Return to Transcripts main page
QUEST MEANS BUSINESS
Southwest Plane Takes Off After Landing at Wrong Airport; Holiday Hack Fears; Credit Card Fraud; Retail Security Breaches; US Market Falls; Suntory Buys Jim Beam; UK Shale Industry Push; European Markets Up; Mistaken Landing; Dreamlifter Debacle; World Cup Airline Costs
Aired January 13, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: Don't be fooled. They may look happy, they may look as if there is good cheer, but the markets most certainly don't. Shares have taken a tumble because it is Monday, the 13th of January.
Tonight, once more into the breach. A second US retailer has fallen victim to the crime of hacking.
Also Jim Beam serves straight up. Suntory buys the all-American brand.
And Brazil tackles its airlines over World Cup pricing.
The start of a new week. I'm Richard Quest, and of course I mean business.
And there's the plane. That is the little plane that could, or the big plane that didn't. Whichever way you want to look at it, that is Southwest Airlines plane, which has just taken off having landed at the wrong airport, and now, of course, it's just taken off from Graham Clark Airport, where it had landed. That's where it landed when it intended to land at an airport with twice the runway.
There was a lot of debate over whether it was going to get in the air, but of course, clearly, the little 737 did manage to take off just a short time ago. We will bring you the picture of the takeoff at the halfway headlines in just half an hour from now.
Let's start, though, with our main story tonight, and the serious and potentially growing breach of credit card security in the United States. There are fears of a major coordinated cyber attack against American shoppers and the shops in which they visit. We know Target was affected, and at least one other major retailer, Neiman Marcus, has also reported a data security breach.
Target's chief executive has promised significant changes in the company. The firm says the personal details of up to 110 million of its customers were compromised during the December holiday season. Reports of more retailers being hacked. The industry is on alert for vulnerabilities.
This is Target's chief executive speaking to the CNBC network.
(BEGIN VIDEO CLIP)
GREGG STEINHAFEL, CEO, TARGET: I was devastated. How could this happen to Target? And I'm personally very sorry that this whole event even happened.
(END VIDEO CLIP)
QUEST: Retailers are now investigating whether they, too, have been hacked. The luxury retailer Neiman Marcus has admitted some customer card details have been used fraudulently. Couldn't say how many.
Now, the United States, frankly, is the only place in the world where credit card fraud and this sort of fraud is growing at such a rate.
QUEST: Join me at the super screen and you'll see what I mean. According to Nilson report, losses from credit card fraud worldwide -- now, worldwide, we're talking about $11 billion in 2012. That's up some 14 percent from the previous year, $11 billion.
But almost half of those losses occurred in the United States, 47 percent. That's a disproportionately large amount given that only a quarter of transactions occurred in the US. So, a quarter transactions are creating 47 percent of the losses.
The report says the strongest defense against counterfeit is the adoption of chip and PIN at the point of sale. Greg Brown is the chief technology officer at the security firm McAfee, joins me now live from Santa Clara, California.
People watching in Europe, Germany, UK, France, the Gulf, the Middle East will be saying why, sir, are you still signing in the United States and not using chip and PIN?
GREG BROWN, CHIEF TECHNOLOGY OFFICER, MCAFEE: Well, I'd have to say it's the scale of the infrastructure that's deployed. There are a lot of retailers and merchants out there that are using the technology and have been successful with it.
And unfortunately, we've recently had a couple of incidents that have been announced about loss of information. And the reality is, it costs a lot of money to modify that infrastructure, and it may or may not solve this particular type of problem by changing the credit card infrastructure itself.
QUEST: But -- so what is the problem? In a nutshell, why does this happen in such a scale in this country, do you believe?
BROWN: Well, I believe that the problem is the value of the target. We look at crime over the decades, it's no different. The criminals will advance with the technology. Over the past 30 years, we've deployed video monitoring technologies to provide protection for physical facilities.
What we're seeing is that the increase in the number of electronic transactions and the dependency on the credit card infrastructure has caused the criminals to become smarter about that infrastructure as well.
And companies have to invest to build those security controls so they can protect the electronic information the same way that they've protected the physical assets over the decades.
QUEST: Now, this is really --
BROWN: So yes, it's the criminals have gotten smarter.
QUEST: This is really interesting, because what you're basically saying is that the companies -- and I don't know the case of Target in any great detail, and I don't know Neiman Marcus in that sense, but companies have to be prepared to spend to stay ahead of the crooks?
BROWN: They absolutely do. The cat and mouse game of the criminal and the retailer hasn't changed. They just -- the technologies that we exchange money with, that we buy goods with, has evolved. And the security technologies are evolving, and those are the kinds of technologies that we provide to our customers to help them be prepared for these criminal attacks.
QUEST: I want to come back to how the consumer can help themselves. Now, obviously, online -- and I'll give you the free plug -- whether it's McAfee anti-virus software or some form of software protection that you can get, in the use of one's credit cards, one can be perhaps a little bit more circumspect and cautious. But for you, what is the single biggest thing we can do to protect ourselves?
BROWN: Well one, I think awareness and monitoring your own credit card activity. It is the consumer's responsibility to see what transactions might be happening that could be fraudulent and reporting those to the credit card provider.
I think also, monitoring the usage of your card. I know these broad- scale attacks against core systems have garnered a lot of attention, but day-to-day, people are under attack in individual transactions at smaller merchants.
So, making sure you keep an eye on your card, making sure that you don't have people taking photos of it at the retailer or writing down numbers from the back of your card are all good measures.
I think also, making sure that as you're monitoring those transactions that you are more aggressive in saying this doesn't quite look right --
QUEST: Right, but --
BROWN: -- and notifying the card provider.
QUEST: But if you are right, then what you are saying is that we must be prepared for more of these sort of incidents in the future.
BROWN: I think we and the economy are learning about the power of digital currency, learning about the power of credit cards and how we can create a better consumer experience with these technologies. And I think organizations like those that have been impacted are learning how to protect our information better. We're very fortunate --
BROWN: -- that in these financial systems, as consumers, we have protections. So, the card providers limit our risk.
BROWN: The card providers provide guidance and technology to the retailers to say, here's how you can implement strong security controls around card information, a la PCI DSS as a standard.
QUEST: Greg, good to talk to you. Thank you for joining us from McAfee, joining us and putting it into perspective.
We need to talk about this in a wider sense. Shelly Palmer, who always helps us understand what is happening, you wrote an article recently. Tell me the title of your article.
SHELLY PALMER, AUTHOR, "DIGITAL WISDOM": "Cyber Security: an Oxymoron." Basically, Richard, this is organized crime against governments, and we are a victim -- we are victims of a victimless crime.
And I think it's time to stop sensationalizing this and understand that the banks themselves, the companies themselves, are not willing to spend to save right now. They are still spending to spend.
And what I mean by that is, they are indemnifying us. Your maximum liability is about $50 bucks and a little inconvenience. You cannot protect yourself against this kind of cybercrime, and you're not going to be able to.
QUEST: Right. But, I would show you my card with the chip and PIN from Europe, except somebody out there would be taking a picture of it --
PALMER: Not a problem.
QUEST: -- to do --
PALMER: As soon as they're ready to spend for chip and PIN -- and what that means, for people who are listening, is that they put a chip inside the car, which is an electronic --
QUEST: No, wait! Most of our viewers --
PALMER: And --
QUEST: Most of our viewers --
PALMER: -- are international, I know.
QUEST: Are international. They're well aware of chip and PIN.
PALMER: Right. And anyway -- right. In America, we don't have it because --
PALMER: Because it costs extra money. Apparently, what it costs is more money than it will save. And as soon as it is no longer smart to not have chip and PIN, American companies will not have -- will, actually, have chip and PIN. We don't now.
QUEST: Target's a massive retailer.
QUEST: Neiman Marcus a big retailer.
QUEST: If I look at all the other cases in the last few months --
PALMER: So, let's put that in perspective. This is the first time -- reported, by the way, not unreported -- reported that we have companies stepping up and saying wow, we've really been breached, and we've been breached hard.
Understand the market forces behind this. You used to have to -- if you're the Mafia, or you're the mob -- I don't want to use the world "Mafia" -- if you're the mob or organized crime, you used to have to go up to somebody and send a little kid with a gun or a knife and mug them in person.
Now, you can -- from another country, bouncing -- literally bouncing around the world, you can victimlessly steal millions of credit cards and nobody goes to jail
QUEST: Right, but from the company's point of view, from the reputational damage point of view, I can't seen any CEO saying I'm going to scrimp and save on the cost of data security --
PALMER: Like -- no, that's not --
QUEST: -- when it could blow up now.
PALMER: By the way, it can blow up bigger. But let's face it, this is a cost-benefit analysis. We have self-insurance, we have insurance that we buy. This is an insured crime. It's not -- and by the way, no one is a victim. People are slightly inconvenienced.
Let me tell you can do as a person and what many people should do. This is a concrete thing you can do. Almost every credit card issuer will issue you two cards under different numbers under the same account.
What you do very simply is when you do things on auto pay, when you take cards out to the store, cards that are going to be put into the hands of others, use one card with one number. When you use your online card, use a different number on the same account.
I do this with American Express. I have a green card, which does what it's supposed to do online, and I have the gold card that I use on the outside, or the Platinum card I use on the outside. Those get hacked all the time because I'm handing them all over the world to people who I don't know. They take them away, they bring them back.
My little green card is for my online auto pay, so at least I'm not terribly inconvenienced. But even when my card is hacked, American Express says you're not liable. Sorry, change your number. What's the worst thing that happens to? You have to change your auto pays over.
PALMER: It's not like you're being hurt.
PALMER: Here's the part that everybody's scared of.
QUEST: No, you're wrong! You're wrong!
PALMER: No, no, no.
QUEST: We are being hurt, because we --
PALMER: Yes, we are.
QUEST: No, come on. You're being -- there's a sophistry in your argument here.
PALMER: There is. I'm --
QUEST: Because we are being hurt --
PALMER: We are.
QUEST: -- because we all pay for it ultimately.
PALMER: We all do pay for it ultimately. No, you are 100 percent right. We all do pay for it. The kind of crime that's being confused with this is where someone steals your identity --
PALMER: -- and it becomes identity theft. Those are rare, but they are vicious. And they're very different --
PALMER: -- because they take all of your identity, and those really do cost you. But this is organized crime taking a bunch of credit cards and floating them on the black market. Richard, it's a bad day at the office when it doesn't pay --
PALMER: When crime no longer pays, they will no longer do it.
QUEST: Oh. Is that a BlackBerry in your pocket?
PALMER: Of course it isn't!
PALMER: I'm just happy to see you.
QUEST: Good to see you. Many thanks, indeed, for joining us. Many thanks indeed.
Right! To the markets and how they are trading. Alison Kosik is at the New York Stock Exchange. Alison, what happened today?
KOSIK: You know what? Investors, I think, Richard, had a case of the Mondays. Also a bit of spillover from Friday's disappointing jobs report from December showing only 74,000 jobs were added to the economy.
Also, you pile on the fact that there were some comments made from Atlanta Federal Reserve chairman Dennis Lockhart today indicating that a weak report for jobs isn't enough for the Fed to slow down its stimulus pullback.
So what do you get? You get investors running for the exits, the Dow falling 179 points today. Ah, but everybody's looking to the rest of the week. Earnings season gets into full gear with all six of the big banks reporting fourth quarter earnings. Richard?
QUEST: And a minor correction won't do us any harm. It could solidify the growth --
QUEST: Alison, good to see you. At the start of the new week, the Dow off 1 percent.
Right. Now, look at this. Jim Beam bourbon. Shares in Jim Beam are up by a quarter of their value. The American spirits maker has just downed in one by Japan's Suntory Holdings for $16 billion. Beam is known for its brand-name products.
(ICE CLINKING IN GLASS)
QUEST: Whoo! Thank you very much. Make mine a double. Including Jim Beam, Maker's Mark whiskey, and Courvoisier cognac. Although Suntory is well-known in Japanese households, many Westerners may only know Beam's perspective new owner from the endorsement in the film "Lost in Translation."
(BEGIN VIDEO CLIP)
BILL MURRAY AS BOB HARRIS, "LOST IN TRANSLATION": For relaxing times, make it Suntory time.
(END VIDEO CLIP)
QUEST: Now, when we come back after the break -- you'll enjoy that. Assuming that's not passed around through the entire camera --
(ICE CLINKING IN GLASS)
QUEST: -- ooh, yes, it's already being poured. We might see nothing in vision -- in focus for the rest of the program. When we come back, fracking is helping fuel the American -- stay -- economy. Now, the UK wants to create its own shale energy boom. This is QUEST MEANS -- hic! -- BUSINESS.
QUEST: The British prime minister, David Cameron, has vowed to go all out to spark a shale energy boom in the United Kingdom. His announcement comes on the day France became the first major energy company, Total, to invest in the country's budding shale industry. Jim Boulden has been following developments, joins me now from CNN London. Jim?
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: That's right, Richard. It's taken a couple years for Britain to get to this stage, but it does want to follow the US into this shale revolution, despite the fact that the rest of Europe is falling behind. Take a listen.
BOULDEN (voice-over): Britain is fast becoming the front line for fracking in Europe.
DAVID CAMERON, PRIME MINISTER OF BRITAIN: Shale is important for our country. It could bring 74,000 jobs, over 3 billion pounds of investment, give us cheaper energy for the future, and increase our energy security.
BOULDEN: Fracking involved injecting water, sand, and chemicals deep into the ground at high pressure to crack shale rock and allow oil -- or in this case, natural gas -- to flow.
It's controversial because environmentalists say there are significant pitfalls, including fears that the chemicals could seep into the ground water. Nevertheless, Britain's government is increasing financial incentives to local governments to persuade them to issue fracking licenses.
ANNA JONES, GREENPEACE: Today, we're seeing them announcing bribes for councils, because they're clearly worried that local councils will reject these applications. So, they're trying to think of any way they can to try and get them to say yes.
BOULDEN: Britain is awash with potential fracking sites, but no commercial fracking for shale gas has taken place. Indeed, to date, there has been little drilling or even testing of Britain's shale deposits.
KEN CRONIN, UK ONSHORE OPERATIONS GROUP: We haven't started fracking yet. The next two to three years is about exploration. Small sites, exploring the geology, the cost, and the flow rate.
BOULDEN: Total is one which will now explore. It's the first major oil company to invest in the UK fracking potential. In a statement, the company said, "The Group is already involved in shale projects in the US, Argentina, China, Australia, and in Europe in Poland and in Denmark. And we'll leverage its expertise in this new venture in the UK."
Of course, the French oil giant cannot frack at home, since shale gas fracking is currently banned in France.
BOULDEN (on camera): Much of Europe is unwilling to even test their shale gas potential. The UK says it's worth testing in hopes of one day lessening the country's dependence on natural gas from the Middle East and Russia. And it says lowering energy bills.
BOULDEN (voice-over): A claim rejected by the anti-fracking lobby.
JONES: Fracking in the UK, to make it economic, it relies on a high gas price. It's expensive to extract.
BOULDEN: Critics say efforts should be put into renewables and conservation, not fracking. The governments says the economic potential is just too great to pass up.
BOUDLEN: And now that Total has taken the leap, Richard, we can expect many of the other oil majors, I think, to start to explore in the UK. We just still don't know the potential here, because until you actually start drilling, it's not very clear the cost-effectiveness of fracking in a country that's so densely-populated, like the UK, Richard.
QUEST: So, not only are there the questions, Jim, on what fracking would be involved in the UK, but as you say, the discrepancy of policy within the EU makes for some uncomfortable bedfellows.
BOULDEN: It reminds me of the genetically-modified food, doesn't it? Where the US did it for years. It then came to Europe. It then sort of got not banned, but it got stopped, and then the UK sort of pushed the boundaries on it and said actually, there's nothing illegal about doing this.
There's nothing illegal about fracking, but countries have started to ban it before companies even frack. So there are countries, like France for instance --
BOULDEN: -- that has no idea of the potential if they were to choose to do it. But they won't.
QUEST: Jim Boulden, who is in London for us tonight. Jim, we thank you for that.
Now, European markets finished the first day of the new trading week, it was in the green. London's FTSW -- well, they were all up -- it climbed to a two-month high. Banks put in a strong performance in Germany. In Paris, Alcatel-Lucent was the top gainer on reports it may sell its enterprise unit. Nice gains in Frankfurt. The best gains of the day came in Zurich with the Zurich SMI.
It's a case of close but not close enough. The pilots onboard this Southwest Airlines plane had a lot of explaining to do after it landed at the wrong airport. We'll show you the takeoff and we'll explain how it happened.
QUEST: Welcome back. QUEST MEANS BUSINESS. This was the 737 belonging to Southwest Airlines. Look at it go, by jingo! At a fast rate up there. They're gunning it to the firewall there, all the way down, making absolutely no room for error. And the nose wheel already up, which suggests a very early rotation. They took no chances in getting the plane off.
(BEGIN VIDEO CLIP)
(END VIDEO CLIP)
QUEST: The runway -- if we look at the runway picture, you will see, this is the runway for the Clark Airport, the Graham Clark Airport. Now, this runway is just 3,700 feet long.
The runway where they'd intended to land, of course, was the Branson County Airport, which was -- or Branson Metropolitan Airport, which is over there, and that runway is considerably longer. In fact, it's 7,000 feet.
When the plane landed at the wrong runway, needless to say, the pilots has to brake hard to ensure that they managed to stop. And, indeed, they stopped with just 150 meters from the end of the runway. Nobody was injured.
So, that's the way it looks and the way the whole thing went wrong. It should, of course, be remembered that recently there was another such case of this, this time with the Dreamlifter from Boeing.
US aviation officials are investigating a case where it was meant to land there and it landed there by accident. That was a huge aircraft. It was the mammoth 747 Dreamlifter, which landed 19 kilometers away from its original destination.
In all these cases, by and large, runways tend to face in the same direction. Officials had to dump fuel before flying the plane again.
Now, we're on -- we are five months away from the World Cup in Brazil, and a battle for business is being fought in the air, no more so than in Brazil, where Azul Airline is capping ticket prices at $420 for any leg of travel during the event.
Shasta Darlington joins me now from Sao Paulo. This is a good, old- fashioned case of price gouging or price economics, supply and demand. And the government is stepping in.
SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT: Absolutely, Richard. And the price that you just mentioned for Azul Airlines is a pretty good deal when you look at some of the other prices out there.
This is a big country, and if you're going to follow your team around to different stadiums, in many cases, just in the first round, you're going to be -- you're going to be in the air for more than 4,000 kilometers. That's the example of the English team.
If you want to go from Rio to Manaus back to Sao Paulo, Belo Horizonte, and that is going to be a lot of money out of your pocket.
DARLINGTON (voice-over): Everyone wants to be there.
DARLINGTON: The 2014 World Cup. It kicks off in Brazil in June. But with 12 stadiums spread out across the country, how will massive crowds get from one game to another? Many of them will fly, 600,000 foreign visitors and 3 million Brazilian fans are expected to turn out, putting pressure on airlines, airports, and prices.
Now, the government is threatening to allow foreign airlines to operate domestic routes to rein in abusive pricing. The International Air Transport Association is skeptical.
CARLOS EBNER, IATA, BRAZIL DIRECTOR: For the first place, I'm quite sure that the domestic airlines, they have enough capacity to cover what will be the needs.
DARLINGTON: Prices for some game days are four times the normal price. For example, you'll spend more than $2,000 to get from Rio to the Amazonian city of Manaus. But prices for short, high-frequency flights are still affordable: less than $200 to get to Sao Paulo from Rio for kickoff. Politics aside, experts say if foreign carriers come in, they'd need months to prepare.
DARLINGTON (on camera): Very few foreign airlines have a presence at regional airports, like this one, which means they don't have ticketing counters or check-in counters or maintenance crews for airplanes.
DARLINGTON (voice-over): Demand, of course, will depend a lot on the matches. If Brazil were knocked out early, it might be a whole different ballgame.
EBNER: Brazilians love soccer, and more than 80 percent of the tickets have been sold for Brazilians.
DARLINGTON: Domestic airlines have already requested more than 1500 extra scheduled flights for the Cup and the expanded use of secondary airports, all to avoid the need for foreign competitors.
The most challenging final draw for airlines would pit Brazil against neighboring Argentina, prompting a mass pilgrimage to Rio's Maracana Stadium. The question is still, will domestic or foreign carriers be operating those flights?
DARLINGTON: Now, at this point, the government threat to allow foreign carriers is looking like just that, a threat. And the fact is, if they're going to do it, they're going to have to act quickly for them to really have capacity to have an impact on prices and set up their infrastructure, Richard.
QUEST: OK. But no one should be surprised. In all these big events, there is an element of higher prices. That goes with the economic territory, Shasta.
DARLINGTON: Absolutely. I think the problem here is that just -- this is such a big country. And at this point, it's still a fairly expensive country. The currency has depreciated a bit in the last year. But you're looking at spending maybe $4,000, $5,000 to get here.
And then, you're going to have to easily spend that much to get around if what you want to do is follow your team. And of course, spend a lot of money on hotels. That's where a lot of the demand is going to be.
DARLINGTON: So, I think the issue here is just the size of the country, Richard.
QUEST: And will you be following it? How many air miles are you going to clock up during the course of the World Cup, or will you be tied to your office in Sao Paulo?
DARLINGTON: Well, we're hoping to get around as much as possible. I'll talk to you more about that a little closer to the dates.
QUEST: Nice one. Thank you. Shasta Darlington joining me from Sao Paulo. Let's go from the air to the cars on the road, and the North American car of the year has been announced. The top award was given at the Detroit Auto Show, where else? After the break, I'll tell you which model claimed the prize.
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment. This is CNN, and on this network, the news always comes first.
U.S. Secretary General Ban Ki-moon has traveled to Iraq as a recent surge of violence is stoking fears of an all-out sectarian war. Fierce fighting has been reported in Anbar Province in recent days. Only yesterday nearly two dozen people were killed in car explosions and shootings across the country.
The former Israeli prime minister Ariel Sharon has been laid to rest at his ranch in the Negev Desert after a state memorial ceremony and a military funeral. International leaders and top officials from Israel gathered to remember Sharon in Jerusalem. He died on Saturday. He had spent the past eight years in a coma.
As many as 100,000 protesters turned out on the streets of Bangkok to try and shut the city down. It's the first day of the latest opposition efforts to force Thailand's prime minister to resign at a February election. Today's peaceful were -- today's protests were -- peaceful.
The first lady of France, Valerie Trierweiler, will spend at least one more night in hospital. She was admitted on Friday after a tabloid published a report alleging President Francois Hollande was having an affair with an actress. It isn't clear if the first lady will return to the Elysee Palace after she's left (inaudible) after she left hospital.
And this is the take off the plane and look at it go -- fast and furious down the runway, certainly no messing around. Southwest Airlines taking off from Graham Clark Airport, just 3 1/2 thousand feet long, the runway. The plane was empty. It had landed on that runway by mistake. It actually intended to land at Branson Airport in Missouri seven miles away.
FIFA has named Portugal's Cristiano Ronaldo the winner of the 2013 Ballon d'Or. It's the second time the Real Madrid forward has won the player of the year honor. He beat the Argentinian -- the Argentinian Lionel Messi who has won it over the past four years.
General Motors swept the top honors at the Detroit Auto Show, confirming its comeback from bankruptcy. Its Chevrolet Corvette Stingray claimed the coveted title of car of the year, and that wasn't the only award in store for GM, as Peter Valdes-Dapena explains.
PETER VALDES-DAPENA WRITER AND EDITOR FOR CONSUMER-FOCUSED AUTOMOTIVE CONTENT FOR CNNMONEY.COM: Chevrolet had a great day at the Detroit Auto Show. The General Motors brand won both the North American car and truck of the year awards. The Chevrolet Corvette Stingray has evolved into a truly world-class performance machine. It beat out the Mazda 3 and the Cadillac CTS to take the car of the year award. With its 455-horsepower engine, it's got performance to rival the best in the business. It's also got interior comfort, technology and fuel economy.
The Chevy Silverado pickup truck is one of General Motors' most important products from a business standpoint -- no question about that. It beat out the Jeep Cherokee and the Acura MDX to take the truck of the year award. The new one has a better look outside, much more sophisticated interior and better ride and better fuel economy. But it's got all the truck capability buyers are looking for. These awards are selected by a jury of about 50 automotive journalists. So the jurors have spoken. Fortunately for GM, buyers are speaking as well.
QUEST: General Motors double award at the auto show marks an early victory for its new chief executive, Mary Barra. She's currently head of product development. She steps up into the CEO role on Wednesday. Now, speaking today, Ms. Barra said America's largest automaker is geared up for more success.
MARY BARRA, INCOMING CEO, GENERAL MOTORS: In this business, everything starts and ends with great product. At today's GM, our products are the result of putting the customer at the center of everything we do. That has fostered a bold new culture at our company, a culture that promotes innovation and encourages risk-taking.
QUEST: She takes over on Wednesday. Now, talking of change, there's no imminent CEO change for Fiat and Chrysler. Sergio Marchionne says he will stay on at the merged auto group for the next three years. He clenched the deal to buy (Fiat-)Chrysler -- the bit that they didn't own already of Fiat -- at the beginning of the month.
Also today, Ford unveiled an F150 in Detroit. The body of the pickup is made out of aluminum or 'alumin-i-um' which I prefer to say -- sounds so much better. Sounds almost more expensive. 'Alumin-i-um' which weighs less than steel so it can help save fuel. Maggie Lake spoke to Ford's chief exec Alan Mulally about the latest model and why the carmaker went with the more expensive 'alumin-i-um' rather than steel.
ALAN MULALLY, PRESIDENT AND CEO, FORD MOTOR COMPANY: Well, you know we've worked with aluminum for many years as you know and also we have a lot of new aluminum alloys that we use in commercial airplanes and in aerospace and now we're introducing those new alloys in the automobile industry. Pound for pound, aluminum is stronger and tougher than steel and it's just a perfect material to continue to improve the fuel economy and the durability and the capability of our F series.
But to your point, this is such a great development for all of the customers of the F series because, you know, clearly it's been the number one truck in the United States for 37 years, the number one vehicle in the United States for 32 years, and so they really prize fuel efficiency and the handling and the capability. And with this truck we're going to be able to significantly improve that capability.
MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL: Alan, this is the first time in decades that American carmakers are not only gaining market share, they're also increasing profits at the same time. Is that something that can continue given the fierce competition that's out there?
MULALLY: Well I think it always starts with your product line, and in Ford's case, as you well know, we invested during the toughest of times in a complete family -- a small, medium, large -- cars, utilities and trucks. They're absolutely best in class in terms of quality, fuel efficiency, safety and really smart design. And so we probably have the best product line up around the world which allows us now to serve more markets and with our scale and our efficiency we're actually the most affordable too. So, I think it's a good foundation for us to continue to profitably grow the corporation.
QUEST: That's the chief exec of Ford, it's Alan Mulally. When we come back, more big names on "Quest Means Business." Google's executive chairman Eric Schmidt. He tells why in the whole scheme of life probably failure is a necessary part of success. (RINGS BELL).
QUEST: Well, we've just received news in CNN. Google has agreed to buy the home automation company Nest Labs for $3.2 billion. Google says the deal is expected to close in the next few months. Nest, which is led by the former Apple designer Tony Fadell develops smart home appliances like thermostats and smoke detectors and indeed you will remember you heard him on this program -- and can program themselves and communicate -- they can communicate with smartphones. In fact, we had Nest on the program just a couple of months ago.
In our news series, "Executive Innovator," we will speak to industry leaders about the new ideas and concepts shaping the world, starting tonight, with Google's executive chairman Eric Schmidt.
KRISTIE LU STOUT, ANCHOR/CORRESPONDENT FOR CNN INTERNATIONAL AND HOST OF CNN'S "NEWS STREAM": He joined Google when it was just a mere startup. In 2001 Eric Schmidt has helped the company grow from search engine marvel to global tech giant as Google's CEO. A decade later, he stepped down from the role with a tweet saying day-to-day adult supervision no longer needed. He handed over the reins to Google co-founder Larry Page. But Schmidt remains front and center as the company's executive chairman responsible for Google's business relationships, government outreach and high-tech (thought) leadership. How would you describe your leadership style?
ERIC SCHMIDT, GOOGLE EXECUTIVE CHAIRMAN: Well, hopefully it's consultative. We learned a long time ago if you look at the science about this, it's also true you also get a much better outcome if you listen to people and you build a consensus around the best idea.
STOUT: You have been leading an innovative company. Do you consider yourself an innovator, and how did you become an innovator?
SCHMIDT: I'm more of a leader than a true innovator. A true innovator is pop out everywhere. What I try to do is I listen for the new idea and I try to champion it. Oh, there's a new idea, oh, there's a new idea. Oh, there's a new approach. Almost all businesses don't really change. But in our industry it's changing all the time. You run in fear that you miss the next thing. You want to listen for it, it will arrive.
STOUT: Now, you've commented on the power of innovation for economic success, not just on the corporate level but for an entire country. How can a country become an innovator?
SCHMIDT: Well all -- if you look at our political process in all of the countries -- the United States, elsewhere -- they're struck with the problems of globalization, demographics and automation. Globalization is we're competing with everybody else, demographics is older people, not enough young people to support them and automation is the robot took my job.
SCHMIDT: Now, you can't go back -- you can't go back to farming. You know, you can't go back to low-wage service workers. And all of these trends are going to continue. They're not going to stop no matter whether you like it or not. So, how are you going to fix this? With innovation, with entrepreneurship. How will the jobs of the next decade happen? It'll be entrepreneurial companies that are fast growing. People have studied this. Big companies on a net basis don't create new jobs, little companies on a net basis don't create new jobs. What creates jobs are entrepreneurs, whether they're individually funded, venture funded, government funded, you name it. They go and create something new. Something new in health care, something new in energy, something new in technology, something to in medicine, on and on and on and on.
STOUT: The thing about entrepreneurship and innovation -- is that it usually bubbles up from the bottom up. So, how can a leader, whether it's the leader of a country or a leader of a corporate entity, inspire and foster innovation from the top down?
SCHMIDT: You have to create a space where innovation occurs, right. In traditional countries, maybe you create a trade zone, you try something new. Perhaps Hong Kong is the innovator for mainland China going forward. You need spaces where innovation can occur and you can test whether that's working better than your current dogma. The failure of most planning is to assume that things don't change, right. We've figured it out, we know exactly what's going to happen, there's never going to be any change. History says that that's wrong. History says change occurs all the time. You have to have some place where experiments can occur, right, where you can measure outcomes, you can see it's a better approach and then spread that throughout the incumbents.
STOUT: Where in the world is this happening where you're seeing these successful, controlled experimental spaces that inspire innovation?
SCHMIDT: I think the American solution ultimately is going to be seen as the best -- strong universities, strong venture and an ability to fail. Almost every other country that's tried to replicate that has not gotten it quite right. They criminalize failure, the culture doesn't allow for people to try and succeed. On and on and on, it's a commitment to education, to young people and to opportunity. If you don't do that, your economy will age gracefully but you won't ultimately win in the long run.
QUEST: That's the executive chairman to Google, that's Eric Schmidt talking on the executive innovator. Now, to the weather forecast. Tom Sater in at the World Weather Center this evening for us. Good evening.
TOM SATER, CNN METEOROLOGIST: How you doing, Richard? One week ago we had that polar vortex move in of course as we have every year. It's just called winter. But I want to show something interesting. While the North American continent was cooler than average, our friends in Europe -- look at this -- above average. Western Russia as well. That is not the case now. Some cooler temperatures have moved in, even snowfall now in Moscow. In fact, temperatures will be at average or slightly below for Moscow.
We're watching two separate systems -- one with good snow in the Alps that moves up toward the northeast, and another one -- wouldn't you know it -- just like the last 15 have been -- an area of low pressure northwest of the U.K. Now, by Tuesday night and Wednesday, possibly some strong wind gusts -- gales -- that could disrupt some air travel, say from London over to Dublin, maybe 60-kilometer-per-hour breezes.
We are watching a band of rain that will come in with the same 48-hour period. Ahead of this storm, though -- the first round does spread that heavy rainfall. Great news for some of the ski resorts into the Alps, and that moves up toward the northeast where, again, we're looking at Vilnius, maybe in Minsk some pretty good snowfall totals and we'll continue to watch those for 24 to 48. But here you go, we could do without the avalanche warnings and the threat for that. But a good deal of snowfall, at least a covering. Mother Nature kind of cleaning things up for this winter.
But temperatures remain at or just slightly below average. Moscow averages -6 for a high and of course in Kiev -3. We're well above at 3 degrees on Wednesday. In the North America and the U.S., still watching some ice flowing down on the Hudson River. Temperature, average high in New York is 3 degrees, or a balmy 10. Atlanta's at 13 -- it was almost one week ago tomorrow morning that it was -7. We had that arctic outbreak. We cannot get any more rainfall in the deep South, although we're picking up quite a bit and right behind it a little clipper system, actually two, and again, it's just kind of freshening things up for the winter look. There's a little light snowfall there.
This is Down Under. They are battling bush fires outside of Purth because the temperatures have been crazy. Currently 15 -- that's nice, that's the overnight period. Adelaide's already at 35. Had a cold front move through helping the 70 firefighters there. But that extreme heat -- take a look at this -- 43 degrees Saturday and Sunday -- I mean that was just outrageous. The overnight low is 29.7, the warmest nighttime low temperature in 110 years and now Adelaide's looking at the possibility of the third hottest heat wave on record. Could have four maybe five days at 40 degrees or higher, 45 in Port Augusta. That's 113 degrees Fahrenheit. And now we watch the heat continue, not just Adelaide, but for the Australian Open, 42 Tuesday, close to 40 on Wednesday -- almost push it up, and then 42 on Thursday. Of course, Richard, we watch this as the referees have discretion of course to suspend play -- but 43 degrees. That's amazing.
QUEST: Yes, I'm too old, I'm too old. Forty-two degrees -- now what's that in real money?
QUEST: Forty-two degrees is -- what -- what's that in Fahrenheit -- that's -
SATER: Oh, this is about oh, 108 through -- yes, 109 degree Fahrenheit.
SATER: No thank you.
QUEST: 107 or 8, gosh that's hot. That's very hot indeed.
QUEST: Thank you very much. I wouldn't want to be playing tennis. I wouldn't want to be doing anything in 107 degrees or 42 degrees if you're under (40). Coming up after the break this holiday season several criminals gave themselves a huge present -- the credit card and debit card details of millions of shoppers. We'll talk about how we protect ourselves after the break. This is "Quest Means Business." It is (inaudible).
QUEST: Returning to our top story tonight. The massive, coordinated cyber-attack against American retailers -- this is the newspaper advertisement that was taken out today by Target. "Dear Target's guests." It's from Gregg Steinhafel who is the chairman and president -- chief exec. "Target learned in mid-December criminals forced their way into our systems. Our top priority is helping you feel confident about shopping. We didn't live up to that responsibility. I am truly sorry," he says. "In the days ahead, a coalition to educate the public on the consumer scams" -- talking consumer scams, Samuel Burke is here to try and give us some guidance about what happens when we use our credit card and debit cards online.
SAMUEL BURKE, BUSINESS CORRESPONDENT: You say cyber criminals over and over again, so people like my mom and dad are sitting at home and thinking, 'Oh, the last thing I want to do is go online.' But in this day and age, if it's done correctly, going online might actually be safer than going to the store and using your chip and pin credit card or your magnetic strip credit card or whatever the credit cards are in person. Just go online, it's probably safer.
QUEST: Explain how.
BURKE: So, if you just go online, make sure you're doing these things and you'll probably be safer online than offline. So, look here -- Target.com. If it just had this, it means it's not good enough, but if we go to the next slide, you'll see that there is -- you see that lock there? If you see that, that means that means that you're -
QUEST: Right, so, this is what you've got -
BURKE: -- on a secure website.
QUEST: -- this is what you've got to look for --
QUEST: -- if it doesn't have -- if it doesn't have that, what does it mean?
BURKE: It means it's not secure, that basically anybody could get your information -
QUEST: But if it does --
BURKE: -- without trying very hard.
QUEST: -- but if it does have this, is this your complete get out of jail free?
BURKE: The experts that I spoke to said that if you see that -- that lock and https -- don't forget about that 's' -- that 's' is super important. You're probably safer there than you are doing it in person because you're not handing your credit card over to some other human being and you're not leaving a paper trail.
QUEST: But what about all these things where, for example, the payment mechanism. Let's say, you choose to use PayPal or -
QUEST: -- or you choose to use something else?
BURKE: That really doesn't matter much as long as you have a secure connection. So, let's say you're making a payment -
QUEST: What's this -- what is this secure connection you're (inaudible)ing on about?
BURKE: That's one example of a secure connection.
QUEST: Right, right.
BURKE: But let's say you're on your mobile phone and you want to use PayPal or something other type of application. As long as you're on a secure connection -- that means WiFi that only you know the password to at your house -- then you're OK. But if you are on an open WiFi connection -- you're at a cafe and you want to buy something and you have found this open connection, make sure you have an app like Onavo -- it's called VPN (virtual private network). An app like Onavo will make it so that your connection is secure on your mobile phone -
QUEST: I assume there are -- I assume that there are others besides Onavo since we don't want to give a huge (inaudible) -
BURKE: There are other ones like Spotflux which works just as well, Onavo is just one that I happen to use.
QUEST: Is it free?
BURKE: It is free of course.
QUEST: Well, (inaudible).
BURKE: So you want to make sure -- if not, it's as if you were saying your credit card to a crowd -- a big crowd of people -- shouting out your credit card numbers. Always make sure either you're using your own private WiFi connection, or if you're on a public one, make sure you have a VPN app and don't pay for it, just get the free ones.
QUEST: Finally and briefly, Shelly Palmer was talking about this earlier -- an oxymoron he calls cyber security. We have to use these things to buy things now, are we at risk?
BURKE: Well, you're at less risk doing it online than you are offline -- handing your credit card over to someone. Someone on our team said I don't want to do banking online, but actually there's no paper trail. Banking online, if done correctly -- you see that little lock or you're using an app on your phone to make sure you have a secure connection -- it's actually safer than doing it at a physical point of entry.
QUEST: I'm still old enough to be reading newspapers.
BURKE: What's that thing?
QUEST: Yes, but don't you start.
QUEST: Stay where you are. Right. Now, this is a very serious issue. It is of course crime -- it's crime pure and simple whichever way you dress it up. If you'd like to have some thoughts on it, @ richardquest and we'll talk about it in the days ahead. We'll have a "Profitable Moment" in a moment. (Inaudible). Good evening to you. (RINGS BELL).
QUEST: Tonight's "Profitable Moment." You know you've had a bad day at the office when you have to tell 150-odd people, "I'm terribly sorry, we've landed at the wrong airport." But that's exactly what happened with the pilots of this 737 from Southwest Airport -- Airlines -- which landed at Graham Clark Airport when it intended to land seven miles away and -- in the last hour as you saw on this program. The plane did finally take off and headed back to its original destination. It's raised the question how on earth does this sort of thing happen? Well, I'll tell you how it happens. It happens because there's no instrument landing system and because it's a visual approach and, most important of all, it happens because several people weren't doing what they were supposed to be doing at the time that they were supposed to be doing it. Whether that's an air traffic controller who's not looking out of the window and seeing the plane isn't where it's supposed to be, or two pilots who aren't checking each other and noticing what's happening on the aircraft.
But here's the thing to really take in mind. Such events happen about once or twice each year somewhere in the world. Yes, it's absolutely true. It's happened dozens of times over the years -- from small planes like 737s to large planes like jumbo jets and 747s. Because the truth is, when it comes to flying, humans are involved. And we all know what happens when they get involved. And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. I'll see you tomorrow.