who would replace Tony Hayward and all the money seems to be on Bob Dudley. He is a top American executive of BP. Between BP and Amoco he has spent many years working for this company in the U.S. and just last month really took over as the-really took over as the lead face and lead voice in this whole spill clean up. Now let's remind viewers how we got here. And how this whole situation began, back in early April.
UNIDENTIFIED MALE: Do you swear or affirm the testimony you are about to give to be the truth, the whole truth, nothing but the truth, a matter pending before this committee?
TONY HAYWARD, CEO, BP: I do.
BOULDEN (voice over): By the time BP's CEO Tony Hayward appeared before Congress in mid-June, he was well under pressure. Even though Hayward had been in the Gulf of Mexico region within days of the explosion on April 20, that cost 11 lives and lead to the sinking of the Deepwater Horizon oil rig, and America's worst oil spill disaster.
HAYWARD: It is clearly been a tragic accident. And I would-I feel great grief and sorrow.
BOULDEN: At first BP's strategy was to say while it would pay for the clean up other companies were also responsible for the well. But the White House and lawmakers zeroed, especially on Hayward, saying BP was not doing enough.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Make no mistake, we will fight this spill with everything we've got, for as long as it takes. We will make BP pay for the damage their company has caused. And we will do whatever is necessary to help the Gulf Coast, and its people, recover from this tragedy.
BOULDEN: The 28-year BP veteran, in the top job for only three years, insisted BP was doing all it could to cap the well, and minimize damage. But he was also criticized for some of his statements.
HAYWARD: There is no one who wants this thing over, more than I do. You know, I'd like my life back.
BOULDEN: Hayward also said the spill was tiny compared to the entire Gulf Region. This all greatly increased the pressure on Hayward, the White House, and Congress. Hayward and BP Chairman Carl-Henric Svanberg, only in the job for six months, were off to Washington. They agreed to a $20 billion compensation fund for any economic losses in the region. BP also told shareholders there would be no dividends this year as the clean up costs topped $3 billion.
Lawmakers insisted Hayward explain his company's handling of the disaster at a June 17th hearing.
HAYWARD: Since I became CEO we have made a lot of progress. We have-
REP. HENRY WAXMAN (D), CALIFORNIA: You've made changes, but now we see this disaster in the Gulf. Does that indicate that you didn't keep that commitment?
HAYWARD: And one of the reasons that I am so distraught-
WAXMAN: Could you answer yes or no?
HAYWARD: by the accident, is that-
WAXMAN: I don't want to know whether you are distraught, I want to know whether you think you have kept your commitment?
BOULDEN: Within days Hayward handed over control of the spill response to Bob Dudley, an American-born veteran of BP. Tony Hayward met with major investors and stakeholders around Europe and the Middle East, shoring up support and reportedly offering to sell assets.
BOULDEN: And of course, BP did just announce that they will be selling around $7 billion worth of assets, Max. And that will give a little bit in kitty for the next CEO in order to pay for this continuing disaster. And, of course, the clean up, and then we have the lawsuits and the fines that will surely come after that, Max.
FOSTER: It seems we are moving towards the end of one particular saga here, if Hayward does go. It is interesting, though, isn't it, Jim. There is some sympathy amongst pretty senior circles here in London for Hayward, whereas there isn't in the U.S.
BOULDEN: Well, yes, certainly there was. The business community here last month got pretty tired of hearing some BP bashing, and Hayward bashing. They weren't defending the company and the actions that were taken that lead to the disaster. They were just saying that, you know it's an American well, it is American consumers, it is oil for the Americans, and BP is a huge company with thousands of employees in the U.S. and thousands of investors. And they wanted to see this as an international company, not as a British company.
Interestingly, if Bob Dudley does take over, he would the first American to run BP and it would certainly be someone who would be much more high profile in the U.S., I would think, than here in the U.K.
FOSTER: Jim, outside BP, thank you very much, indeed.
And we'll be back there, of course, as we get the financial results, when we expect the news on Hayward as well. Probably tomorrow morning, London time. As Jim says, Bob Dudley is expected to be named chief executive once Tony Hayward does step down. He's been BP's managing director since February 2009, earning $2.2 million last year. Dudley took over day-to-day control of the spill operation from CEO Tony Hayward last month. The 54-year-old began his career in 1979, with the U.S. oil company Amoco, which BP took over in 1998. From 2003 to 2008 he headed TNK BP, the company's valuable Russian joint venture.
But in 2008 BP's relationship with Russia went sour and Dudley was forced to flee the country and go into hiding. The fact that Dudley is from Mississippi could help improve BP's reputation in the U.S. He has a B.A. in chemical engineering from the University of Illinois. And Dudley is married, and has two children.
Right now BP is, though, still trying to reconnect a rig to its relief well in the Gulf of Mexico, the heart of this story, where it all really began, so it can restart work to drill the relief well. The operation was suspended on Friday because of Tropical Storm Bonnie. BP's containment cap on the rupture well is still in place.
We're learning all the lingo during this story about the oil industry. David Mattingly joins me now from New Orleans-David.
DAVID MATTINGLY, CNN INT'L. CORRESPONDENT: What we saw yesterday was, we went up with the U.S. Coast Guard, flying over the Gulf of Mexico to see how things were coming back together after that tropical storm. We saw a lot of activity, but surprisingly, little oil.
MATTINGLY (voice over): All the pieces are coming back together. In a Coast Guard fly over of the spill site we saw platforms and ships gearing back up to kill the BP well after running for cover from a tropical storm that never arrived. But there is one thing we don't see. What happened to all the pools of thick crude oil?
REAR ADMIRAL PAUL ZUKUNFT, FEDERAL ON-SCENE COORDINATOR: This oil is rapidly breaking down. And there is very little oil left. We have a few streamers that we located earlier off of Grand Isle, that perhaps can be skimmed. But right now we're not seeing many targets for our skimming fleet of 780 skimmers.
MATTINGLY: You realize when you say that it is so hard for people to believe that this spill was so enormous, and yet you are having trouble finding the oil to skim it?
ZUKUNFT: Well, it is not for lack of trying. We have 50 aircraft, saturating this very location where satellites indicate there could be oil sheen in the area. So, we're going to look, just like we would doing search and rescue to see where any possible target pockets of oil might be over this area.
MATTINGLY: Remarkably, the Coast Guard says surface oil from the BP spill could be gone in a matter of weeks, as the sheen and bands of weathered oil continue to dissipate and evaporate.
(On camera): What we're finding out is that the storm didn't have any effect on the oil at all. The wind and the waves that it produced weren't strong enough to help break the oil up. So, in other words, that storm, when it came through, was just a big waste of some very valuable time.
(voice over): The best estimates now, the operations that will fill the well with drilling mud are at least a week away. And the worry lingers of future storms and the impact they could have; a hurricane season game of cat-and-mouse, where time is of the essence.
MATTINGLY: It is important to note here, that all the oil that we were discussing with the Coast Guard is about the surface oil, the oil that can be retrieved from the surface of the water, most of that is now being cleaned up and they're looking at possibly weeks, maybe a month from now, when that oil, the sheen and everything else that is still out there, might disappear. But that does not mean there won't be oil in that water, we're looking at tar balls and other elements that are in the water, having an impact on the shore and the Gulf states of the United States for quite some time, Max.
FOSTER: OK, David. That is the point, isn't it? Thank you very much, indeed, for that.
Now, BP's shares performed well in London, today with all of this going on, the market factoring an expected change at the top of the company. Of course, their shares ended the day up over 4.5 percent.
London's FTSE 100, overall, was around 0.72 percent, at the close, with BP's help, of course, a big factor in that main index. European traders came back from the weekend having digested the results of the bank stress tests as well. And financial stocks were among the best performers. According to European regulators only seven banks failed to prove they could weather a fresh economic shock. In Paris, Societe Generale, finished up around 5.25 percent. Also (ph) Credit Agrico rose more than 3 percent, all linked in with that finance story in Frankfurt, the DAX ended up just under half of 1 percent. Commerzbank was the biggest gainer there. With a rise of close to 3.5 percent.
Let's find out now, though, how the all-important Dow is doing, over there on Wall Street. It is up. There was some pretty positive housing figures, which is playing this out (ph). We'll have a more on that a little later on.
Now, Ford is on a roll. Quarterly results are the best they've had since 2004. And it is looking to the future. Don't miss my interview, next, with the man in the driving seat. He is the CEO Alan Mullaly. That is up next on QUEST MEANS BUSINESS.
FOSTER: Now for the U.S. auto sector, the battle to emerge from the downturn has been long, a very long slog. Ford took the latest step in its turn around, though, this Monday, the car maker unveiled its latest model to the world. It is the new and updated Explorer. It is what the people at Ford are calling the next generation SUV. Just last week the company reported a jump in profit and sales for the year's second quarter. Earnings rose to 2.7 billion; Ford's best quarterly results in six years. It says it is building on its achievement of surviving the economic downturn and it is staying out of bankruptcy. It is also cut its debt by $7 billion. It had borrowed large sums to help fund its turn around and it is still in debt by around $27 billion.
Ford was the only three, only, of the Big Three U.S. carmakers not to go through bankruptcy back in 2009. Earlier I spoke to the CEO Alan Mulally who is in New York. He was promoting the new Ford Explorer; a vehicle with a smaller engine than it predecessor, interestingly. If the idea is to reinvent the SUV, that is a question I asked Mr. Mulally.
ALAN MULALLY, PRESIDENT & CEO, FORD MOTOR COMPANY: No, absolutely and that was the excitement of the reveal today is that this is a completely reinvented Explorer. And just to give you a little bit of perspective about that. That we have produced and sold 6 million Explorer over the years and 4 million are still in service. And every year 140 Explorer customers trade in their Explorer. And all of them, just about, want a new Explorer. So, what they really want is a significant improvement in quality, and fuel efficiency, safety, really smart design, like My Ford In Sync, and, of course, the very best value. So, as we have come through the recession and we invested in all the new products. This is the time now where we were revealing the brand new dynamite new Explorer.
FOSTER: What is the message to your customer? What are you actually selling to them here?
MULALLY: Well, the first thing is that when they walk into a Ford store, our promise to them was that they would be able to have a complete line up of vehicles, small medium and large, cars, utilities and trucks. And everyone of these vehicles, whenever it suits their needs, will be best in class in quality and fuel efficiency, safety, and really smart design and good value. So, there is a-it is a significant segment of the market, with the mid-size SUV, and we see a really bright future for the new Explorer.
FOSTER: This was something that came out of the project known as "The Way Forward", a restructuring plan, which you took on in the early stages and have really overseen. We had the evidence of that, didn't we, on Friday?
FOSTER: Remarkable financial results coming out from the company, under your leadership.
MULALLY: Thank you very much, Max.
FOSTER: I mean, incredible figures that came out that completely surpassed all expectations. You've had a weekend to digest that. How do you react to the reaction, as it were?
MULALLY: Well, it has been really quite remarkable, Max, because clearly the results that we're seeing today are a result of the actions that we put in place, the decisive actions that we took, nearly four years ago now. And remember at that time, when I joined Ford, we decided to focus on the Ford brand, we decided we were going to have a complete family of vehicles, small, medium and large, cars, utilities and trucks, and every vehicle; no matter what its size, would be best in class, in terms of quality, fuel efficiency, safety, really smart design. And of course, the very best value; so we borrowed money four years ago to restructure ourselves, to be able to operate profitably, at the lower current demand, and the changing model mix. And then we went to work and accelerated the development of all of these new Ford cars, trucks and utilities. And what you are seeing today and what we announced on the results on Friday, was that, clearly, based on the strength of this product line, that even during a relatively slow recovery that we are actually increasing market share, increasing, net pricing. People are paying for the value in the car. And we are actually growing the business now, going forward.
FOSTER: You are still at a massive amount of debt, but you are managing to break that down a bit over time. The Explorer will be a big test; how well it does will be a big test to the whole restructuring plan. When do you expect to pay off the debt? When do you expect to be back on par, you know, when you were in a strong position?
MULALLY: Yes, well we gave some other guidance about that, Max, on Friday, in that we shared that we had paid $7 billion of our debt during the second quarter. Also that we gave guidance that by the end of 2011, we'll be in a net positive cash position, meaning that we have more cash than debt. But clearly, our state goal is to get back to investment grade, following that as soon as possible. And I think we're absolutely on track, in fact, ahead of that plan today.
FOSTER: A lot of the demand and a lot of the profit came from the United States market. That has rebounded pretty well, hasn't it? I'm just wondering how concerned you are about what people call a double-dip recession, the U.S. economy going backwards again?
MULALLY: No, I understand. And everything that we see, Max, is we see a relatively steady growth in the United States, and also around the world, for 2010, and also continuing in 2011. And really following very closely the expansion of the economic activity of the GDP. Now, clearly this is a slower recovery than what we have had in the past, following a recession. But this is a very good slope, and very steady, and we anticipate that this is going to continue over the next few years.
FOSTER: So, we're not going to have a reversal in the fortunes of the U.S. economy, you don't think?
MULALLY: I sure don't think so because you know with the very decisive action we've taken on fiscal, and on monetary policy. And of course the laser focus that we all have now, around the world, on the importance of economic growth. I think that everybody is engaged, they're engaged in the United States, they're engaged with the leaders around the world. And everybody knows the most important thing we all can do is to take the actions collectively to grow the economy world wide.
FOSTER: Chief executive of Ford, there. We'll be hearing more from him, a little later on, including rumors about his eminent retirement. Are they true?
Back to our top story now, BP and the fate of Tony Hayward. Fadel Gheit joins me now. He is the managing director of Oppenheimer, the head of oil and gas research for that investment bank. In the interest of full disclosure we should point out that Oppenheimer has an investment in BP stock.
And it is also why we are speaking to you. Because you are going to be on a conference call tomorrow with BP executives, aren't you? You are going to hear, I presume, you are expecting to hear that Hayward is out, tomorrow morning, London time?
FADEL GHEIT, MANAGING DIR., OPPENHEIMER: Yes, I think that is likely to be the case. That is what I understand is the case, that Tony Hayward will be replaced and Robert Dudley will take his place.
FOSTER: Robert Dudley is currently overseeing the spill operation, and is an American. Are you also expecting to hear that Tony Hayward will stay within the company in some form, or will he be out all together?
GHEIT: I think Tony will probably be likely to leave the company. He would be temporarily on the board until, I believe, the end of the year. And then he will move on. Unfortunately, he got caught into the most unfortunate circumstances; he made a couple of statements that were very under fortunate. But I have known Tony for many years. I think he's a good man. I find it very difficult to see him leave the company while the investigation of this accident is still ongoing. So, the jury is still out, but he was convicted. So, I find it very ironic that this is the business justice. But it is what it is, and BP will survive. And Bob Dudley is going to be the new CEO, who will hopefully take the company to a-a better and stronger position than it is now.
FOSTER: Good man or bad man, he oversaw a disaster in a company, didn't he? So he had-there is not future for him in that role at that company, whether or not he did a good job, because of what happened?
GHEIT: Yes, absolutely, I mean at this point, I think a lot of investors, a lot of people would like to see a clean break and they would like to see a new regime under Bob Dudley, a new face, hopefully a new beginning. And this time around Bob Dudley has to be very ruthless, he really has to see what caused this accident and prevent it once and for all, from happening ever again. BP has to provide analysts and investors and the public, in general, measureable progress of them being not among the best, but the best in class when it comes to safety and the environmental record. This is something that obviously has tarnished the company's reputation and put the company's own survival at risk. So, if I were Bob Dudley that would be my top priority.
FOSTER: OK, Fadel Gheit, thank you very much indeed. We'll wait to see what happens tomorrow, but it all looks like it is unfolding, certainly the career of Tony Hayward.
Now, what is old is new again. We'll show you how Turkey's largest city, a showcase for thousands of years of history, is reinventing itself, as a "Future City".
FOSTER: How does an ancient city move with the times and preserve its identity without turning into a museum?
In our "Future Cities" series we look at how the urban landscape is adapting to new challenges. Richard Quest looks at how Istanbul is showing the world what is old, is new again.
RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS (voice over): There are few cities in the world that rival Istanbul for historic attractions. Just look, stretching over seven hills, two continents, it is a city that has grown and developed in a style that accommodates new people, new ideas, the new century.
AYSENUR AKMAN, MUSEUM OF ENERGY, SANTRALISTANBUL: Santralistanbul is a cultural project which aims to transform the city.
QUEST: Santralistanbul, originally the Ottoman Empire's first power plant. From 1914 it generated electricity for Istanbul for almost 70 years. Now, in the same building its new cultural center pays homage to the city's industrial past.
AKMAN: It is one of the first examples of such a renovation project in Turkey, not in Istanbul, but also through the whole of Turkey there is not a similar renovation project of an industrial area heritage or building through such an art and cultural center. The visitors, when they come here they really like-feel themselves like they are in a science fiction movie. That is a sense that many visitors say to us.
QUEST: The power generated here brought the Industrial Revolution to Istanbul, along with electric trams, communications systems, even night life. They are all direct result of this building. Today, with the museum for energy, modern art, and concept venues, this complex is powering a cultural revolution.
AKMAN: Now, in the 21st century, the Santralistanbul aims to transform the city with art and culture. Now we are again, a power plant, a new type of power plant. It is the main parts of the production of electricity. It is one of the turbine generator groups.
When we came here in 2004, it was left open like that. And we preferred not to close it, and to exhibit it to people as how we found it.
QUEST: The Museum of Energy is evocative. The turbines and the control rooms are reminders of the Ottoman past.
AKMAN: We (UNINTELLIGIBLE) the control room of (UNINTELLIGIBLE) power plant from Istanbul. It was the place that they produced electricity with the turbine generator groups; it was distributed to Istanbul.
QUEST: In its heyday, 500 people would work at this power plant, which eventually closed in 1983. This year Istanbul is enjoying the title of 2010 European Capital of Culture. So, the year is packed with events, celebrating its diversity.
KORHAN GUMUS, 1020 EUROPEAN CAPITAL OF CULTURE CMTE.: Now we have this heritage of the modernity in the city. If we see the culture as a strategic instrument for the city, you will see how the city developed.
QUEST: At Santralistanbul, the city developing precisely by preserving its past. And this, says, the architect Chris Jones, is the way to build future cities.
CHRIS JONES, ARCHITECT, RMJM ISTANBUL: It is really important to actually reuse what you have. Work with what you've got, rather than creating new developments consistently. Addressing what opportunities, wonderful opportunities, these offer. And you end up with a more interesting and more compelling architecture, as a result, I think.
QUEST: The Ottomans left their mark on Istanbul. Across town, Topkapi Palace, where the sultans ruled. It is still revered as an architectural wonder that has lots to teach modern designers.
MAMET AKSAKAL, JOURNALIST: It is the center of culture, you know, in the past, and even today. And an example of architecture with today's modern technology and we wouldn't be able to build many buildings they build 550 years ago.
QUEST: Original features have been adapted to very modern needs.
JONES: It's a fantastic kind of rebirth for a development of this nature, an industrial aesthetic, an industrial typology being given the opportunity to contribute to the city again, old and new, and sit cheek by jowl in this city to -- to great success. I think all cities can sustain change and they should move forward. But they should respect the past.
AKMAN: There is no single one, but I hope there will be. I hope it will be -- the industrial help which echoed in Turkey will change and people will understand that there are many stories that these buildings can tell us.
QUEST: In Central Istanbul, historical heritage is the foundation on which the future is being conceived.
(END VIDEO TAPE)
FOSTER: Welcome back.
I'm Max Foster in London.
More QUEST MEANS BUSINESS in just a moment.
But first, here are the main news headlines.
A whistleblower Web site says a huge cache of leaked U.S. military documents could provide evidence of war crimes in Afghanistan. Wikileaks has released what it calls "The Afghan War Diaries" -- raw data from 2004 to 2009. The documents reportedly suggest Pakistan's intelligence services aiding the Taliban. Pakistan denies it, but Afghanistan is urging Washington to take serious action.
Many survivors of the killing fields in Cambodia call it an insult. A UN-backed tribunal has sentenced a former Khmer Rouge prison chief, Eav Duch, to 35 years behind bars, but he'll go free in 19, partly because of time already served. Duch oversaw the torture and murder of more than 40,000 men, women and children in the 1970s.
German chancellor, Angela Merkel, is calling for a thorough investigation into the stampede at a music festival. Local police say the chaos on Saturday left 19 people dead 400 injured. In an interview, Merkel said she was horrified at what happened. And she says the local government there has the full support of the federal administration in the investigation.
Thousands of people gathered in Cuba to mark the 57th anniversary of the Cuban revolution. There was a lot of speculation about whether former Cuban president, Fidel Castro, would attend. But, as it turned out, he didn't. His brother, President Raul Castro, was there but didn't speak. The rally marked the first battle of the Cuban revolution, led by Fidel Castro alongside Raul.
The U.S. state of Arizona's new immigration enforcement law is scheduled to take effect later this week. Some call it racist. Others say the economy is tough right now and the U.S. jobs need to go to legal workers. Communities all over the country are considering similar laws.
Dan Simon went to one of them in America's heartland.
DAN SIMON, CNN NATIONAL CORRESPONDENT (voice-over): Surrounded by cattle and cornfields, Fremont, Nebraska is the kind of place that feels insulated from the nation's big problems, especially illegal immigration.
Just look on a map. Mexico is a long ways away from Nebraska -- about a thousand miles. But the immigration battle has reached the heartland and this town outside of Omaha of only 25,000 people.
JERRY HART, LED PETITION DRIVE: You know, you look at the flooding situation, are you going to wait for FEMA to come take care of you or are you going to start sandbagging your own house so you don't get floodwaters in?
That's what we're trying to do.
SIMON: Jerry Hart, a retired IRS agent, and John Wiegert, an elementary school teacher, led an effort to put on a measure on the town's ballot that bans hiring or renting property to illegal immigrants. It passed last month by a decisive 57 percent of the vote.
(on camera): Why does a city like Fremont, smack in the middle of the country, need an anti-immigration law?
JOHN WIEGERT, LED PETITION DRIVE: We're for immigration. We're just against illegal aliens coming in bringing drugs, gangs, crime and economic burden that's going to grow exponentially for years if we don't do something in our -- in our town.
UNIDENTIFIED FEMALE: We don't need it.
UNIDENTIFIED MALE: Good morning.
SIMON (voice-over): Yes. It's the identical argument used by anti- illegal immigration hawks around the country, even though police dispute that crime here is on the rise. But like many American cities, Fremont's Hispanic population has risen significantly, from an estimated 200 in 1990 to about 2,000 now.
(on camera): Freemont's Hispanic population has surged in recent years, with the promise of a steady job at the area's meat packing plants. The city has a low unemployment rate. But according to supporters, one of the primary arguments for the measure is that illegal immigrants are taking away jobs from American citizens.
(voice-over): Nothing makes this woman's blood boil more.
MIRIAM BERGANZA, FREMONT RESIDENT: You're not going to see any Anglo- Americans working the lines. You're not.
SIMON (on camera): What you're saying is they don't want those jobs to be...
BERGANZA: They don't want the jobs. We want them because we've got to support our kids.
SIMON (voice-over): Miriam Berganza, an American citizen, has worked in those plants, which she says are filled mainly by Hispanics. She cannot understand why Fremont has become an immigration battlefront. BERGANZA: Fremont has grown because of the illegal immigrants. We have grown. We spend our money here. We don't go nowhere else. We spend it here. I don't -- I don't see the problem with that.
SIMON: Miriam says the byproduct of all this is growing racial tension and a feeling of being unwanted.
Kristen Ostrom fought unsuccessfully to defeat the measure, in part, because she thought it encouraged racial profiling.
KRISTEN OSTROM, OPPOSITION LEADER: The Hispanic community feels like the people voted for them to leave. And we have people telling us day after day that they're just waiting for the police to come and escort them out of Fremont.
SIMON (on camera): That's not going to happen.
OSTROM: That's absolutely not going to happen, but the Hispanic community feels like they are not welcome.
SIMON (voice-over): Ordinance supporters deny race played a role.
It's not clear how many illegal immigrants live in Fremont. What is clear -- the battle is headed to the courts, with opponents, like those critical of Arizona's controversial bill, claiming immigration enforcement is strictly a federal matter.
Dan Simon, CNN, Fremont, Nebraska.
FOSTER: Well, if you plan to visit Arizona, carry your passport at all times or you run the risk of a $100 fine and 20 days in jail. Businesses are bracing for the new law and wondering whether tourists will be put off.
Let's go live to Phoenix and Debbie Johnson, president and CEO of the Arizona Hotel Lodging Association.
Thank you very much, indeed for joining us.
What sort of...
DEBBIE JOHNSON, ARIZONA HOTEL LODGING ASSOCIATION: Thank you.
FOSTER: How -- how are your businesses that you represent suffering already?
JOHNSON: Well, I think, unfortunately, what's happened here in Arizona is because of the law, we had one of our congressmen call for a bcc. And that bcc has caused many groups to cancel their visits to Arizona. So conventions, group business, people who were planning to come to Arizona are now no longer to come here.
FOSTER: So how much is the -- has business been affected by that?
JOHNSON: Well, I think we've -- we've lost significant business because of it. And our big concern is that this industry supports over 200,000 jobs in our state. And these are people like you and I, who need their jobs to -- to feed their families and to take care of their families. And when they start losing hours and losing benefits because business isn't coming, that's when we get concerned.
FOSTER: And individual tourists apparently will be put off, as well, because of this issue with identification. They have to have their I.D. on them all the time to prove that they're not there illegally.
JOHNSON: Well, and, really, the identification that is needed is the identification that you would use to get on an airplane -- a driver's license, a passport. Generally people that are traveling carry that information with them anyway.
But I think the misperception that has gone out there is that Arizona is not a welcoming destination. And that's one of the myths that we're trying to make sure we get out, is that Arizona is a very welcoming, warm, hospitality organization and -- and state and that the people that we want to come here want to enjoy the diverse culture that we have here in Arizona.
FOSTER: It's a really good local example, is it, really, of how the business community and the politicians aren't really working well together.
What sort of lessons do you think other communities can learn on how the way this has been handled?
JOHNSON: I absolutely think there are some great lessons. I think as an industry, as a tourism industry, as a business community, we need to make sure that we're edu -- educating our elected officials about the benefits of the tourism industry, because, in addition to the people coming to experience our state, we leave $2.4 billion in tax revenue in this state.
FOSTER: Yes, but why aren't the politicians backing you up?
Or are they just caught up with their own issues?
JOHNSON: Well, I think there are so many issues that are going on. Obviously, we're in a recession and there's many different things going on in our own state and they've got, you know, dozens and dozens of issues. So as we've experienced the economic recession and the AIG effect and all these other issues, I think we need to, as an industry, take it upon ourselves to educate our legislators about the benefits of this industry and about the value of tourism in general.
FOSTER: Is -- are there some deals to be had right now because have you been struggling to attract business to the area?
I'm just thinking of our more efficient viewers.
JOHNSON: Absolutely. Yes, absolutely. Arizona has some great deals right now. We've got some of the lowest room rates that we've seen in 10, 15 years, which is great. It's a great time for people to visit. And -- and we just want to make sure people know that this is still the Arizona that we were six months and a year ago. And we encourage people to come to Arizona, experience our diverse and rich culture and support the over 200,000 people that are out here trying to support their families.
FOSTER: Debbie Johnson, thank you very much, indeed, for joining us.
Now, it's all about jobs. In the second part of my interview with Ford's CEO, Alan Mulally talks about reopening factories and getting people back to work -- how Ford hopes to drive job growth, next.
FOSTER: Well, the jobs of Detroit were painfully cut down to size when the economy -- the U.S. economy -- took a nosedive. But at Ford, they've carried on building for the future.
In the second part of my interview with CEO Alan Mulally, I put it to him that things were now starting to get better.
ALAN MULALLY, PRESIDENT AND CEO, FORD: Well, of course. And just to comment on -- on -- on your question, it really has been hard. And the most important thing that we all could do, as we went through this terrible, terrible recession, was the -- was to match our production capacity to the real demand, because, of course, if you produce more goods than are really needed, then, you know, it ruins the residual values, it hurts the dealers' networks and it actually even delays the recovery from a recession.
So we did take the decisive action to size ourself, get back to profitability. And now, with the neatest thing about the earnings announcement again on Friday was, that we are now growing the business, we're growing it profitability across all of our businesses in the United States and worldwide, and we're going to now be able to provide tremendous jobs and careers and opportunities again for everybody associated with Ford.
FOSTER: There's an opportunity here, though, isn't there?
You could reopen or open new factories in countries with cheaper labor -- India, for example.
MULALLY: Well, you know, clearly, we're going to grow in all of the countries. But we really subscribe to Henry Ford's original vision. And, Max, he laid out a -- a vision that he wanted to operate Ford in every country, every market in which we sell our vehicles. And so, really, quite a compelling vision, because he wanted to provide people the very best cars and trucks in the world. But he also wanted to provide them great opportunities to work at Ford.
So the way Ford is set up worldwide is we are essentially operating in every country in which we -- in which we sell our vehicles. And then, of course, the best thing we do is to leverage those assets worldwide, work together very closely and get the advantage and the benefits of scale and intellectual capabilities.
So we're going to continue to operate and expand in every country in which we sell.
FOSTER: Well, I guess, like other multinationals, you're looking particularly at the emerging markets right now, the developing economies, rather than the U.S. and Europe particularly.
MULALLY: Absolutely. And we subscribe to both, because, you know, clearly, for us, the Americas is a tremendous market for us. Europe and Russia a tremendous market, as well as Asia-Pacific. And we're in very good positions in all three regions.
Of course, the larger markets that are a little bit more mature, of course, are the Americas and Europe. But, you know, still growing. So we've -- we want to maintain and enhance our position there.
But, clearly, led by China and India, we have a tremendous operating - - a tremendous opportunity to serve those customers.
FOSTER: A personal question, if you don't mind. I understand you are 65 years old. I'm allowed to point that out, because you're a chief executive offer a major company. People are talking about your retirement...
MULALLY: It's -- it's the new 50.
FOSTER: Yes. OK. So that suggests that you're not planning to retire any time soon, right?
MULALLY: Check. I love serving our Ford.
(END VIDEO TAPE)
FOSTER: And he plans to continue doing so.
That was the head of Ford, of course.
Now, over in Moscow, there's some interesting weather, because it's particularly hot. And Guillermo is going to tell us about that -- Guillermo.
GUILLERMO ARDUINO, CNN METEOROLOGIST: It's unrelenting, Max. And also, I was checking it out. The low temperature of the day should be 12 degrees daily. And we have 23 right now, which is nighttime hours. But the -- the high, that should be 22, as you see, is behaving at 37. We expect 36 tomorrow. And I was checking out, in the next week or so, no change.
We have had 15 days above 30 degrees when the high should be 22. This high pressure center here is pumping all the warm air in here, blocking any system from going there and changing the air pattern and also bringing some rain showers. And so we may see some thunder, especially along the fringe of this high pressure center. But certainly in the Baltics and here in the Balkan Peninsula is -- the Baltics and Balkan both is where we may see some storms. And as you see, they remain west. This high is blocking them. Moscow, sorry, no change.
So I'm going to show you later what we have expected for tomorrow in there. Also, some clouds will go into Britain. Spain and Portugal, high pressure, too. The West Med, the Balearics, fantastic. Parts of Italy looking fine. Then all the way up into Scandinavia we see some clouds. London going up a little bit, 26 degrees. I think you're going to have a nice week, not only because Richard is gone, because every time Richard is gone, we have nice weather, but also because I was checking out the charts and we see that nice conditions prevail.
Thirty-three for Kiev for Tuesday. You see Moscow, it's 23 right now. Don't get fooled. That's going to change. That's going to change when the sun comes out. And we'll see very hot conditions. Twenty-one in Paris at this hour. It's 8:49 p.m., 7:49 p.m. in Birmingham.
Thanks for watching CNN, if you're watching from there. Thirty-nine in Seville right now, in Spain; 24 in Athens.
Also, look at the clouds moving through Britain, as you see, and also some rain to the north. Windy conditions prevail in coastal sections, but not bad at all.
Puerto Rico, look -- nice. We don't have any storms.
Remember last week?
Thursday was awful with that -- that tropical storm that we had in the vicinity. Cuba only to the west is where we have some storms. Miami looking great now. The Keys looking fantastic, as well.
Let's see, this low is leaving Uruguay here and moving into the open Atlantic Ocean. It is very cold in Argentina, Chile and Uruguay. It will continue to be cold. And the rain will persist, Max, in China, unfortunately. We have a lot of rain in coastal sections. The flood threat continues -- back to you.
FOSTER: OK, Guillermo.
Thank you very much, indeed, for that.
FOSTER: Now, Ferrari say they did nothing wrong.
CNN's Pedro Pinto is with us for a look at the drama surrounding the German Grand Prix, one race that didn't with a checkered flag.
FOSTER: The World Motor Sport Council will consider whether to punish the Ferrari Formula One team further for breaking the rules of the sport at the German Grand Prix on Sunday. Ferrari has already been fined $100,000 for use of illegal team orders in winning the German event. Ferrari drivers finished third and second, after the Brazilian, Felipe Massa, allowed Fernando Alonso of Spain to overtake him to win the race. The team, though, denies any wrongdoing.
Pedro from CNN's World Sport joins me now.
I'm a little confused about one thing -- Pedro.
PEDRO PINTO, CNN SPORTS CORRESPONDENT: Tell me.
FOSTER: Is Formula One a team sport or an individual sport, because that's what we essentially end up talking about when we discuss this sort of thing, right?
PINTO: You're absolutely right. And -- and the fact here is there is a rule which prohibits teams orders. It was prompted in 2002, curiously, after there was a shocking example of it with Ferrari, as well. And Michael Schumacher and Rubens Barrichello back then. And if you do have this rule, you have to enforce it and you can't just fine a team $100,000. You need to do more than that.
FOSTER: It seems in the last...
PINTO: That's peanuts for them.
FOSTER: -- members' orders, aren't they, if they're teams, because it's (INAUDIBLE)...
PINTO: Not in this sport. Not in this sport.
FOSTER: And that doesn't make any sense...
PINTO: Well, the thing is...
FOSTER: -- for most people...
PINTO: The thing is, you can say so. The thing is, you can't afford to have 24 one man teams out there. It's just not going to happen. So if it is a team sport, you need to decide if you're going to allow the team principle to tell them what to do or not. This makes perfect sense if you're Ferrari.
Alonso has 21 more points than Massa in the standings. He's the only driver that can still win you the title. Of course, you're going to want him to win to get 25 points instead of 18. It makes all the sense in the world.
However, if it's against the rules, you can't do it. That's why you had -- and I actually wanted to say this, what -- what the team told Massa -- and I quote -- "Fernando is faster than you. Can you confirm you understand?"
Nudge, nudge, wink, wink.
FOSTER: Pretty clear.
PINTO: So -- and then after that, they told Massa, good lad, just stick with it. Sorry.
So it's obvious it's a grey area. It's obvious what they told him to do. They didn't tell him let Alonso go through because they know it's against the rules. So you're right that the team sport, the team principle should be allowed to -- to say what they want the team to do, but that's not the rules.
FOSTER: And in terms of the financial aspects to this, it's a big industry in many ways, but not least because of the betting. A lot of betting companies are expressing their concern. They just -- they don't think it's very clear for their customers about what they're betting on, because they feel like they're betting on an individual event, when it's a -- it's a team event with all kinds of team (INAUDIBLE)...
PINTO: I know -- I know -- I know what you're getting at. I do. And I also think it's -- it's a lot of the topic of discussion here in the U.K., because of the -- the betting industry is so huge.
However, what -- what are you going to do?
I mean the -- the -- you bet for someone to win the race. If you're an educated bettor, then you will think a Ferrari are the fastest team then they will allow Alonso to win the race. So it's so gray. Just get rid of the rule, let teams operate as teams and pick which driver is more convenient to win the race, because they're competing against other teams they shouldn't be competing between each other, really, should they?
FOSTER: But I guess, you know, it's such a high profile sport. And the fact that we're discussing this kind of helps, in a way. It becomes higher profile. The marketing is still there. It's not going to suffer in any way.
PINTO: You know what?
And now we're -- we're having a look here at the driver standard. And you can see here why Alonso was a -- allowed to win the race, because he's the only -- he's in fifth, as we saw there. Massa is all the way down in eighth. So there's a big difference. And with -- with the McLarens and the Red Bulls dominating the early part of the season, Ferrari know they have to get it right on all accounts now and they don't care about this fine. That's like one pea for you and I, I think, combined, those $100,000.
But going back to that -- to that story, Max, I think that last year, they had so much negative publicity, I think they can do without it this year. Last year, they had Crashgate, you'll remember, with the whole Renault story, Flavio Briatore being banned. They had Ferrari threatening to pull out of the sport because of the budget rules they wanted to -- to install. So I think they could do without this this season. They want a clean sport. It's been a great season with a new point system with five drivers who will be going for the world championship when there are seven races left.
So I think they would like to avoid this. They'll take the lack of publicity when it's negative right now.
PINTO: That's what I think, anyway.
FOSTER: Always exciting, though, that one.
PINTO: Yes. It is.
FOSTER: We'll see you, Pedro.
PINTO: Thank you.
FOSTER: After the break, the finish line is almost in sight for Wall Street. We'll get you up to date with the stock market numbers in the United States and around the rest of the world.
FOSTER: Let's take a look at the stock markets right now.
Shares in most of Europe mostly finished down; mostly finished in the plus column -- what am I talking about?
Adding to last week's healthy gains, it's been pretty good news for investors across the continent. Investors had the weekend to digest the results of the European bank stress tests published after the markets closed on Friday. According to European regulators, only seven failed to prove they could weather a fresh economic shock, which is seen as pretty positive overall.
Bank shares were among the -- the main gainers across the region.
A look now, the Dow is up, as you can see, which means that it's now back in positive territory for 2010. That's to the tune of around 50 points. It's up nearly .5 of 1 percent at the moment.
In Asia, stocks advanced after the European stress test results, as well, to (INAUDIBLE) 225; chalked up a second straight day of gains, the close below its highs.
For the session in Shanghai, it's now six days of back to back gains for the Composite Index, up .75 a percent this session.
All in all, pretty positive around the world right now.
That is QUEST MEANS BUSINESS.
I'm Max Foster in London.
"WORLD ONE" with Ralitsa starts right now.