:00:07. > :00:14.stem water supplies in the short- term and ration water supplies in
:00:14. > :00:17.the future. Welcome to the era of expensive
:00:17. > :00:23.commodities. When companies once thought they could waste a raw
:00:23. > :00:33.materials, not any more. I will be asking us make guests on how they
:00:33. > :00:49.
:00:49. > :00:54.plan to economise. We also report on the building tools that work.
:00:54. > :01:04.First of all, let's spend a few minutes meeting each guest. First
:01:04. > :01:09.
:01:10. > :01:19.stop, we have architect Gene Kohn from Kohn Pedersen Fox. Give us
:01:20. > :01:22.
:01:22. > :01:28.some examples of your work. We have offices in New York, Boston,
:01:28. > :01:36.Shanghai and Seoul, Korea, and Hong Kong. Some of our projects,
:01:36. > :01:46.particularly locally in London, that are well known would be the
:01:46. > :01:53.
:01:53. > :01:59.Haren Tower. There is a tower that is 1612 feet in Hong Kong.
:01:59. > :02:09.But it is not all tall towers. Also with us, two supermarket
:02:09. > :02:15.
:02:15. > :02:20.retailers, Mark Price, from Waitrose. By you on track to double
:02:20. > :02:28.the number of shops as you predicted?
:02:28. > :02:38.A I think so. If we keep on our track, we will double by next year.
:02:38. > :02:42.
:02:42. > :02:46.Andy Bond, last on the programme, he was the chief executive of Asda.
:02:46. > :02:56.Not any more. A I work part-time for them now. I
:02:56. > :02:57.
:02:57. > :03:01.have taken on chairmanships on other boards. I have gone plural.
:03:01. > :03:04.I was there for 16 years and developed through the business and
:03:04. > :03:11.it is a great place to build your career.
:03:11. > :03:15.Market position-wise, they feel like they are well apart but I know,
:03:15. > :03:21.Mark, you are not as expensive as people imagine.
:03:21. > :03:24.Her be it is about value, not cheapness. For me, it is about
:03:24. > :03:32.providing the highest possible quality of the lowest possible cost.
:03:32. > :03:42.Items like milk the same price as everyone else.
:03:42. > :03:52.Somehow it feels like it is a more expensive store.
:03:52. > :03:58.
:03:58. > :04:06.We also sell bread at 75p, milk at 35p, I could go on. Asda's Market
:04:06. > :04:16.position is perhaps less clear-cut. Across a broader range of goods, we
:04:16. > :04:19.
:04:19. > :04:25.think we ave best price-ranged supermarket. -- we have the. We
:04:25. > :04:30.have a good range of clothing, broad range of non-food goods.
:04:30. > :04:36.The let's get stuck into the topic of commodities and raw materials.
:04:37. > :04:42.For years, we have often thought about cost control, the efficient
:04:43. > :04:47.use of labour. Labour costs were the most important of the costs.
:04:48. > :04:53.Are we now in an era where raw material costs are the most
:04:53. > :04:58.important? After all, Schumann's are not in short supply but raw
:04:58. > :05:03.material, natural resources are. -- humans are not.
:05:03. > :05:13.A how far can you economise in the use of material in your businesses?
:05:13. > :05:14.
:05:14. > :05:19.A will start with you, Gene. run to the issue is population.
:05:20. > :05:24.The world population is roughly over 6 billion and by the year 2025
:05:25. > :05:29.it could be as much as 9 billion. By 2050, 10 billion people. We will
:05:29. > :05:32.have to look carefully at the materials we use and how we use
:05:32. > :05:37.them because the demand for more buildings is going to be enormous.
:05:37. > :05:43.It is a big problem for the world. Or on commodity I am aware of now
:05:43. > :05:53.is cotton. I work for a clothing business and you look at Cotton and
:05:53. > :05:53.
:05:54. > :05:59.it is an in -- it is an interesting dynamic between labour and
:05:59. > :06:06.materials. As the overall commodity price increases as a percentage of
:06:06. > :06:11.the price of the good, you find many factories migrate back to
:06:11. > :06:20.close to home areas because Labour is less significant and equally the
:06:20. > :06:24.shipment of goods from China is increasing. You could see a benefit
:06:24. > :06:29.to the local economy of the increase in commodity prices.
:06:29. > :06:33.I a localisation effect because the label -- labour cost factor is much
:06:33. > :06:38.smaller than the material cost. I was on the phone to a friend of
:06:38. > :06:44.mine in Turkey which used to be a big source of clothing for the UK
:06:44. > :06:49.and that has diminished in the last few years. All of a sudden, they
:06:49. > :06:53.are in a great demand again. Even in the UK, there are signs of a
:06:53. > :06:58.resurgence in clothing manufacture in the UK.
:06:58. > :07:03.Aid big issue for us is importing inflation rather than deflation.
:07:03. > :07:08.People in China had been working for $1 a day at now they want $5 a
:07:08. > :07:14.day to make handbags and trainers and that is a cost we have to bear.
:07:14. > :07:20.The more intractable problem for us is a warming world where the system
:07:20. > :07:24.and the consequences that brings. I look at food commodity prices now.
:07:24. > :07:31.We have trout in the home base in China and which producing areas.
:07:32. > :07:37.The worst droughts in Russia for 130 years, the second-largest
:07:37. > :07:41.producer and Canada, weak prices and soy prices are going up. Crops
:07:41. > :07:48.and South America have been affected by bad weather forced Bob
:07:48. > :07:53.you don't think these are the usual temporary blips?
:07:53. > :08:00.-- but you don't think? By think this is a long-term trend.
:08:00. > :08:04.If you look at overfishing, the problems with cocoa in Africa.
:08:04. > :08:09.There are a host of problems that are affecting our ability to get
:08:09. > :08:12.commodities into the UK at low prices. The solution to the problem
:08:12. > :08:16.in the UK is working more with British farmers to be more
:08:17. > :08:20.sustainable in the UK, we are keen on the green agenda and we believe
:08:20. > :08:28.we have to be a restorative retailer - put back more than we
:08:28. > :08:38.take out. I heard we throw away over one-
:08:38. > :08:39.
:08:39. > :08:42.third of all the food product that we buy, not just as a household but
:08:42. > :08:48.retailers. Have you look at your systems to see if they can be
:08:48. > :08:52.sharpened? It is a fair observation that
:08:53. > :08:58.consumers and retailers waste quite a lot of food. We are all doing
:08:58. > :09:03.work in making sure only sufficient product hits the shelves for those
:09:03. > :09:13.that want to consume it. What is the waste amount?
:09:13. > :09:14.
:09:14. > :09:18.What his produced and then what is sold to us and what goes to the
:09:18. > :09:22.consumer, it would be inefficient to try and get rid of every last
:09:22. > :09:30.ounce of weights. What is a reasonable target?
:09:30. > :09:39.Every retailer has to set Bern target. We make sure our excess
:09:39. > :09:43.food goes to charity. -- said their own target. There is a
:09:43. > :09:48.consciousness we need to drive that. That alone will not be the solution.
:09:48. > :09:50.We need to be much cleverer at how we produce food, get more from the
:09:50. > :09:54.land and become more self- sufficient here.
:09:54. > :09:59.I am interested in whether there is a trade-off between the labour
:09:59. > :10:04.costs and the material cost. Thinking about how building is
:10:04. > :10:14.constructed, do we over use material, physical material, in
:10:14. > :10:19.
:10:19. > :10:24.order to economise on Labour? If you build with metal and glass,
:10:24. > :10:29.you will reduce the amount of labour. It is more efficient to
:10:29. > :10:34.build with metal and glass versus the manual way of laying brick but
:10:34. > :10:41.there is a cost to it. You use natural resources to make these
:10:41. > :10:45.materials. I would say, across the world, people are interested in the
:10:45. > :10:49.Green Building, the sustainable building. China leads the world on
:10:49. > :10:56.research in solar panels and windmills at this point back. For
:10:56. > :11:01.me, it is finding other sources of energy that will be crucial.
:11:01. > :11:05.I want to come back to solutions in using the resource constraint as
:11:06. > :11:10.opposed to living with the food resource we have more efficiently.
:11:10. > :11:15.Maybe we cannot. Maybe in buildings, if you build that much building,
:11:15. > :11:16.you will use that much material. There is nothing you can do to
:11:17. > :11:21.economise. I think people will have to live
:11:21. > :11:27.more frugally and the market will detect that. If you look at Third
:11:27. > :11:34.World countries, 70% of what people spend goes on food. On -- in the UK,
:11:34. > :11:43.it was -- is 10%. It was around 30% ten years ago. We have changed
:11:43. > :11:48.dramatically. I think people will spend more on food as our
:11:48. > :11:54.agricultural land shrinks. It is more apparent and more upon
:11:54. > :12:02.us in other retail sectors because when you look at clothing, you are
:12:02. > :12:06.already seen the death of highly consumable clothing. People are
:12:06. > :12:12.living more within their means and been savvy to having only three
:12:12. > :12:15.pairs of jeans that last longer rather than 10 pairs that you throw
:12:16. > :12:19.away after a couple of uses. We increasingly see that.
:12:19. > :12:24.One of the things you see is buildings becoming simpler in their
:12:24. > :12:27.design and use of material. Looking at all the great buildings recently
:12:27. > :12:33.that get all the press, look at the quality of the detail and the
:12:33. > :12:39.amount of material used to make them rich in their visual interest,
:12:39. > :12:47.that will change because of the use of material. We cannot keep
:12:47. > :12:54.building all these icons. If you want to learn more about the topics
:12:54. > :13:04.in the programme and about our partner, the Open University, visit
:13:04. > :13:04.
:13:04. > :13:11.Let's talk about buildings. At this point, I am interested in the
:13:11. > :13:15.conflict between form and function. In modern capitalism, to we deliver
:13:15. > :13:21.buildings where too much at that goes into fancy designs would do we
:13:21. > :13:31.not put enough effort into the aesthetic of buildings? I am
:13:31. > :13:31.
:13:31. > :13:38.looking at you, because Asda's supermarkets are quite functional.
:13:38. > :13:43.They are designed primarily for a purpose. Some of a busiest stores,
:13:43. > :13:52.80,000 people a week. They'd to need to be built for efficiency. I
:13:52. > :13:56.don't think it's always the cost of form. The supermarkets and the
:13:56. > :14:00.planning authorities are increasingly aware of the need to
:14:00. > :14:04.design buildings that are somewhat attractive. Many of the
:14:04. > :14:14.supermarkets that are constructed today are built as part of multi-
:14:14. > :14:19.use facilities. There is an aesthetic viewpoint. You can find a
:14:19. > :14:27.balance. But the big as the supermarket has to be designed to
:14:27. > :14:34.be purposeful. -- Asda. It allows a lot of people to shop intensely and
:14:34. > :14:39.to be served well. It is arguably not to everyone's taste to have a
:14:39. > :14:46.linear design. Yet it is by far the most efficient way to design a
:14:47. > :14:56.stall and if you change did, customers would be frustrated. --
:14:56. > :15:00.changed it. For Waitrose, we think form is very important. Everything
:15:00. > :15:04.we do we sympathetic with the environment. Sometimes, it does
:15:04. > :15:08.look like a supermarket. Other times, we kept the facade of the
:15:08. > :15:14.old building because that is right for that environment. Having said
:15:14. > :15:18.that, there must be a balance in making sure what we build his fit
:15:18. > :15:22.for purpose and efficient so we can be profitable but by and large, we
:15:22. > :15:27.spend more on average on outbuildings because we think these
:15:27. > :15:31.epics are important for the Environment and the community.
:15:31. > :15:36.the customers respond to win more aesthetically pleasing building?
:15:36. > :15:40.Are think they do. People enjoy being in our shops. It's not
:15:41. > :15:46.primarily built for auction. It must be efficient. We think
:15:46. > :15:49.creating an environment with wider aisles and a nice shopping
:15:49. > :15:53.environment encourages people to come in and spend more money and
:15:53. > :16:01.more time. We find that our customers are loyal to was because
:16:01. > :16:07.they prefer that environment but the wrist a cost we incur. -- to us.
:16:08. > :16:11.-- there is a cost. We found there has been no net advantage so we are
:16:11. > :16:14.very committed to building beautiful buildings, working with
:16:14. > :16:23.the environment in which we put them and making sure shopping is as
:16:23. > :16:28.much of a pleasure as it can be. couple of points. One of my
:16:28. > :16:33.favourite clients was Stanley Marcus. He told me his favourites
:16:33. > :16:37.basis and buildings were ones that made him feel good about himself.
:16:37. > :16:41.That was the test of Architecture. He said if you were a customer, you
:16:41. > :16:47.walk into a space which is light and spacious and beautiful, you are
:16:47. > :16:56.going to spend more time and more money. You stand tall, you're
:16:56. > :17:00.confident. It works for me. I spend time looking for things.
:17:00. > :17:06.Architecture is critical to society because where you live, the
:17:06. > :17:10.environment of your home sets your attitude for the day. The place you
:17:10. > :17:14.work, that environment, it affects you. If you're in a hospital that
:17:14. > :17:20.is badly designed, you lose hope. If you wipe been one that has
:17:20. > :17:23.thought about light and space, you can create hope. -- if you are in
:17:23. > :17:32.one. There are so much about the environment that helps you achieve
:17:32. > :17:39.the goal you want. That is what great architects do. It is blending
:17:40. > :17:43.function and place. In a way, the question is just a bit simplistic
:17:43. > :17:51.in trying to separate function and form because the function relies on
:17:51. > :17:54.the form. And the form relies on the function. Before we get it to
:17:55. > :17:58.lovey-dovey, it is actually quite important that people who don't
:17:58. > :18:02.have large amounts of money can go to a fairly plain building and buy
:18:02. > :18:07.something that is cheaper. When I haven't spent profits on the
:18:07. > :18:10.building. I guess the point, and there must be a massive debate in
:18:11. > :18:17.the whole fraternity of architecture, it is this dilemma
:18:17. > :18:23.over whether beauty is more expensive. Is it exclusive and in
:18:23. > :18:29.accessible to his single mother with three kids from Birmingham?
:18:29. > :18:33.can say you can have a beauty that does not cost more. The general
:18:33. > :18:37.point and I will come on to the specific Waitrose point. I think
:18:37. > :18:42.simplicity of form can cost less. The second point is the wonderful
:18:42. > :18:46.thing about Waitrose is that it is owned by all the people in it. We
:18:46. > :18:52.decide about profits. We don't look to maximise profits, we look to
:18:52. > :18:56.sustainability. You choose to make a nice
:18:56. > :19:00.environment work. A nice environment to make it less
:19:00. > :19:06.bothered as a consequence. You can't maximise profits to
:19:06. > :19:10.shareholders and do the things that Waitrose does. I was really using
:19:10. > :19:14.an example to get you to comment on the fact that we can use another
:19:14. > :19:19.example, so many things when we did into the detail of architecture,
:19:19. > :19:29.and we talk about beauty, it does seem to me that there is a lot of
:19:29. > :19:30.
:19:30. > :19:37.occasions, the debate between cost and form. I do think simpler
:19:37. > :19:41.buildings are better than exaggerated form or overly
:19:41. > :19:46.materialised buildings. There are a lot of young architects doing
:19:46. > :19:51.simple things. You should be able to design low-cost housing which
:19:51. > :19:54.makes the internal environment and one that you feel good about being
:19:54. > :19:59.in and speaking him. It's OK for business to say, we're not going to
:19:59. > :20:03.make as much money but we are going to provide an environment that
:20:03. > :20:08.provides joy and his special for our customers, the people who work
:20:08. > :20:12.here. One last point I will make is that we worked with someone from
:20:12. > :20:17.IBM. He wanted a new building despite the turmoil in the economic
:20:18. > :20:21.conditions. He cared about the way people communicated and worked
:20:21. > :20:31.together. So functionally, he created a building that people
:20:31. > :20:35.started communicating, not just e- mails but verbally. They would
:20:35. > :20:40.private rooms with people behind closed doors. People interacted.
:20:40. > :20:45.The company took off. Buildings have a role because more than just
:20:45. > :20:48.been icons, they have to inspire the users. The other point is if
:20:48. > :20:52.you are going to spend more on your building, you have to look at are
:20:52. > :20:57.the areas of your business were you can make efficiencies to somehow
:20:57. > :21:01.compensate and I think one of the most shameful been in London, there
:21:01. > :21:06.are lights on in every office building and we think we have huge
:21:06. > :21:12.pressures with energy costs, it's terrible. Or ours, we don't work
:21:12. > :21:17.with any new shot that doesn't automatically turn off at set times.
:21:17. > :21:21.-- for us. We encourage everyone to be efficient with energy. One thing
:21:21. > :21:26.businesses should be doing to compensate for those additional
:21:26. > :21:29.costs, thinking smugly about how they operate those businesses.
:21:29. > :21:38.What about the American supermarkets, Wal-Mart, for example,
:21:38. > :21:43.big sheds. Do you admire their architectural style? I don't admire
:21:43. > :21:50.them, to be honest. They are big boxes. They are about providing
:21:50. > :21:55.economic goods for both approaches and for lots of people. They may do
:21:55. > :22:00.the job and doing quite well. I have to admit, I have not been in
:22:00. > :22:10.too many. And do they do the job quite well? The thing that binds
:22:10. > :22:14.everybody to get that Wal-Mart is a single minded focus on cost. Every
:22:14. > :22:20.aspect, an obsession primarily with low-cost. We've got to except that
:22:20. > :22:26.they're not beautiful buildings were more focus has been put on the
:22:26. > :22:31.form. They are extremely efficient to run. For consumers, extremely
:22:31. > :22:37.efficient to stop there. What makes them efficient at to run? But you
:22:37. > :22:42.can build them big? The layout and the linear shape means that getting
:22:42. > :22:46.the shelves replenished is very easy. You need a lower labour
:22:46. > :22:51.element in order to run at the stores. There is less energy
:22:51. > :22:55.utilisation and they are cheaper to build. Should a bit more effort be
:22:55. > :23:00.put into the design of them? I think you increasingly find it is.
:23:00. > :23:05.Well Wal-Mart is entering other markets, more focus has been put on
:23:05. > :23:11.design. -- where. The other aspect is the shop building. The kind of
:23:11. > :23:16.thing you find scattered across the Middle East. They're not making a
:23:16. > :23:20.statement of low-cost, than making a statement of high-cost. Exactly.
:23:20. > :23:28.It is about image. They want to raise their image to be the very
:23:28. > :23:37.best. Architecture plays a role in that. For the global architecture
:23:37. > :23:45.sector, that must be hugely important. There are a lot of
:23:45. > :23:49.places now what they are spending a lot of money. If you look at China,
:23:49. > :23:57.a powerful image that can best and 20 years, they have built the
:23:57. > :24:03.equivalent of a New York and added 8 million people. They have made
:24:03. > :24:10.some very amazing buildings. Some very good, some not so good but
:24:10. > :24:16.nevertheless, an image that, we have arrived, we are important, we
:24:16. > :24:23.have Pala. Dictators have used architecture to express power were.
:24:23. > :24:31.It is a very good note on which we should end. Let me think my guests.
:24:31. > :24:36.Gene cone. Mark price. And Andy Bond. I will be back with more