05/07/2017 BBC Business Live


05/07/2017

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

:00:00.:00:18.

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

:00:19.:00:21.

and Vauxhall today, but workers fear for their future,

:00:22.:00:23.

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

:00:24.:00:29.

And Narendra Modi has become the first

:00:30.:00:34.

Indian Prime Minister to visit Israel ever, with new military

:00:35.:00:37.

and cyber security deals at the top of the agenda.

:00:38.:00:39.

And we have the latest from the markets.

:00:40.:00:44.

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

:00:45.:00:51.

on that later. And we'll be getting

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

:00:54.:00:55.

around the globe, we're going to be speaking

:00:56.:00:57.

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

:00:58.:01:00.

biggest dairy companies. Also, as Volvo calls time

:01:01.:01:01.

on the internal combustion engine, are you ready to give

:01:02.:01:04.

up your gas guzzler? Get in touch, just use

:01:05.:01:07.

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

:01:08.:01:16.

light to General Motors for the $2.5bn sale

:01:17.:01:22.

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

:01:23.:01:28.

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

:01:29.:01:32.

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

:01:33.:01:36.

General Motors wants to sell - their European operation,

:01:37.:01:39.

which is dominated by Opel, has lost If successful,

:01:40.:01:41.

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

:01:42.:01:49.

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

:01:50.:01:51.

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

:01:52.:02:01.

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

:02:02.:02:04.

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

:02:05.:02:07.

Executive of Tantalum Corporation - who specialise in analysing

:02:08.:02:11.

automotive data. Ozgur, thank you so much for joining

:02:12.:02:19.

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

:02:20.:02:23.

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

:02:24.:02:27.

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

:02:28.:02:30.

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

:02:31.:02:36.

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

:02:37.:02:44.

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

:02:45.:02:51.

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

:02:52.:02:55.

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

:02:56.:02:58.

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

:02:59.:03:03.

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

:03:04.:03:07.

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

:03:08.:03:13.

PSA is notoriously European continent based? Will they go to

:03:14.:03:16.

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

:03:17.:03:21.

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

:03:22.:03:25.

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

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

:03:30.:03:32.

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

:03:33.:03:36.

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

:03:37.:03:41.

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

:03:42.:03:46.

the media following the press releases, the German work

:03:47.:03:48.

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

:03:49.:03:52.

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

:03:53.:03:56.

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

:03:57.:04:01.

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

:04:02.:04:04.

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

:04:05.:04:07.

the car industry will completely different from whatever it is like

:04:08.:04:11.

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

:04:12.:04:22.

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

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

:04:29.:04:36.

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

:04:37.:04:39.

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

:04:40.:04:46.

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

:04:47.:04:49.

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

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

:04:53.:04:56.

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

:04:57.:04:57.

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

:04:58.:05:02.

Volvo has announced that it is the first traditional

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

:05:05.:05:07.

signalling the end of the internal combustion engine.

:05:08.:05:10.

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

:05:11.:05:15.

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

:05:16.:05:19.

London remains Europe's number one hub for technology

:05:20.:05:21.

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

:05:22.:05:26.

in the first half of 2017, private equity investment

:05:27.:05:28.

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

:05:29.:05:31.

During the same period, Berlin was the next most popular

:05:32.:05:33.

Emirates has said the cabin ban on laptops no longer applies

:05:34.:05:45.

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

:05:46.:05:49.

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

:05:50.:05:52.

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

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

:06:09.:06:12.

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

:06:13.:06:15.

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

:06:16.:06:23.

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

:06:24.:06:26.

India so it is thought that negotiations might get back on

:06:27.:06:29.

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

:06:30.:06:32.

Nahendra Modi is in Israel on the first ever official

:06:33.:06:34.

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

:06:35.:06:39.

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

:06:40.:06:49.

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

:06:50.:06:54.

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

:06:55.:07:00.

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

:07:01.:07:04.

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

:07:05.:07:08.

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

:07:09.:07:16.

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

:07:17.:07:20.

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

:07:21.:07:28.

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

:07:29.:07:31.

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

:07:32.:07:38.

agencies could sign a deal where they could collaborate on some

:07:39.:07:42.

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

:07:43.:07:47.

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

:07:48.:07:53.

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

:07:54.:07:57.

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

:07:58.:08:00.

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

:08:01.:08:03.

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

:08:04.:08:11.

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

:08:12.:08:19.

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

:08:20.:08:21.

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

:08:22.:08:28.

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

:08:29.:08:32.

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

:08:33.:08:37.

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

:08:38.:08:40.

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

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later today, remember we had a holiday yesterday.

:08:45.:08:50.

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

:08:51.:08:54.

Wednesday after the July four holiday. Markets and businesses were

:08:55.:08:59.

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

:09:00.:09:04.

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

:09:05.:09:07.

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

:09:08.:09:12.

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

:09:13.:09:15.

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

:09:16.:09:21.

also revealed plans to reduce its monster sized bond portfolio but

:09:22.:09:26.

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

:09:27.:09:30.

The minutes will be interesting because policy members have

:09:31.:09:33.

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

:09:34.:09:36.

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

:09:37.:09:38.

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

:09:39.:09:45.

Managing Director and Portfolio Manager at investment

:09:46.:09:49.

management firm, PIMCO. We will start with the Asian

:09:50.:09:56.

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

:09:57.:09:59.

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

:10:00.:10:02.

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

:10:03.:10:06.

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

:10:07.:10:10.

more aggressive foreign policy, and potentially that could create some

:10:11.:10:13.

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

:10:14.:10:18.

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

:10:19.:10:21.

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

:10:22.:10:28.

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

:10:29.:10:33.

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

:10:34.:10:38.

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

:10:39.:10:42.

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

:10:43.:10:47.

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

:10:48.:10:52.

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

:10:53.:10:56.

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

:10:57.:11:09.

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

:11:10.:11:13.

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

:11:14.:11:16.

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

:11:17.:11:20.

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

:11:21.:11:27.

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

:11:28.:11:33.

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

:11:34.:11:39.

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

:11:40.:11:42.

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

:11:43.:11:48.

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

:11:49.:11:51.

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

:11:52.:11:58.

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

:11:59.:12:04.

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

:12:05.:12:10.

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

:12:11.:12:12.

has been milking big profits around the globe.

:12:13.:12:15.

You are with Business Live, from BBC News.

:12:16.:12:24.

Food prices at the supermarket are continuing to rise,

:12:25.:12:26.

according to the latest shop price index from the British

:12:27.:12:29.

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

:12:30.:12:38.

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

:12:39.:12:41.

helped by non food products falling 1.4% in price.

:12:42.:12:48.

Rachel Lund is Head of Retail Insight Analytics

:12:49.:12:50.

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

:12:51.:13:00.

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

:13:01.:13:06.

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

:13:07.:13:09.

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

:13:10.:13:12.

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

:13:13.:13:16.

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

:13:17.:13:23.

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

:13:24.:13:26.

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

:13:27.:13:32.

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

:13:33.:13:35.

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

:13:36.:13:39.

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

:13:40.:13:43.

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

:13:44.:13:47.

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

:13:48.:13:50.

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

:13:51.:13:54.

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

:13:55.:13:58.

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

:13:59.:14:01.

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

:14:02.:14:11.

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

:14:12.:14:13.

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

:14:14.:14:15.

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

:14:16.:14:18.

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

:14:19.:14:22.

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

:14:23.:14:25.

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

:14:26.:14:28.

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

:14:29.:14:32.

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

:14:33.:14:39.

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

:14:40.:14:44.

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

:14:45.:14:53.

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

:14:54.:14:55.

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

:14:56.:15:04.

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

:15:05.:15:06.

to give the green light to General Motors sale

:15:07.:15:09.

of its European Vauxhall and Opel A quick look at how

:15:10.:15:11.

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

:15:12.:15:28.

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

:15:29.:15:35.

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

:15:36.:15:37.

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

:15:38.:15:42.

biggest dairy companies - that's been going since

:15:43.:15:45.

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

:15:46.:15:52.

The brand does not have an enormous profile.

:15:53.:15:55.

Based in Denmark, Arla is an international

:15:56.:15:57.

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

:15:58.:16:04.

Peder Tuborgh is the Chief Executive of Arla...

:16:05.:16:09.

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

:16:10.:16:17.

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

:16:18.:16:23.

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

:16:24.:16:28.

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

:16:29.:16:36.

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

:16:37.:16:40.

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

:16:41.:16:45.

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

:16:46.:16:48.

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

:16:49.:16:53.

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

:16:54.:16:59.

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

:17:00.:17:05.

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

:17:06.:17:09.

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

:17:10.:17:14.

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

:17:15.:17:18.

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

:17:19.:17:24.

previous interview there is inflation, but nothing to do with

:17:25.:17:29.

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

:17:30.:17:36.

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

:17:37.:17:43.

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

:17:44.:17:48.

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

:17:49.:17:52.

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

:17:53.:17:58.

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

:17:59.:18:03.

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

:18:04.:18:07.

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

:18:08.:18:14.

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

:18:15.:18:21.

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

:18:22.:18:27.

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

:18:28.:18:36.

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

:18:37.:18:43.

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

:18:44.:18:48.

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

:18:49.:18:55.

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

:18:56.:18:59.

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

:19:00.:19:03.

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

:19:04.:19:08.

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

:19:09.:19:13.

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

:19:14.:19:18.

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

:19:19.:19:25.

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

:19:26.:19:31.

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

:19:32.:19:38.

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

:19:39.:19:44.

greenhouse gas? Your methane production is massive. Actually a

:19:45.:19:50.

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

:19:51.:19:58.

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

:19:59.:20:03.

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

:20:04.:20:13.

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

:20:14.:20:20.

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

:20:21.:20:25.

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

:20:26.:20:30.

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

:20:31.:20:34.

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

:20:35.:20:36.

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

:20:37.:20:38.

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

:20:39.:20:41.

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

:20:42.:20:50.

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

:20:51.:20:54.

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

:20:55.:20:57.

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

:20:58.:21:04.

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

:21:05.:21:08.

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

:21:09.:21:18.

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

:21:19.:21:20.

Managing Director and We will start with his Volvo story.

:21:21.:21:31.

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

:21:32.:21:38.

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

:21:39.:21:42.

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

:21:43.:21:52.

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

:21:53.:21:58.

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

:21:59.:22:02.

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

:22:03.:22:09.

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

:22:10.:22:14.

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

:22:15.:22:17.

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

:22:18.:22:23.

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

:22:24.:22:30.

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

:22:31.:22:42.

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

:22:43.:22:46.

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

:22:47.:22:50.

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

:22:51.:22:57.

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

:22:58.:23:01.

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

:23:02.:23:11.

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

:23:12.:23:24.

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

:23:25.:23:33.

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

:23:34.:23:39.

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

:23:40.:23:43.

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

:23:44.:23:47.

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

:23:48.:23:52.

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

:23:53.:23:55.

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

:23:56.:24:06.

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

:24:07.:24:11.

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

:24:12.:24:16.

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

:24:17.:24:22.

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

:24:23.:24:28.

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

:24:29.:24:34.

topped . People working at the gig, 200

:24:35.:24:46.

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

:24:47.:24:50.

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

:24:51.:24:56.

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

:24:57.:25:02.

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

:25:03.:25:06.

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

:25:07.:25:12.

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

:25:13.:25:16.

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

:25:17.:25:22.

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

:25:23.:25:29.

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

:25:30.:25:36.

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

:25:37.:25:42.

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

:25:43.:25:52.

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

:25:53.:26:00.

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

:26:01.:26:01.

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