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QUEST MEANS BUSINESS
Sandy Batters US; Where Sandy's Headed Next; Flooding Across New Jersey; Storm Devastates New York; Wall Street to Reopen Wednesday; Assessing the Damage; Dollar Falling; Apple Shakeup
Aired October 30, 2012 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: Sandy's deadly sweep. Two dozen are dead as the storm rages through the East Coast. We will bring you the latest details.
Rising costs. The longest trading shutdown in over a century. We'll update you on that.
And mobile management. One of the stories tonight for you: Apple fires two top execs. It's a major strategy revamp.
I'm Richard Quest. I mean business.
Good evening. Before we bring you up to date on the devastation that was wrought by super storm Sandy, it has now been confirmed that the New York Stock Exchange and the NASDAQ will reopen on Wednesday. That has now been confirmed.
They were both closed on Tuesday, it was the second day of closure due to the storm. It's a crucial time for investors. Wednesday's the last day of the month, just two days before a major US jobs report, and then, of course, there is the presidential election that is still to come.
But now we know that the New York Stock Exchange and the NASDAQ will reopen tomorrow. We'll have more of that later in the program.
Sandy has claimed at least 29 lives across the United States, millions more people are now left to battle flooded streets, crippled transport networks, and there are those widespread power outages, even snow storms to worry about.
Flooding has knocked out power across the northeast. This is in Baltimore County Maryland, where almost 200,000 people are without power. Almost 8 million customers in total don't have electricity across 15 states, including Washington, DC.
Power lines have been blown down. There's now serious fire risk. This was in Brick Township in New Jersey, about 100 kilometers north. The National Guard is still trying to rescue hundreds of people after floodwaters overwhelmed a levy.
President Barack Obama is to manage the response. He will remain at the White House. He's due to visit the affected region tomorrow, as you have just been hearing. He has also just been speaking to the Red Cross at the headquarters in Washington and basically called on everybody to pull together.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: My thoughts and prayers go out to all the families who've lost loved ones. Unfortunately, there have been fatalities as a consequence of Hurricane Sandy, and it's not clear that we've counted up all the fatalities at this point.
And obviously this is something that is heartbreaking for the entire nation, and we certainly feel profoundly for all the families whose lives have been upended are going to be going through some very tough times over the next several days and, perhaps, several weeks and months.
The most important message I have for them is that America is with you. We are standing behind you, and we are going to do everything we can to help you get back on your feet.
(END VIDEO CLIP)
QUEST: We need to know where Sandy, or at least whatever is left, is headed next. Jenny Harrison's at the World Weather Center. We know where it's been, we know the damage it's done. What's left?
JENNY HARRISON, CNN METEOROLOGIST: Well, a lot is actually still left, Richard. There's still a very large storm system and still has a lot of power within it in terms of winds, but also just look at this: the rain and also the snow, still coming from this storm system.
It's hard to really pick -- depict the center of this -- now what is this area of low pressure. But it's around about here, and it's just moving very, very slowly away from the coast and pushing up towards the Great Lakes.
This is showing you a similar sort of picture with the rain and the snow, but also showing you the sustained winds: 43 kilometers an hour, the sustained winds, across in Detroit right now. So, you can also see where the strongest winds are on the western side of that storm system.
The snow is going to continue to come down. Particularly affected: West Virginia. Easily another 25 centimeters in the next 48 hours, and we could easily by the end of this time see around a meter of snowfall --
QUEST: All right.
HARRISON: -- certainly in the higher elevations.
QUEST: Let me jump in here. You say it's still putting on the snow. Is it still generating wind and destructive rain force?
HARRISON: The rain isn't quite as heavy as it was, but the snow is certainly -- it's all part and parcel of the same system. Basically, it's pulling at the moisture from the -- from literally from the ocean, and then spreading it across the entire region. We've got the snow where we have, obviously, the colder air. So, that's why we're still seeing that. So, we are still seeing both, Richard, but it is on its way northwards. And as it moves away, conditions will gradually improve. But it is still very much a storm system and will be, certainly, for the next couple of days.
QUEST: Thank you, Jenny. And Jenny will be back later when we'll update on, of course, European weather and, if you're traveling around, that which you need to know, Jenny Harrison.
So, now let's delve deep a little bit more in detail. New Jersey, for instance, where people were forced onto their rooftops after a levy was unexpectedly broken by the tidal surge. Travel's been seriously hit by the floodwaters. The state governor is Chris Christie, and not mincing his words, he explained the extent of the damage.
(BEGIN VIDEO CLIP)
GOV. CHRIS CHRISTIE (R), NEW JERSEY: There is major damage on each and every one of New Jersey's rail lines. Large sections of track will washed out on the New Jersey coastline. Numerous power lines and trees have fallen along New Jersey transit railways across the state.
Several rail bridges damaged by storm surge, including boats and other debris lodged on the railroad tracks. New Jersey transit rail station hubs at Hoboken, Secaucus, and Newark Penn Station were also impacted significantly by flooding.
(END VIDEO CLIP)
QUEST: Last night, we were talking to Ali Velshi, who was waist-deep in floodwater. He was in Atlantic City, and this is the situation. He filed this dispatch a short time ago.
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: I'm here in downtown Atlantic City, which is exactly where I was when the storm hit, when those water levels rose. It was up to my waist. It's now entirely gone.
There's still flooding in businesses and homes. There are some power lines down, there are some trees down. I went down to the boardwalk, which is about three quarters of a mile down there. You can see where those red lights are. Just beyond that is the boardwalk.
Big chunk of the boardwalk has been taken out over at one end. It's not the main part that most tourists would be on, but the storm did come in underneath a big chunk of it and sort of ripped it to shreds.
Most of the shops there have been closed, boarded up. Some of the signs have been removed. There are some newspaper boxes and mailboxes that have been tipped over. But largely, Atlantic City has escaped the brunt of the damage.
It's off season. Most people are gone from here. About 300 to 500 people may still be in shelters. Some more people are going to shelters as they realize that this is -- that there's some serious damage been done and they don't have power and they don't have water.
But most of the damage to coastal New Jersey was not in Atlantic City. It was in other places. They're using Atlantic City as a staging area for the National Guard, for ambulances, for utility operations, where they're going around to other place and trying to help out.
The Coast Guard's been flying around doing an evaluation of what's going on, and there are some rescues going on in other parts of New Jersey, but Atlantic City does seem to be slowly getting back to normal. We can still hear sirens and emergency vehicles around town, but from what we've heard from authorities around here, Atlantic City is doing OK.
QUEST: Ali Velshi, who has now gone further west and a bit northwest to try and catch up with the snow that has been falling on the Virginias.
Michael Bloomberg says ten people were killed in New York City overnight, and that number is likely to rise. New York's mayor is also urging people to be patient during the recovery process.
(BEGIN VIDEO CLIP)
MICHAEL BLOOMBERG, MAYOR OF NEW YORK: In addition to the lives we lost, the damage we've suffered across the city is clearly extensive, and it will not be repaired overnight. The two biggest challenges facing our city going forward are getting our mass transit system up and running and restoring power.
This morning, we have begun the work of clearing and reopening bridges and roadways, both of which will take some time, and the best ways New Yorkers can help us get this done quickly is to stay off the roads.
(END VIDEO CLIP)
QUEST: So, everything is moving in some shape or form. Public transport's beginning to start back up in New York. Of course, the subway will be weeks -- days away. I don't know how long it is.
Ashleigh Banfield is live for us in Manhattan. Ashleigh, before we talk about the -- the sight behind you, does anybody have any idea when the subway might start in some shape, form, or description?
ASHLEIGH BANFIELD, CNN CORRESPONDENT: Oh. Great question, because you know this city operates on its mass transit, particularly the transit underground.
Here's what I can tell you about the seven tunnels that man those trains, those subway trains. They are all flooded, all seven of them. And the word is, it could take up to four days, Richard Quest, to pump all the water out of those tunnels.
The mayor himself said he does not have a timeline on how long it will be before that mass transit is up and running. However, some of the buses will be up and going tomorrow. And you can see behind me, traffic -- good, old Manhattan traffic -- has started up on a lot of the streets, and not just the emergency vehicles, which is what we saw so much of yesterday.
BANFIELD: But regular people driving. And --
QUEST: This --
BANFIELD: Go ahead.
QUEST: This building behind you. If it wasn't so potentially --
QUEST: -- serious, I would say it reminds me of a doll's house, where you open the front and you see everything inside. How on Earth no one was seriously injured when that lot came down? Explain.
BANFIELD: That's the first thing I wondered. That had to be a terrible -- a terrible situation for those who were inside. First, let me give you the backdrop on it, as you go and take a look -- Rich, go and show those, what Richard Quest calls "the dollhouse," because that's exactly what it seems like.
The "New York Post" has reported that this may, in fact, have been an illegal hotel that was operating, and some of the people that were quoted in the newspaper said they felt some things falling from the ceiling, they got a bit concerned, Richard.
They came outside, saw a great big crack in the facade, came back inside, got their friends together, knocked on doors, came outside only to watch the facade come crumbling down.
QUEST: Good grief.
BANFIELD: We don't have any reports of injuries, though --
BANFIELD: -- because I think they had some warnings on it. But that -- look what's more amazing. In New York City, that would be cleaned up, this would be -- workers would be all over that sidewalk making sure that nothing else falls and that that would be cleared away.
QUEST: All right.
BANFIELD: There's just too much to do in this city to be attending to this disaster.
QUEST: So -- so finally, is there any feeling of anything -- this is a silly question, but I think you'll know what I'm asking you. Is there any feeling of anything getting back to normal at all?
BANFIELD: Yes! Yes, and that's what's really quite something. I did not expect to see what I saw as I was driving towards this location. In fact, Richard, I decided to pop my iPad up and just videotape what my drive looked like out the window of the car. And the sidewalks were teeming with people, as they are normally.
QUEST: All right.
BANFIELD: There were a lot of stores that were open and restaurants that were open. You can see the pictures, Richard. That was my drive down to Chelsea. And this, as of last night, I couldn't even find a bowl of soup in this city after a very, very difficult day in the driving cold rain.
QUEST: All right.
BANFIELD: But yes, there's a lot of commerce back up and running. And you know what, Richard? Since you're a business reporter, you're going to like this one.
Mayor Bloomberg expects the economic loss to this city -- just the economics, not this stuff behind me. Not the damage. The economic loss to this city because of this storm to be upwards of $7 billion. But I think it's fair to say that's going to be a moving target, that number.
QUEST: All right. Many thanks, indeed. Ashleigh Banfield joining me from New York.
Now, many of you will be wondering when flights in and out of the East Coast will resume normal services, and after the break, we will show you exactly what's going to happen, how they will manage to get things moving. QUEST MEANS BUSINESS, it's next.
QUEST: Now, the NASDAQ and the New York Stock Exchange will be back in business on Wednesday after two days of being shut. It's the first time -- 1888, apparently, that the NYSE had to shut its -- close its doors for more than a day due to weather. Obviously, 9/11 was longer than that, but we know the reasons.
QUEST: Alison Kosik is with us. So, Alison. We'll come to the controversy over being closed as long and for as -- as it has these two days. But they are now going to open tomorrow. Is that right?
ALISON KOSIK, CNN CORRESPONDENT: Yes. You're going to hear the ding- ding-ding, 9:30 AM Eastern Time, the New York Stock Exchange telling us, Richard, that the building, the trading floor, they're all fully operational and ready to go.
And you know, they've been testing with their member firms today just to make sure they've got it together, but just in case, they've got a contingency plan. Trading can be done electronically through its NYSE Arca exchange. So, that could step in just in case it can't reactivate the NYSE.
And getting the markets open, Richard, it's a priority. It's especially crucial because it's the last day of the month, when traders and hedge funds and mutual funds, they all need to square up their positions before they send out their monthly statements, Richard.
QUEST: And not only that, before we get that jobs report --
QUEST: -- at the end of the week, and we have the election, of course, what people want to trade on. The question, of course, has been, why they needed to close. This is an electronic system.
QUEST: Did they need to be closed today?
KOSIK: Different trading experts have had certain feelings about this. Because if you thought about what happened on Sunday night, the New York Stock Exchange said yes, we are ready to go electronically, but then stepped back from that.
Many people believe that it would have been fine, because 90 percent of the trading is already done electronically. But the New York Stock Exchange cited safety reasons and just the -- the whole physicality issue, that how are these people going to get to work with public transportation closed?
QUEST: Safety first.
KOSIK: All the flooding going on?
QUEST: Safety first.
QUEST: Now, the financial costs aren't clear, but here's what officials -- and I suppose it's all a bit like -- put your finger in the air and try and work out how much it's going to be -- but here's what some officials have been saying so far.
(BEGIN VIDEO CLIP)
JAMES LEE WITT, FORMER DIRECTOR, FEMA: I heard an estimate of $20 billion. It's -- you just don't realize how much damage until the water goes down and look at the infrastructure and seeing what problems you may have. And the power companies are going to have a challenge on their hands, and people need to be patient.
GEORGE PATAKI, FORMER GOVERNOR OF NEW YORK (via telephone): It's going to be in the billions, there's no question about it. With the stock markets closed down, all transportation essentially shut down yesterday and today. We'll see how quickly they can respond to get it up again tomorrow. But one of the things you do is, you don't worry about the price tag until you're confident that everyone is out of danger.
(END VIDEO CLIP)
QUEST: And we're a business program. We don't put -- we never, ever count dollars before bodies in that sense. And neither do you, and I know we feel strongly on that. At some point, they will have to factor in the long -- sort-term cost and effect of this.
KOSIK: Exactly, and if you think about the property damage, the lost business, and sure, that starts adding up to $20 billion. And a big chunk of it is going to be insured losses. Of course, you're going to see insurers take a big hit, because they're going to have to cover those damages.
There are even some economists that put that number even higher, Richard. They're saying that these losses could top $45 billion.
But what's interesting is that some analysts are saying that the storm's net effect on the US economy should be temporary, that initially some industries --
KOSIK: -- will take a hit, but others will wind up getting a boost when there's construction and rebuilding going on.
QUEST: The old pent-up demand comes into play.
QUEST: One cancels out the other. The insurance cost will still be there. Alison, you'll be, no doubt, either at the Stock Exchange, one exchange or other, when the markets open.
Currencies are still trading, even if US stocks are not. Right now, the dollar's falling against the world's major currencies, down by two fifths of one percent. These are the rates --
QUEST: -- this is the break.
QUEST: Now, people on the East Coast trying to resume some kind of normality in the wake of last night's storm. These are the latest news headlines. Limited bus service in New York in about two hours, despite all the fire and damage.
JFK Airport may -- may -- be open on Wednesday. LaGuardia, the domestic airport, Canada as well, will not be. There is apparently extensive damage to the airport infrastructure.
A search and rescue operation in New Jersey. This video from the National Guard -- you can see why people were forced to flee onto their rooftops. The Guard had to dispatch helicopters to get residents taken by surprise when a levy, a dam if you like, broke last night.
This was from Monday.
(BEGIN VIDEO CLIP)
(WIND, WATER RUSHING)
(END VIDEO CLIP)
QUEST: Yes, that's the water when the storm hit in Ocean City, New Jersey. The waves rushed in, the streets were like a raging river.
When trading resumes on Wall Street, besides everything we're talking about, investors will have their first chance to react to an executive shakeup at Apple, and this is what, of course, they will be reacting to.
Fire up the contacts list, and you'll see what took place. There were major changes. The senior vice president of the IOS software, the man who was once seen as the heir apparent, joined Apple when Steve Jobs returned in 1997. He's John Browett. He's the senior VP of retail. He's only been nine months in the job, and he has been -- he is, of course, one of those people who is going to be out.
This doesn't seem to want to do what I want it to do. Never mind, not to wait.
The other person who's going to be out, of course -- there will be other major changes taking place in Apple. Dan Simon is our correspondent and joins me now to talk about this. Dan, these changes, how serious, and why are they being -- why are they being made?
DAN SIMON, CNN SILICON VALLEY CORRESPONDENT: Well, I'll tell you what, let's talk about Scott Forstall first. This is a guy who is one of the giants of Silicon Valley. He was entrusted with the crown jewels at Apple, developing the software that powers the iPhone and the iPad. Did a great job for many years. But it's said that he has an abrasive style.
But the buzz is that because of this debacle with Apple's new map application, he didn't want to apologize for it. Well, Tim Cook felt otherwise. He's the one who ended up putting out the public apology, and apparently he told Scott Forstall, "You're out."
Of course, there's also been some problems with Siri, the much-hyped voice recognition application. He's also in charge of that. Scott Forstall's going to be a free agent, here, and I'm sure he'll be gobbled up quickly by some other firm.
The other dismissal you're talking about, John Browett, that's not as big of a deal because he'd only been there for a few months -- well, nine months, as you said. But I think it's an acknowledgment that that particular hire just wasn't a good fit for Apple.
He came from an electronics retailer in Europe, came from Dixons, so I assume that they'll probably make a hire for that relatively soon. Scott Forstall, his responsibilities are going to other people at the firm.
But how it relates to Apple, how it's going to affect the operating system for the iPhone, the iPad going forward, we'll just have to wait and see, Richard.
QUEST: Yes, the -- the Forstall is one thing, but Browett is another. Browett came from Dixons, and if the reports I read are true, was not particularly well-liked. He cut staff at the Apple stores and was generally thought of as being not a good hire.
This Forstall business. It's a bit brutal, isn't it? Yes, he might have been responsible for the maps fiasco or farrago, but he's being unceremoniously dumped.
SIMON: Well, I think that's the perception out there, but he's been known to ruffle a lot of feathers at Apple, for lack of a better expression. Did not get along well with some on the executive team, according to a lot of the things that I have read. So, if you have a situation here where a guy's not getting along with his peers, then perhaps you need to make a change.
Now, look. Steve Jobs apparently was able to keep these big egos in check. With him being gone and Tim Cook taking the reins, perhaps that wasn't the case anymore.
QUEST: All right.
SIMON: But I would assume some more tidbits will leak out in the next few days.
QUEST: Many thanks, Dan Simon. The other story we're following, of course, today. There's only that one because it will obviously have an impact when the markets open.
Coming up next, Sandy's impact on the campaign trail. Electioneering is on hold, but frankly, you cannot ignore the fact that the US goes to the polls one week from today.
QUEST: QUEST MEANS BUSINESS.
QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN and, on this network, the news always comes first.
(BEGIN VIDEO CLIP)
QUEST (voice-over): An aerial view of Atlantic City, New Jersey. We now see the scale of the destruction from Sandy. The storm roared in overnight (inaudible) million people in the mid-Atlantic who don't have power. The death toll is 29.
Barack Obama's warned the storm's not over yet. Speaking at the Red Cross headquarters in Washington, he's called for the federal government to drop red tape in its response effort.
The Nasdaq and the New York Stock Exchange have confirmed they will be back in business open tomorrow. Wall Street's trading was shut down on Monday and today, the first time since 1888 there have been two consecutive closures for weather.
Heavy rain and Tropical Storm Son-Tinh has been pounding southern China and there one person has been killed. The typhoon weakened to a tropical storm on Monday. It's crashing into Vietnam and the Philippines, and there 30 people lost their lives.
Other news: intense shelling and airstrikes have replaced any thought of a cease-fire in Syria for now. The Qatari government is accusing Damascus of waging what it calls a war of extermination against its own people. The country's prime minister also accused the West of doing nothing. Syrian troops have slaughtered thousands of people.
Germany, the IMF and the OECD and developments say that reform is necessary to revive growth in the struggling Eurozone. Economic recovery remains uncertain. The (inaudible) talks in Berlin, Chancellor Merkel, Managing Director Lagarde also welcomed efforts by European nations to bring down their deficits.
QUEST: One week from today Americans will decide who will occupy the Oval Office and the White House for the next four years. I don't want to seem crass, but, of course, we are in the middle of this hurricane and superstorm and questions must clearly have been raised about whether or not there is a -- how it plays out.
President Obama canceled a third day of campaigning because of the storm. He received a telephone briefing at the White House. Mitt Romney attended a storm relief event in Ohio. The New Jersey governor, Chris Christie, says the election should not be the priority right now.
(BEGIN VIDEO CLIP)
GOV. CHRIS CHRISTIE (R), N.J.: I don't give a damn about Election Day. It doesn't matter a lick to me at the moment. I've got much bigger fish to fry than that. So do the people of the state of New Jersey.
(END VIDEO CLIP)
QUEST: The undecideds are in control. And on this map, the deep blue is safe Obama states. The red is safe Romney; the yellow, undecided. You can see many of the states affected in this are, indeed, Democrat leaning. They're not all the way Democrat.
Now with the memory of Katrina still strong, both candidates -- it's an impossible position. CNN's White House correspondent, Dan Lothian, is with me.
Damned if you do, i.e. you go campaigning; damned if you don't because you risk seriously perhaps undermining this very close race. In this environment, Mr. Lothian, what do you do?
DAN LOTHIAN, CNN CORRESPONDENT: Well, I think you have to do a little bit of both, and then you have to time it just right. I mean, what you saw from the president, you're still correct, that there really is no easy answer to that question.
What you've seen this president do is come out yesterday in the Briefing Room, make some remarks. They released photos of the president taking charge in meetings in the Situation Room with the various top administration officials, making sure that he's on top of this issue.
You see the president coming off the campaign trail, rushing back here from Florida yesterday, to show that he is being commander in chief in a very difficult situation.
And now this latest news that we're getting after, you know, you have a couple of days of getting a sense of how the response and how the damage is adding up, the president now announcing that he will going to New Jersey tomorrow to tour the damaged areas there with the governor of New Jersey, Governor Christie.
He'll also be talking with people who are living in the areas that have been impacted by the storm, will talk with the first responders as well.
LOTHIAN: And so it is a very difficult balance, with the president doing sort of his day job, his job as commander in chief. But then we'll also head back out on the campaign trail later in the week to do that other job, which is trying to become commander in chief for another four years, Richard.
QUEST: But -- and this is interesting, though: if the president has a relatively easier task because, after all, he is the president; he has to do these things, Mitt Romney has the difficult task, because he can't be seen to be electioneering.
And we may be appear to have got -- Dan, can you hear me still?
Dan Lothian appears to have lost us for the moment.
Many of you will be wondering when flights in and out of the East Coast will resume normal service. We'll have that story for you in just a moment. This is QUEST MEANS BUSINESS.
QUEST: Now many of you will be wondering when flights in and out of the East Coast will resume normal services. This shows you pretty much how things are in the United States (inaudible). Look at this vast swath of air travel that is taking place.
But over here in the northeast, there is still a decided lack of air travel at the moment, particularly -- Boston's getting back to normal, but down here in New York, there is very much like -- and if you look why, you can see from these -- this fact: because what we now have, of course, is major airports that are now closed.
You've got Kennedy; you've got Newark; you've got LaGuardia -- the three big airports are closed -- and for good reason. There has been serious runway flooding on the three airports, particularly LaGuardia. Now they say Kennedy may open in a little while. But LaGuardia is going to be closed for some time.
And you can see why LaGuardia puts into the position, as we move and zoom in further. The runways, all the major runways at LaGuardia go out to the ocean. They go into the sea in some shape or form. Here you can at the bottom, out at the side and way over.
What we are hearing at the moment about LaGuardia is that there's been extensive damage. Now that will not just be to the pontoons that hold up some of these runways over here.
These runways, by the way, are over water.
It will also be on the navigation equipment going out into the sea. LaGuardia, to put this in perspective, has 24 million passengers a year, over 300,000 aircraft operations.
As long as this airport is out of commission, then New York continues to be seriously hobbled and disconnected to the rest of the United States. We'll be watching to see when Kennedy comes back online along with Newark and the other airports. But you're -- if you're planning to travel to the northeast United States, to New York, in any shape or form, that is going to be an impossible task.
The scale of the disaster wrought by this superstorm, Sandy, is just unfolding. One thing is clear: the New York, Queens residents were hit by a double disaster. Floodwaters rose in some parts. This inferno tore through others. Eighty homes were burned.
CNN has learned that Congressman Republican Bob Turner is among those who lost their homes. The bridges and the tunnels connecting Manhattan to the rest of the world were also hard-hit. The Holland Tunnel remains closed. This is what it looked like inside one of its ventilation buildings under the Hudson River yesterday.
Up to North Carolina coast, two helicopter crews saved 14 people aboard the H.M.S. Bounty, a sailing ship used for classic adventure films. Bounty then sank. One of its crew members was later found dead. The captain is still missing.
The car company, Ford, says Sandy will have very little impact on future business. America's second biggest carmaker reported steady third quarter results with $2.3 billion pretax profits in North America. It outweighed the very heavy losses in Europe.
Ford's about to undergo a massive restructuring -- job losses, plant closures. I spoke to Ford's chief financial officer, Bob Shanks, and asked him how the superstorm had affected operations.
(BEGIN VIDEO CLIP)
BOB SHANKS, CFO, FORD: We haven't been affected much directly. We have about 3,300 dealers in the U.S., of which about 800 are in the affected regions. And they have been down for a day, maybe two days; could be a little bit longer. Fortunately, many of them were told -- had advance notice, obviously, of the storm, and actually if they felt they had inventory that was at risk of being damaged, have moved that.
So hopefully that worked out fine. In terms of our suppliers, very, very minor issues that we're working around. But all of our plants are up and running as normal.
QUEST: Let's return to the results that you've just announced.
No amount, no results can mask the awfulness of the state of affairs in Europe at the moment. And finally Ford is lancing the boil, aren't you?
SHANKS: Well, we are, but I think actually they are overmasking the results in Europe, because we had, despite the loss that we had in Europe, which was $468 million, we had a record quarter for the company, and it was driven by an any quarter record by North America.
We made $2.3 billion there, 12 percent operating margin. And the reason I mention it is because many of the same things that we did to turn around the business in North America we're now bringing to Europe and applying it there to bring that business back to a profit state by mid- decade.
QUEST: Is Europe broken?
SHANKS: I think the industry needs to restructure. We believe that the industry has substantial excess capacity, which has actually been exacerbated by free trade agreements that the E.U. has agreed to, that, particularly with Korea, have been unfair from our perspective and one-way in nature.
And we're already seeing that the Korean imports are increasing much more dramatically than exports from Europe going back to Korea. But there's clearly a situation of substantial excess capacity that's got to be taken on by the industry. And we're doing what we can do to address our own issues and now it's up to others to take care of their own.
QUEST: All right. It is a provocative question, full of hyperbole. But, frankly, you're losing so much money in Europe, why not just turn off the lights and leave?
SHANKS: We love Europe. If --
QUEST: You're losing money there, hand over fist.
SHANKS: And we lost even more in North America. Now we're getting record profits. So our opportunity is to actually take that business, transform it and make it a significant contributor at Ford. And we're completely confident that we're going to be able to do that.
(END VIDEO CLIP)
QUEST: The CFO of Ford.
UBS is cutting thousands of jobs after reporting third quarter loss of more than $2 billion. The Swiss bank is sacking 10,000 employees. That's about 15 percent of its workforce. Most of the affected jobs will be in the investment banking arm. UBS is hoping to reconstruct and will stay -- will save it more than $3.5 billion over the next three years.
Some of the bank's London employees say they found out they'd been cut when their security passes didn't work this morning. Don't you just love that when it happens?
CNN's not independently confirmed the passes were being refused; but anyway, this is some of the tweets.
"U've Been Sacked" has been topping Twitter trends. Ralph Sinclair says he has been speaking to bankers at UBS in London. This is what he claims to have heard (inaudible).
"From inside 100 Liverpool Street: 'Whole desks are gone and there are people who stood outside without access to the building.'"
Owen Callan -- Owen Callan describes himself as a fixed-income dealer at Dansk Markets (ph), tweeted "people arrive today and if their pass doesn't work, they are sent into a special room and they're told they are on special leave."
Nik Simon says he "had a liquid breakfast with some UBS bankers who just (sic) their jobs this morning."
It is never easy when these jobs go, but it's seems this is a particularly brutal way that it was done.
Europe's main markets closed higher, better than expected earnings from BP and Deutsche Bank buoyed the major indices. Both were up around 4 percent; only Athens went the other way, adding another half a percent to yesterday's 6 percent plunge.
To the World Weather Center. Jenny Harrison is back with us, keeping an eye on Sandy and updating us on what's happening in Europe (inaudible).
JENNY HARRISON, CNN METEOROLOGIST: Yes, both of those, Richard, yes, as you say, Sandy's still a very large storm, still of course really bringing some very heavy amounts of rain and also some tremendous amounts of snow, expecting to see about a meter of snow by the time this is done across Virginia.
The winds are still strong. They will ease as the storm moves away further towards the north. But right now we've got some sustained winds at around 30-40 kph with some high gusts in there as well.
This is the storm system. So as (inaudible) pick up the moisture from the Atlantic and then on the back side, in the cold air which is coming down as snow. But the system is slowly moving up through the Great Lakes, pushing into southern areas of Canada. That will all take place over the next couple of days. So slow but steady really is what we'll be seeing from this superstorm Sandy.
Meanwhile, across in Europe, central regions of the Med, we're seeing some thunderstorms. There have been some warnings in place. It is a very unsettled picture, a very windy picture as well. But have a look at this. Now this is actually on Sunday in Venice, aqua alta.
But as we go into Wednesday, the warnings have actually got suddenly higher. They've been at the amber alert for the last couple of days and they are today. And by Wednesday, we could be seeing water over 140 centimeters throughout central areas of Venice. There is a red alert in place. More rain coming in with this area of low pressure, of course combining with the high tide.
And this is when we have aqua alta. So of course, the people of Venice are used to this, but it doesn't make it an easy event to deal with. Heavy rain, strong winds as well, very strong winds across much of Europe. And it's a very strong area of low pressure.
And when you get these warnings, red, amber a threat, yellow amber and then red, at 90 percent of the city, is expected to have actually flooded when we have water reaching 140 centimeters. That will be through Wednesday. The winds picking up across the northwest of Europe.
This is the wind forecast just blustery, strong winds across the north, the northwest and also throughout the central Med. The cold air back in place, coming in from the northwest as that next area of low pressure works its way in, Richard.
QUEST: We thank you for that, Jenny Harrison at the World Weather Center, keeping us informed both on the big story of the day and the weather where you are.
QUEST MEANS BUSINESS will be back in a moment.
QUEST: Now across the eastern United States, Sandy's impact has manifested itself in many different ways. In the state of West Virginia, it's a blizzard, not a downpour that's causing the trouble. Martin Savidge is there in the town of Kingwood.
It is difficult to appreciate -- Martin, first of all, first and foremost, before this storm arrived, how much snow was already on the ground, if any?
MARTIN SAVIDGE, CNN CORRESPONDENT: There was no snow on the ground. And this is exactly what happens when a hurricane collides with an arctic blast somewhere over the state of West Virginia, especially at the higher elevations, 25 centimeters easy we have on the ground, another 30 centimeters could be coming down, very thick, very heavy, wet stuff. And that's knocking out power.
Take a look at some of the images we got while driving. And this shows you some of the unique aspects of this particular storm in this particular area. These trees that are coated, painted, look like they're almost dipped in snow, are weighed down by hundreds of pounds of all that heavy stuff. And it's dragging the trees down.
And what it's doing is also dragging down the power lines. That's why there's no power in this community for 300,000 of the residents don't have power. The snow is so heavy, pulls down the lines, pulls down the trees, the trees explode and then collapse in branches on the roadways and snow and it is just a mess.
So the disaster on the coast not as severe in the mountains, but it's still a major problem and will continue all of today and through much of tomorrow --
QUEST: All right. Now --
SAVIDGE: -- here, Richard.
QUEST: -- well, good. You've answered my next question, how long it continues for.
But that snow stays on those trees in that fashion, we are -- we are inevitably going to see more trees come down and more power lines down. So far from getting better the situation will deteriorate quite considerably?
SAVIDGE: Right. Exactly. It's going to be one of those sort of slow-motion problems up here. In other words, it doesn't all go at once. It's going to build up, inch by inch, centimeter by centimeter and eventually then, bang, it all lets loose. Then the lights go out.
And it's going to happen in one community after another. And those are the kind of power outages that take a long time to fix, because they're isolated in remote areas, but impact a lot of people.
QUEST: Just lift your foot out of the snow so we can see how deep it is, so we get an idea of -- well, put it back in, there you are. That gives an idea of just how much has fallen in the last 24 hours.
Martin Savidge, who is in the snow for us in Virginia. We thank you for that, Martin.
The worst of Sandy appears to be over, at least as regards the wind and the rain, not the snow. There's no doubt that those affected this has been a dramatic and terrifying 24 hours.
(BEGIN VIDEO CLIP)
CORY BOOKER, MAYOR OF NEWARK: This storm and the flooding, we expect, will be greater than Irene.
MICHAEL BLOOMBERG, MAYOR OF NYC(?): Conditions are deteriorating very rapidly and the window for you getting out safely is closing.
UNIDENTIFIED MALE: They saw all the water coming up; they knew they had about a half dozen people here still in their houses, so they went knocking on the doors and got those people out.
UNIDENTIFIED MALE: Now if you're in the evacuation area you got to get out of here, because the point is, if you stay here, you could be cut off.
CHRISTIE: This is not a time to be stupid. This is a time to try to save yourself and your family.
BLOOMBERG(?): The worst of the weather has come and the city certainly is feeling the impact.
UNIDENTIFIED MALE: I never thought it would be this bad. It was bad. This is the worst I've -- I was here in Hurricane Donna and Donna was nothing like this.
CHRISTIE: It's incalculable at this moment. I mean, it just is. I have not been able to tour my state yet to even get a handle on it. But what I expect I'm going to see is a devastated Jersey shore.
CRAIG FUGATE, FEMA(?): This is not over. We still have more weather to deal with. Hopefully people will be able to stay safe until we can get to the other side of the storm.
QUEST: Tonight's "Profitable Moment," like any big news story, there's always a material effect from a natural disaster. Here, some companies will try to sell their own products off the back of it. Some would say in bad taste; others say it's capitalism.
This is an advert emailed out by American Apparel as Sandy approached the East Coast. "In case you're bored during the storm, 20 percent off everything for the next 36 hours." Many people on Twitter have complained they found the advert offensive. American Apparel is not alone.
This is a tweet from Urban Outfitters, "This storm blows (but free shipping doesn't)! #ALLSOGGY. The companies haven't responded to our questions for comment on this.
In the age of informal chatty customer relations, adverts like these may be a matter of personal taste. When we see some of the scenes on the East Coast, perhaps promotional offers should not be the first thing on our minds.
Or maybe, maybe there's nothing wrong with these. Think about it. They saw a storm. They took advantage of it. Are the rest of us just being precious with hindsight because there has been a bit of destruction and quite a few deaths? Or maybe those who are in business were doing what they do best; @RichardQuest whether you think they were right or not.
And because that is QUEST MEANS BUSINESS for the night, I'm Richard Quest, whatever you're up to in the hours ahead, I hope it's profitable.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The news headlines for you at this hour: Atlantic City in New Jersey, and we see the scale of the destruction from the storm. It roared overnight. It knocked power out for nearly 8 million people in the mid-Atlantic. The death toll stands at 29.
Barack Obama's warned the storm is not over yet. He was speaking at the Red Cross headquarters in Washington, when he called for the federal government to drop red tape in the response effort.
The Nasdaq, the New York Stock Exchange have both confirmed they will be open tomorrow. Wall Street's been closed since Monday, the first time two consecutive days' trading lost because of weather since 1888.
Heavy rain: Tropical Storm Son-Tinh has been pounding southern China. At least one person has been killed there. The typhoon weakened to a tropical storm on Monday after crashing into Vietnam and the Philippines, where more than 30 people lost their lives.
Intense shelling and airstrikes have replaced any thought of a cease- fire in Syria. The Qatari government is accusing Damascus of waging what it calls a war of extermination against its own people. The country's prime minister has accused the West of doing nothing as Syrian troops have slaughtered thousands of people.
(END VIDEO CLIP)
QUEST: Those are the news headlines. You are up to date. Now to New York, "AMANPOUR" is live.