05/07/2017 BBC Business Live


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Live from London, that's our top story on Wednesday 5th July.


General Motors is hoping to get the all-clear for the sale of Opel


and Vauxhall today, but workers fear for their future,


as the new buyers talk of "speedy" cost savings.


And Narendra Modi has become the first


Indian Prime Minister to visit Israel ever, with new military


and cyber security deals at the top of the agenda.


And we have the latest from the markets.


All of them down, but the FTSE only a touch, just .03 of a percent. More


on that later. And we'll be getting


the inside track on on a business that's been milking big profits


around the globe, we're going to be speaking


to the boss of Arla, one of the world's


biggest dairy companies. Also, as Volvo calls time


on the internal combustion engine, are you ready to give


up your gas guzzler? Get in touch, just use


the hashtag #BBCBizLive. whether or not to give the green


light to General Motors for the $2.5bn sale


of its European operations. GM is hoping to off-load Vauxhall


and Opel to the PSA group, that's the French company,


which owns Peugeot and Citroen. It's easy to see why


General Motors wants to sell - their European operation,


which is dominated by Opel, has lost If successful,


the deal would make PSA the continent's second-biggest car


maker, after Volkswagen, and ahead Opel employs 38,000


people across Europe, and it's feared the sale could put


thousands of those jobs under threat, with workers in the UK and


Germany considered to be most at With me is Ozgur Tohumcu, Chief


Executive of Tantalum Corporation - who specialise in analysing


automotive data. Ozgur, thank you so much for joining


us in the studio. Do you think this deal will go ahead? I think it will


go ahead, because if you look at all the data and the money just


presented, it will be the second largest auto-maker in Europe. I


don't necessarily think it will be a moniker listed position for the new


company, so it will be cleared in my opinion -- a monopoly. Given that GM


have lost $9.1 billion through Opal, why do PSA want to buy the company?


To your point, the European operation for GM has not made a


profit since 1999, and PSA once it probably for two reasons, one is


that you will have access to the second largest market in Europe,


which is the UK, and then it allows them to distribute their cars across


a larger scale. Will they use it to get out of Europe at all, because


PSA is notoriously European continent based? Will they go to


China, export to the States, anything like that? Towards emerging


markets may be, I doubt towards the US because PSA tried to enter the


American market for many years and has not been successful, but


ultimately I think it is a play for the European market. There is


concern this merger could bring job cuts for workers. There must be a


lot of overlaps. There has been a lot of good communication between GM


and the PSA group, Opel and Vauxhall, as far as I can look at


the media following the press releases, the German work


councillors and the UK unions were given a lot of assurances about now


job cuts, but history says in the long-term if you want to achieve the


types of savings they are looking for, you have to do some reductions.


What is interesting about the timing of this, the timing in the


development of Holkar industry is that we all know in ten years' time


the car industry will completely different from whatever it is like


at the moment. So how does this move really play -- the Hoff car injures


three. -- the Holkar industry. Yes, some of the emerging trends. You


highlighted one of them around a electric vehicles, you have the


drive towards autonomous vehicles. There is not much talk about how the


new entity will be embracing these new trends. So it is all up in the


air? For addressing these trends, think it is a lot in the air and we


have to realise all of these companies to be successful in the


long-term, they have to embrace of these big shifts in the car


industry. OK, thank you very much for your time.


Let's take a look at some of the other stories making the news...


Volvo has announced that it is the first traditional


car-maker to shift to pure electric and hybrid production -


signalling the end of the internal combustion engine.


Every model made from 2019 onwards will have an electric motor.


The company said it will also offer hybrid options on every model.


London remains Europe's number one hub for technology


The Mayor of London's agency, London Partners, say that


in the first half of 2017, private equity investment


in the capital's tech sector totalled a record $5.8bn.


During the same period, Berlin was the next most popular


Emirates has said the cabin ban on laptops no longer applies


In March, the US banned cabin laptops and other large electronic


devices to and from eight mostly Muslim nations, fearing bombs may


Just a quick look at this story coming out of India on our live


page, posted by Simon Atkinson, saying snapped deal rejects flip


card offer. This was a long awaited merger, India's two biggest


home-grown online retailers. It looks like talks have hit the rocks.


Snapped deal rejected a takeover. Amazon is making big inroads into


India so it is thought that negotiations might get back on


track. Nobody has said anything officially yet on that one.


Nahendra Modi is in Israel on the first ever official


Sameer Hashmi is in Mumbai - what's on the agenda?


A lot, if it is the first visit ever. That's right, it is a


significant and historic trip, the first Indian Prime Minister to visit


Israel in 70 years, since India got independence. A lot is on the menu,


especially deals, I want to talk about the fence first, that is the


big area where deals are expected. India is Israel's biggest market for


arms -- want to talk about defence first. India is expected to order


8000 spike anti-tank missiles, which would cost about $500 million. That


deal could be signed on this trip. India could also signed MoUss for


buying more weapons in the future. Last year India signed deals worth


$2 billion alone when it comes to defence. Israel and India space


agencies could sign a deal where they could collaborate on some


projects, and Israel could look at buying or using India space research


Organisation's lunches to launch its own satellites. In addition to that,


water and agriculture are the other two sectors where deals are expected


to be announced. So yes, multi-billion dollars of deals could


be announced at the end of this trip and we are expected to hear


something by this evening. Good to hear from you, thank you. A quick


look at markets. Completely unfazed, then OK, by the missile tests in


North Korea. All of the markets a little bit of looking reasonably


healthy. On the European markets, this is where they have started. The


FTSE hovering around 73.50, 73.60. Read tax is down a touch. Remember,


later in the week we have the jobs figures coming out of the US. We are


slightly holding our breath for that but we would talk about that a bit


in a second. Meanwhile, looking ahead to what is going on in the US


later today, remember we had a holiday yesterday.


People will be rubbing their eyes as they get back to business on


Wednesday after the July four holiday. Markets and businesses were


closed in observance, so Wednesday will really be back at it for most


people. The Federal Reserve, America's central bank, will release


the minutes from their last committee meeting back in June. At


that meeting, they decided to raise interest rates, and it was the


fourth time they have done so since the end of the recession. The Fed


also revealed plans to reduce its monster sized bond portfolio but


during the financial crisis. -- bought during the financial crisis.


The minutes will be interesting because policy members have


expressed concerns about inflation, that it is quite tepid, so investors


will be looking to see if any of that anxiety might put the brakes on


further increases to interest rates. Joining us is Mike Amey,


Managing Director and Portfolio Manager at investment


management firm, PIMCO. We will start with the Asian


markets, something you might have expected to see a big reaction on


the markets with a North Korean missile test, but it hasn't really


happened. If you look back to the last six to nine months, one of the


things we were worried about with a change in the US presidency was some


more aggressive foreign policy, and potentially that could create some


volatility is in the markets. You have had all of these nuclear tests,


these ballistic tests, rather, and a very muted response, effectively


just moving on. Because they just anything it is going to come to


anything, for...? I think there is no clarity. I thought markets hate


uncertainty? But nothing has changed. We have seen this before,


one way or another. I do think it is quite interesting that the markets


are just not interested, which is potentially a little bit complacent,


frankly. I have written down in my notes here, missiles and money. The


second question is about money, world pay, this great transaction


processor. People are chasing it. It will go for a lot of money. WorldPay


is a transaction system, when you pay through your mobile phone


banking app or through contactless, these are the people who do the


transactions, and they are doing very well at it. The company has


been valued at eight to nine Ilion pounds. It rose by ?2 billion


yesterday alone. Which ironically is what RBS sold at four in 2010. Poor


RBS. A tough one to look back on. Unfortunately the time they had to


sell it, they had no choice was that RBS a British state-owned bank that


had to be bailed out in 2008 and then had to sell off its assets, and


this was one of them. Enda yes, sold the two billion and now it is worth


eight to nine. We will be talking about Bravo getting rid of the


internal combustion engine, do you have a hybrid car? We do have an


electric car actually. Head of the curve, I am still on a diesel. So am


I. Still to come, we will be getting the inside track on a business that


has been milking big profits around the globe.


You are with Business Live, from BBC News.


Food prices at the supermarket are continuing to rise,


according to the latest shop price index from the British


ambient food up 1.5% - over prices were down 0.3% in june


ambient food up 1.5% - over prices were down 0.3% in June


helped by non food products falling 1.4% in price.


Rachel Lund is Head of Retail Insight Analytics


I suppose what surprises me about these figures is in some respects of


them are still going down, even though we have got inflation at


2.9%. You are absolutely right. Year-on-year, some of these prices


are going down, although what we have seen the last six months as


they are edging up, it is just that at the back end of last year there


were some big falls in prices, so quite a lot of ground to recover,


particularly in non-food prices. So what is actually reversing the sort


of devolutionary trend in food prices? Is it to do with the weaker


pound or what? It has a big part to play. The currency has fell 12%


since the referendum last year, which has a big impact on input


costs, but also to monitor prices as well first we have been through a


period of low and falling commodity prices, which has reversed over the


past year, so we have seen some big gains in underlying commodity


prices. Looking forward, where do you think prices will go in the


supermarkets? Prices will continue to head upwards. We have probably


seen the lion's share of increases in food prices, they will almost


certainly had up a little bit but we have still got a little bit more to


come, particularly in the non-food area. We expect to see the shop


price index, which we report on, heading to inflationary territory in


the next few months. What you think is the major factor in the moment in


terms of determining where prices go? I think it very much is the


currency movement. That takes some time to feed through, because of


hedging contracts and also because of stock cycles as well, and we


haven't seen all of those impacts play out. Thank you very much for


joining us. We will look at another food related item on our live page.


Food and cars and missiles today, isn't it? Do you do your grocery


shopping online? Sometimes but very rarely. What do you think the


average weekly Ocado costs? 50 quid. ?108 and that has gone down. More


details on that on our live page. You're watching Business Live -


our top story The EU Commission will decide today whether or not


to give the green light to General Motors sale


of its European Vauxhall and Opel A quick look at how


markets are faring.... We have moved upwards. A little bit


undecided, the FT-SE up one quarter of a percent.


Now let's get the inside track on the big business


Our next guest, Arla Foods, is one of the world's


biggest dairy companies - that's been going since


the 1880's and now turns over in excess of $10bn.


The brand does not have an enormous profile.


Based in Denmark, Arla is an international


It's major brands include Lurpak butter and Castello cheese.


Peder Tuborgh is the Chief Executive of Arla...


Welcome to the studio. The company has a long and deepest to read.


Telus when it started, and how it is led by cooperatives? The company is


much older than us. Since the 1880s. We are owned by farmers in seven


different countries. Including 2500 farmers in the UK. We have a big


base of farmers that own the company this because it is owned by the


farmers, what difference does that make? Why are you different from an


ordinary milk company? We're different, every penny we make our


profits go right back to the farmers. I have employed by farmers


to make sure the milk price is as high as it can be in any given


situation. Let's talk about the milk price. About one year ago in the


headlines in the UK. Unsustainable, farmers getting less than it was


costing them to produce it. Where is it now? We have been through a


recession, global recession, millions of farmers can echo that.


It has recovered. We are on an upward slope. We heard from your


previous interview there is inflation, but nothing to do with


the pound, it is a global thing. Do your farmers make more from their


milk than other farmers? We strive to be in a position. That is not a


yes. At the moment yes, but you can find times when we are just average.


Why is it so difficult to get a high price for milk, it is such a natural


food, something we will need. The world's population is growing. Why


is the milk price so volatile? It is Wallace are because of the supply


side. Farmers all over the world react to milk prices. When it is


down this stop producing. Which they have done in the last year. Then


there is a lack of milk, guess what, but very short at Christmas time. We


have a desperate need for butter. By your Christmas but now. Where will


milk come from in the future? The big mass intensive farms in the huge


acres of them. Or will it come from organic food and farms? We are the


world's biggest producer of organics food. 1 billion litres of milk. Our


organic farmers are amongst the biggest one. It is having bigger


farms, that is a trend for 125 years, but doing it in a sustainable


way. That is why we are unique, doing it without farmers, to make


sure as they become more efficient they are doing it in a sustainable


way. What new markets are opening up? More sales in China? Yes


certainly, we have partnerships and co-owner ships in China. I'm very


focused on Africa and sub Sahara, we have open the facility in Nigeria.


What concerns do have, compared to the UK? It is new consumption. Plays


out in a different way. The Chinese do not eat a lot of cheesier. How


that cheese market will play up is a wonder. What is your contribution to


greenhouse gas? Your methane production is massive. Actually a


serious problem. It is, that is how the carriers. A force of nature.


Well, you can do a lot of things to research, how you feed the cows. We


have great programmes around. On the supply side, we have the biggest


fresh milk dairy outside London, carbon neutral. 80%. That is how


you're going to feed an enormous market coming in China. Increasingly


using dairy products, which 20 years ago they did not. Still the per


capita consumption is much lower than Europe. That will drive the


excitement in the future of the dairy industry. Thank you so much


for coming in. In a moment we'll take a look


through the Business Pages but first here's a quick reminder of how


to get in touch with us. The business live pages where you


can stay ahead of all the day's breaking business news. We keep you


up to the latest details with insight and analysis from the BBC's


team of editors right around the world. We want to hear from you, get


involved on the BBC Business Live page. We aren't Twitter. And you can


find us on Facebook. -- we are on. What other business


stories has the media been Joining us again is Mike Amey,


Managing Director and We will start with his Volvo story.


Explain what this is about. The end of the combustion engine? Volvo


announcing that by 2019 all of their cars, they will not have a


combustion engine in any car from 2019 onwards. The first classic car


company. They will have an option of combustion in the Highbury. Name one


is developing in internal combustion engine now, he would? You have the


transition going on. The key question for the car industry, where


the focus is. Whether the incumbents will be the dominant force, or the


newer companies coming through. Volvo trying to be one of the newer


companies, making the move early. You are a convert? We have an


electric car. It is great. Really enjoyed it. What about the range?


About to edge and 50, 200 six miles. What happens if you want to go 500


miles. We have a diesel car. We thought that when we were told the


authority by diesel cars this would you give up your gas guzzler? Andy


says electric cars are not the future. Hydrogen fuel cells will be


the only way forward. Wolfgang says he would go for it for the right


place. Jim says why have a car when you can have a new


Uber. Story in the US about people employed in carp production going


down. What Mr Trump promised, to keep industries like this employing


people. There is a question as to whether the demand is not there.


Everyone has their new car. There are some issues there. The


workforces down a of percent. Of course the US is supposed to be one


of the stronger economies. Couple of warning signs we should all be aware


of. If there is a slowdown in the car industry, does that mean we will


get the broader slowdown in the consumer sector. A story about the


Green Day concert due to take place in Scotland, cancelled at the last


minute. A staff turning up to do a 12 hour shift did not get paid. You


many reasons. I was lucky enough, many reasons. I was lucky enough,


they are touring Europe, I was lucky enough to go to the London gig on


Saturday. We might have a photo of that. Team photo. That is a Lions


topped . People working at the gig, 200


people not paid for this turning up to do the 12 hour shift. Zero hours


contract, the gig was cancelled, they got nothing. A good example of


how tough it is if you are on those contracts. What can you do about


that? Any legislation? Everybody would love to bring in laws and


regulations? You could say there has to be a role if you are there, this


was half an hour before the thing was supposed to start, one thing you


could say, if you are there X hours beforehand. People would pay for


childcare. They have to get there and get back. The workers can


dictate the terms of the contract. You can start to turn things around.


Let us know what gave you are going to next. All we have time for an


business. More business news through the day on the BBC website.


We will see a few contrasts in the weather across the UK in the next


few days. For many parts of England and Wales it will turn very warm, if


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