04/09/2017 BBC Business Live


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This is Business Live from BBC News with Ben Thompson and Sally Bundock.


Rising North Korea tensions following the nation's most powerful


nuclear test to date and fears Pyongyang may be preparing


Live from London, that's our top story on Monday, 4th September 2017.


Donald Trump warns he could sever ties with the nation's trading


partners in response to the missile threat.


We will have all you need to know about that.


Counting the cost of Hurricane Harvey.


AS the deadly storm dents the US oil industry,


we find out what it mean for the world's largest economy?


And some nervousness on the markets after that North Korean bomb test,


but investors are keeping a closer eye on the international response


We'll be getting the inside track on the cost


Yep, summer's officially over when children go back to school.


We ask the boss of a major uniform maker is schoolwear


So today we want to know - congested roads and selfish drivers.


Does the school run make your blood boil?


Just hours after Pyongyang said it tested a hydrogen bomb,


President Trump tweeted that the US could impose trade embargos


on all countries that do business with North Korea.


That list includes India, Russia, Pakistan and perhaps


The latest figures show that trade between the US and China is worth


This makes China the United States'


Many experts believe that Washington is leaning on Beijing


Trade with China is crucial to the fortunes of Pyongyang,


with over 80% of all North Korean exports


being purchased by their neighbours across the border.


Good toads you, Robin. This is a Trump tweet, isn't it? Talking about


trade sanctions with any country that do business with North Korea?


Yes, China wasn't named, but clearly this is aimed as China responsible


for the vast majority of trade with North Korea. Trade that keeps that


country going and that is part of the reason why China does it because


the prospect of an implosion, an economic implosion in North Korea is


something that China does not want to entertain. That could bring with


it humanitarian crisis on its border perhaps, even the reunification of


the whole of this peninsula and US troops up by the Chinese border.


China doesn't want to entertain the prospect of an economic collapse and


trade remains important. The idea of suddenly stopping trade with China


and that long list as Ben mentioned of other countries that do trade


with North Korea, it is almost laughable because the figures are


staggering, aren't they? Remember as well there are countless US firms


among them the biggest in the world Apple, who have a significant


revenue exposure in China. They rely on trade between China and the US.


So, they would be damaged as well. In terms of China, what reaction


have we had from them if any to this? Well, interesting grid we're


waiting to hear from the Ministry of Foreign Affairs who are due to have


their usual press conference today. We have heard though some official


reaction coming from the summit in the east where President Xi is


hosting a handful of world leaders at the bricks summit and they in a


statement communique at the end of that two-day meeting condemned as


deplorable the actions of the north. I think behind the scenes the


Chinese leadership are far more angry at the actions of Kim Jong-un,


but China, you know has a different view from the United States on some


aspects of this dispute. It does want to see a denuke scholarised


peninsula, but it doesn't want to see the collapse of the north and


the problems that may bring for it on its border. All right, Robin,


thank you very much. Robin Brant. There has been reaction on markets.


We will look at this in a few minutes.


At least 47 people have died since Hurricane Harvey hit Texas


Some residents have been allowed to return to their homes but flood


waters are still rising in other areas.


President Trump has asked Congress for $7.8 billion as an initial


payment to help with recovery efforts following the flooding


The White House says about 100,000 homes,


not all of which were fully insured, had been affected by


the storm and the flooding that accompanied it.


Texas Governor, Greg Abbott, said the state could need as much


as $180 billion from the federal government to help it recover.


The storm at its height knocked up to 24% of US oil


It's also believed the nation's largest refinery in Port Arthur may


be shut for up to two weeks, sending petrol prices


Michelle Fleury reports from Houston.


I'm standing by the Upper Houston channel.


I'm standing by the Upper Houston Channel.


It is about 23 miles long and on each side it is lined


This area around Houston is vitally important to the energy industry.


Much of the refinery capacity was impacted


when Hurricane Harvey made land fall.


As they try to restore operations to get in and to get that refining


capacity back up and running, one crucial part will be getting


the waterways open again so that vessels can come in and out


of here carrying crude oil and other vital supplies and it is not


that come through here, consumer goods travel on vessels


through here making their way to shelves of stores


Given its strategic importance, American authorities have made


it a priority to get this area reopened.


We have been told some estimates that if this port,


if this area is closed for a week, it could cost the economy as much


as $2.5 billion which is why all efforts are being made to try


and clear the debris as fast as possible.


Ingrid Hobbs is an insurance specialist and litigation partner


at the law firm Mayer Brown International.


Michelle looking a the aftermath. It is very difficult, isn't it, to


calculate at this point what this will cost and to whom and whether


they are insured oar not? It is extremely difficult partly because


the water has only stopped pouring down recently and it is difficult


for loss adjusters to get in and to see the extent of the devastation.


There are huge different losses involved as well. You mentioned


earlier the oil industry and the impact on the production levels.


I've read in different reports that there is something like a 25% impact


on production per day. So that is going to have a significant impact


on pricing, but on a personal level for those affected having been


displaced losing their homes, maybe looking at long-term re-housing,


rebuilding costs, how much of that will actually be insured, flood


ex-clueses operating in the domestic insurance policies, ought owe motive


industry affected, the amount of cars you can see floating through


the water, those will be claims on personal ought owe motive policies


and the ex-at any time of the cover available remains to be seen. The


Total cost they are saying will be in the order of $100 billion, so


even more than Hurricane Katrina. I wanted to ask you about how it


compares because there are clearly direct costs and indirect costs and


the indirect costs could go on for years of just trying to put things


right. Where do we start in that job as a loss adjuster, where do you


start to look? There are so many different elements to this? It


splits down into different kinds of insurance. The State will be


incredibly busy, the national insurance flood programme, will


respond immediately, but there will be individual insurers involved on


the ground in the United States and then reinsured through the Lloyds


community here in London and they will be looking at each individual


insurer instructing loss adjusters to go out on their behalf for their


policyholder, damage assessments and then also looking at longer term


economic losses. In this particular case, unlike Hurricane sandy and


Katrina, many businesses and individuals are uninsured for


various reasons, aren't they, that makes it much more complicated? We


don't know the extent of non insurance, but there is difficulty


in obtaining cover for properties that are in the flood plain and


Texas and Houston in particular is well-known as a flooding risk. So we


need to wait and see the extent of what is covered, but there will be


loss of profits claims down the line. Damage claims, personal injury


claims and we will have to see what the extent of each of those classes


of insurance and loss looks like and whether or not exclusions in the


policies bite, flood exclusions, act of god exclusions, we don't have any


real handle on the extent of the damage now. Ingrid, thank you for


sharing your expertise with us this morning. There is a lot more detail


on our website about what is going on there in at moment and how it


stands. Yes, something we will be covering for a good while to come


yet. Let's take a look at some of


the other stories making the news. Fast-food chain McDonald's


is facing its first strike in the UK as workers at two sites walk-out


in a dispute over zero-hours Workers at Cambridge and Crayford


in south-east London The Bakers, Food and


Allied Workers Union, said staff want a wage


of at least ?10 an hour James Henderson, the chief executive


of one of the UK's best known public relations firms,


has stood down amid claims it stirred up racial


tensions in South Africa. Bell Pottinger has faced criticism


from the country's main opposition party after it ran a media campaign


for the wealthy Gupta family. South Africa's Democratic Alliance


Party said the PR firm emphasised The EU's Brexit negotiator,


Michel Barnier, says he plans to "educate" the British people


about the price it would pay The European Union suggested that


little progress had been made The British Government has hit back,


claiming that the EU was not I wonder how they plan to educate


people? Maybe it will be a leaflet drop from a plane with facts!


We will talk about that with our markets guest in a moment. Pirelli


is planning a market listing. The tyre maker is planning to return to


the stock market in Milan, Italy, it is the world's fifth biggest tyre


maker. It delisted in 2015 after a mandatory offer launched by an


investment vehicle. It is coming back to market. Some markets for you


before we speak to Richard Hunt ir. He is head of research at Wilson


King Investment Management. We would expect there could be a reaction to


what happened with North Korea, but the markets are taking it in their


stride? The difficulty is how to price it in? Are we talking about a


skirmish or something more serious? Clearly, it is not something that


investors can runaway and keeping a close eye as you would probably


expect overnight in the Asian markets we have had interests in the


likes of the yen seeing it is a defensive currency as well as gold


and some sovereign bonds. Is it the geopolitical stuff or does it come


down to sanctions and trade? I think from a kind of human point of view,


the geopolitical part of the equation is much more concerning. I


think from practical point of view and something investors will


arguably be more interested in is what sort of sanctions may come in,


but as we have been hearing earlier, the US, China, relationship is so


large that it might be crimped at the edges, but they will be looking


to keep that intact. Tell us about your comments on Michel Barnier's


advice that perhaps the British are not really across the full


consequences of leaving the European Union? There is this danger, as we


knew since day one, that there is a possibility that Britain will be


used as a scapegoat so as not to encourage other members of the EU


even to think about some kind of exit which was obviously one of the


concerns from the EU's prospective at the start this could be the thin


end of the wedge. There are the complications begin, of course, with


I don't think the UK is disputing the fact that there are certain


contracts we have already entered into what we will see through. The


questions, of course, in terms of some of the money that the EU made


whilst the UK has been a member and some of the assets that the UK is


entitled to, how that off sets this so-called divorce bill. Sclaerl, at


this stage, we are making little progress. There is an irony about


the education, given that during the referendum campaign that education


was one thing that people talked about, maybe people were told lies


and it comes down to information. On the top of that we don't know what


could happen. It is so confusing? Michel Barnier is trying to speak


with 27 tongues, isn't he? Representing the entirety of the EU.


At any given time you have to question how much is the EU bloc and


how much is personal? Thank you, Richard. Nice to see you. Shedding


come light on that. We'll talk more about it, I'm sure.


Back to school for children across the northern hemispheres, we will


find out why uniforms are becoming more expense of full. -- more


expensive. Before we grapple with ties, blazers, polo shirt, let's


talk about Europe's biggest tech show. Samsung, Apple, they have


given it a wide berth, the exhibition in Burlington


forthcoming. The IFA exhibition. Now, smaller competitors are using


the event to make a case for their innovations. Joe Miller is there.


This is LG's new V30. No modular design, no side screen, the focus is


on taking pictures and shooting video. Two new cameras on the back,


a deep and beautiful screen, and a lovely zoom feature, you can pick a


particular object or person in the distance and then the camera will


very smoothly zoom in towards it. Question for this phone, as with


previous LG models, some of which had cutting edge features but have


not sold well, can it make inroads into a crowded and competitive


smartphone market? I think LG has aways been about choice, it may not


be number one in phones, it may not be the thinnest, the cheapest, the


brightest, there is a lot of things that we are not but one thing we


have always been is giving people an alternative choice. Two ways you can


compete with Samsung and Apple, one is with cutting edge features and


the other, such as with this 400 dollar Moto X4 is to compete


aggressively on price. It targets the disk ruminating consumer,


someone who wants a high-quality smartphone experience but is not


looking for the flagship prices. We design a phone to provide all the


benefits but price it very well accordingly. In just a couple of


weeks, a new iPhone is likely to dominate the headlines,


manufacturers like those here in Berlin will hope that they too are


still able to make a splash. fresh food could be left rotting if


strict customs control for EU goods are put in place of the Brexit.


If your commute into the office has got a bit busier, probably because


the summer break is officially over for many schoolchildren, roads are


busy, schoolchildren across the northern hemisphere are back at


school. Which means many parents are


counting the cost of buying everything they need for the new


school year. One of the most expensive things they'll fork out


for is a new school uniform. So why are uniforms becoming more


expensive? Our next guest will know. He's the boss of Trutex, the UK's


number one brand in school uniforms and sportswear. The company was


founded over 150 years ago under a different name, and has been


operating under the Trutex name since the 1920s. In 2010 when it was


teetering on the brink of administration, Trutex was bought


out by a private equity firm, and then underwent a management buyout.


Success ensued, and now Trutex has expanded into China, where it has


ten factories and manufactures over 1.5 million garments a year. Prince


George will soon be wearing a Trutex uniform - the company supplies to St


Thomas's prep school in Battersea, where the young Prince will begin


his education. So, good news for you royal


watchers. Matthew Easter is with us,


he's managing director at Trutex. Good morning. Good morning. Thank


you so much for coming in. I have three boys, I know the cost, you get


through the uniform like you would not believe, and also, lose it, week


one, they come home without the school jumper, nowhere to be seen,


but the name is in it, that is key. Give us a sense of the size and


scale of your business. It has ballooned since you moved into


China. ?30 million business, we manufacture 4 million garments a


year, exporting to 15 countries across the world. Not everywhere has


the uniform, so we focus on China in particular. When you had to start


working there, you have to get used to the culture, their uniform is...


Explain. Traditionally, the uniform is very much in line with the


communist state, a pretty horrible set of shell suits, sorry for


anybody who wants to wear those, but these days it is far more akin to a


European or British style education uniform. The schools are becoming


more branded and more focused on brand. Talking about the history of


the firm, touching on it briefly there, chequered past, the


management buyout, private equity, you were instrumental in that


process and talk us through it. 2010, the business had obviously


been through a period of decline, over a number of years, and that


forced a chain, in 2010. -- change. I came in at that point and along


with the team, we were lucky, a number of people were in the


business who had experience in the business, we had to bring in new


focus. What were they getting wrong, it strikes me, parents have to buy a


uniform, how could you get that wrong? In principle you cannot, the


product, the brand, it was very well recognised, like every other


business, you have to do everything right, manage your customers, your


finances, very seasonal business, cash management, and managing stock


is hugely important. And requires a lot of focus. Something we have said


since you have come in, uniform is getting more expensive, is it


getting more expensive? How do you... How do you sell that in the


sense that parents are forced to buy it, we have to buy the gear for our


kids and it is a huge expense, and for families who cannot afford it,


it is a real issue. It is not getting more expensive, overall, the


cost of uniforms is cheaper than it was 20 years ago. Clearly, the


devaluation of the pound has had an impact on lots of things, post


Brexit, and clothing is one of those. Why would argue what we make


is good value, there is an upfront cost but it is something you want


the kids to wear all year, passed down as well. There is pressure on


schools to make it more affordable and have less branded uniform and


more stuff you can get from your high street retailer. We try to work


with the schools and have a sensible blend of branded and unbranded


uniform so it is not too expensive. Schools... That is not good news for


the business model. There is plenty of schools we can go and get to, and


on that model, we will get more business over time, by doing it


right. Very good to see you, thank you for joining us. Matthew Easter,


managing director of Trutex. In a moment we will be spinning


through the business pages, but first, a quick reminder of how to


get in touch with us: we will keep you up-to-date with all


the latest details with insight and analysis from the BBC's team of


editors right around the world. And we want to hear from you, too, get


involved on the business live web page. You can find us on Facebook as


well. The Brix Conference, Brazil, Russia,


India and China, it is something we were mentioning all of the time in


its heyday, when they were all thriving, these economies. -- the


Brics. 2001, Goldman Sachs, coined this term for the emerging


economies, took on a political life because these countries, as well as


being emerging markets, were men to take on some of the world economic


leadership away from the US and Europe, they have this annual


conference but it has not worked out like that, powers have diverged.


China, the driving economy and all of this, is much cleaner now on the


economies closer to its home, so it really is forgetting this notion of


the Brics and going to a much more to graphically centric. Cynics said,


you cannot lump these economies together thanks on -- based on vague


similarities, looking at someone of the size, power and scale of China.


It suited them at the time, they wanted to be this alternative power


source in the world economy, there are such disparities now, and you


cannot horse these things together, apart from India and China, Brazil,


Russia and South Africa, their economies are not doing well, and so


there is also a divergence from the past. Wall Street Journal, Nissan


hopes drivers will turn to its new electric car... The Chief Executive


of Nissan has pushed this he thought there would be selling 1.5 million


electricals at least by now, and they are selling about one third of


that, so big hope for the new one, riding on the coat-tails, doing even


better than Tesla. They are jealous of Tesla's success. It is a market


car, it should do quite well. We will keep an eye on it, we will


watch this space. Thank you for your company today. We


will both be here tomorrow. We will see you, goodbye.


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