Return to Transcripts main page
QUEST MEANS BUSINESS
French Workers Strike; Battle for Liverpool Goes to Court
Aired October 12, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: It's a battle of the wills. French workers are on strike and plans to make them work longer.
It's a battle for Liverpool that's reached the high court. Rival bidders are now entering the fray.
And they have been battling it out on social media why The GAP had to scrap its new logo.
The battle starts now, I'm Richard Quest, and I mean business.
Tonight France is on strike and there is no telling, seemingly, where it will end. Workers who walked out today could well be back out again tomorrow. They'll stay out as long as union members are voting to do so. Because each day there will be ballot deciding whether to go on with the action; it is because of a bid by the government raise the retirement age in France, the age at which you can receive the state pension.
This was the scene in Paris earlier. As we workers marched through the city. Flights and train services suffered severe disruptions. Teachers and students stay away from school. The Eiffel Tower, too, was closed. Now to show you what's been happening, for example, the Port of Marseilles, 85 ships, including more than 50 oil tankers are awaiting off shore and were unable to dock. Port workers there have been on strike for more than two weeks over harbor reforms. Refinery workers are joining the walkout across France and it all raises the prospect of fuel shortages by the end of the week.
To Paris now, to start our coverage and our correspondent Jim Bittermann is in the French capital.
Jim, obviously, public services and railway and transportation was affected but how widespread was it elsewhere in the economy?
JIM BITTERMANN, CNN CORRESPONDENT: Well, I think, you know the transportation sector, it is more of an inconvenience than anything else. People weren't able to get on the trains or planes that they wanted to take. About a third of the flights were canceled out at Charles De Gaulle Airport, about a half at Orly today. And in the metros and subways in Paris there were problems in a number of lines, some of the cross country trains were affected so, but those were mostly bothersome kinds of things that lead to crowded conditions. And people did have to cancel some of their travel plans.
More toward the economy, though, are the things that you mentioned there, towards the end of your lead-in, and that is that the port workers on strike who began their strike on other issues have now joined this strike, and that is causing problems in terms of shipping. And most importantly the refinery workers on strike, most of the refineries now across the country are on strike.
There are reserves, of course, the country can get along for a few days, but some of the management are estimating that within about a week or so you are going to start seeing fuel shortages develop. That is the kind of thing that could really put pressure on the government. Really, immediate pressure on the government, Richard
QUEST: OK, how much sympathy is there in the wider economy for this? Everyone is affected by the-by the raise in the retirement in the state pensions, but of course these cuts will hit disproportionately, state workers.
BITTERMANN: Well, at least over the weekend, before this began, this last round of strikes began, a public opinion poll indicated somewhat surprisingly I think for some of us here that about 70 percent of the French were for the strikes; and not only that but for a hardening of the labor actions against the government. Now, that could well temporize as the situation develops here, if it goes on for any length of time. But at the moment, one of the things that has got people's backs up here is the fact that these pension reforms are being sort of pushed through the parliament, using Sarkozy's majority in both the parliament and senate, to sort of push them through without regard of the-for the kind of objections that are being raised by the left wing parties and what not, the people who are opposed to the pension reforms, Richard.
QUEST: So, as people in France tonight, look out into the future, President Sarkozy seems to be sticking to his guns, on one level. The battle lines are drawn. The resigned grimace that you are giving me back, Jim, suggests more of the same and similar across the board.
BITTERMANN: I'm afraid so Richard, the fact is the prime minister said today there were no further concessions possible. They did make some concessions earlier as this bill was being passed around through the national assembly and up through the senate. They made some concessions on the margins of the legislation, but they have said now, today, they have said very clearly that there are no further concessions possible. So, really there is no way that this looks like this confrontation can be headed off, at least, right now, Richard.
QUEST: All right. Jim Bittermann joining me from Paris. Many thanks, Jim.
Now, shares on France's benchmark index ended the day lower. The scenes in Paris weren't the only reason oil shares headed down around the region. Crude prices fell. Investors awaiting to find out what is going on inside the U.S. Federal Reserve. The minutes of its last meeting gives us an indication-and indeed those minutes have now just been published. I'm plowing through them at the moment, because it is always in the minutes. The devil is in the detail, as they discuss and decide. We'll be talking to Peter Morici in a moment. It's not so much the vote, its all to do with what they said as they came to their decision.
Look at the Dow Jones industrials, which is open at the moment. Off 20 points, now under 11,000, and that seems to be where it is headed. But we hovering very nicely. It seems to be holding their own for the time being. We're going to talk more about this, all this in a moment.
From a boardroom spat to a courtroom showdown. Liverpool's American owners are seeing red. It is taking place at the high court in London.
QUEST: Now bear with me. The minutes of the Federal Reserves meeting have just been released. It was held in late September. Now as you look at the comments from the Fed it is a nine-page document. From-we know how they voted, they voted to not only keep the interest rates where they were, but the minutes show the FOMC debating the need for fresh new stimulus measures. And time and again, the minutes talk about a number of participants commented on this. Participants agreed on that. Nevertheless, many participants saw evidence that current unemployment rate was considerably above levels. So, for example, what its clearly showing is that many Fed policy makers are now of the opinion that quantitative easing, printing money, may be closer-well, after the next meeting which is just after the election.
(DESK BELL CHIMES)
Our good friend, Peter Morici is in Washington, joins me now. Peter as I look at these minutes, nine pages of them, there is an undertone within them that more members are coming to the conclusion QE, PDQ. As they say.
PETER MORICI, UNIV. OF MARYLAND: Absolutely. It seems to be that is the policy option of choice. And that is until earlier in this year the Fed was buying mortgaged-backed securities, helping finance the housing market. And since that time as those securities matured it has been going into Treasuries. Now, the question is, does it want to increase its portfolio further. It is a little bit more than $2 trillion, does it want to take it up to $2.5 trillion and buy more mortgage-backed securities in stages over say the next six months. That would push mortgage rates even lower. And it is an open question as to how much that would help, where the monetary policy is all played out.
QUEST: But how far was the political aspects of this involved. You had a September meeting with a November midterm. They can come in November, after the midterms, and their political frigidity (ph) remains intact.
MORICI: Absolutely. The Fed does not like to act in the fall of a year divisible by two. They don't want to act in September, October and appear to be trying to influence the outcome of the presidential election. The fact of the matter is no one believes that anything the fed can do, anything the president or Congress can do, can have an immediate affect. But they meet again right after the election. Look for QE2 to leave the port then and start sailing.
QUEST: Hey, I've just found a part of the quote. I want to just go through there, while you were just chatting there. It says, "Members generally thought that the statement," the one I'm reading now, "should note the committee was prepared to provide additional accommodation if necessary. And that they, members generally felt that that might be appropriate before long. So there it is. It is laid out bare for us all to see, isn't it?
MORICI: Absolutely. The real question is do they do it through the interest that they pay on reserves, by eliminating that, to try to push the banks to lend more? Or do they simply go directly into credit markets? I'm betting that they'll go directly into credit markets, quantitative easing. Not rely on the banks to push down rates further. They are basically going to bend the yield curve down.
QUEST: And as they do this, does anybody bear in mind Bernanke's warning that QE2 is a greater unknown that original QE?
MORICI: Absolutely. You know, that has to weigh on their minds. Bernanke's textbook on macroeconomics says that when exchange rates are fixed, monetary policy is a very limited tool. The quote in the textbook is much stronger than that. And with the exchange rate, vis-a-vis the Chinese yuan and many Asian currencies essentially fixed, I mean a crawling peg is essentially fixed. We're living in a world like Bretton Woods, where a country with an over-valued currency can only use monetary policy so far, to jump start his economy.
I mean, the bottom line here is the real action has to take place at the Treasury on exchange rates. The president says we have options in that regard. You know, former Assistant Secretary for Monetary Affairs Fred Bergsten says we can intervene in markets. That is the shoe that everybody is waiting to see fall, but very few people think this Treasury will take those steps. So for now the Fed muddles through.
QUEST: Final brief question: Are you a soccer supporter or a American football supporter there, Peter Morici. Which do you prefer? Because we have our next story on football-which I would call football, you would call soccer.
MORICI: Oh, I prefer American football myself simply because I grew up with it. And I'm a die-hard New York Giants fan. You know as long as the Giants are winning Peter has a happy fall.
QUEST: Many thanks. Regardless of QE, many thanks, Peter Morici joining me from Washington.
MORICI: Take care.
QUEST: Raising the issue, though, because the stakes have been raised in the battle for Liverpool Football Club. As the club's future is being hammered out in Britain's high court. One bidder is upping his offer for what has been one of the most venerable teams, and venerated teams in England. The club's current owners, Tom Hicks and George Gillett, owe nearly $450 million on the club. That is what has been borrowed. And most of that money is owed to RBS, Royal Bank of Scotland. If they can't pay back the money, or refinance by Friday, the bank, RBS, could take over the team. So far, so good.
Hicks and Gillett are trying to block the club's sale. The club is- the board of Liverpool has said they are going to sell to John Henry, the owner of the Boston Red Sox. His New England Sports Ventures has offered $476 million. RBS, the bank, has signed off on the deal.
You with me so far?
Now, someone else has come into the battle. His name is Peter Lim; he's the Sin GAP ore businessman. He has now increased his offer by saying he'll pay $500 million for Liverpool.
So, we now have this situation: The board wants to sell to one person. Hicks and Gillett want to sell to somebody else. Who has the final say? Our Correspondent Phil Black was inside the courtroom. I asked him if Hicks and Gillett own Liverpool, what is the argument about whether they can sell or not?
PHIL BLACK, CNN INT'L. CORRESPONDENT: Well, it all cuts to the heart of what was being argued in court today, Richard. Essentially it revolves around what the court heard was a corporate governance agreement, signed between the Royal Bank of Scotland and the club's American owners, at the time they put the club on sale. And what it effectively did was hand responsibility for any potential sale over to the board, led by an independent chairman.
So, it comes down to the board to sign off on the final offer in accordance with that agreement. And both sides argue that that agreement has been broken in different ways, Richard.
QUEST: Which, of course, explains why Martin Broughton, and why Hicks and Gillett wanted to change the board composition.
BLACK: Yes, indeed, that's right. And this is where the bank alleges that Hicks and Gillett breached their side of the contract. They say that according to their corporate governance agreement. Hicks and Gillett have no say anymore on the composition of the board. They are not allowed to hire, they are not allowed to fire. And they also claim that under that agreement they are not allowed to block a reasonable sale of the club. And of course, the rest of the board, the RBS, they say this is a reasonable sale.
QUEST: And how, I mean, one never knows how a court case will end up, but were there any leanings on indications as to which way the wind is blowing?
BLACK: It is difficult to say, really. We know we're going to get a definite decision on both arguments at 10:30 local time tomorrow morning. The one thing that Hicks and Gillett's lawyer never really said out loud was that they want what they consider to be the best possible offer. They want to be able to consider the best possible, because ultimately they want the most money. The judge put that to their lawyer a few times. He sort of talked around it, essentially. But we'll see just which way the judge's decision falls here tomorrow morning, Richard.
QUEST: Lots of lawyers in court, were there?
BLACK: More than I have ever seen, I think. Rows and rows of lawyers, senior QCs, their junior compatriots, and it would seem their whole legal staff. But the court was packed anyway. There was all these lawyers, surrounded by journalists, standing right up against the walls. And then there was, of course, also a number of Liverpool Football fans who journeyed from Liverpool to stand in the court in these very squashed, tight conditions, and listen to hours and hours of legal argument.
QUEST: Is there any finally, and frivolously, any suggestion which team the judge supports?
BLACK: Hard to say. The judge had a pretty good poker face on throughout the day. He asked some very incisive questions, as they do, of both sides. But I wouldn't hasten to guess at this stage. It is fair to say, certainly, that the RBS lawyers seemed pretty confident, if not perhaps, a little cocky. The walked into this very confident. All the language they used throughout was certainly pointing to that very strong belief that they had the winning argument here.
QUEST: Phil Black joining me earlier, from the high court.
I think I'd give a fiver to know which football team, as well, my lord on the bench, Mr. Justice, who ever it is on the bench, supports. Whether your business is football or finance it is a familiar story. It is a classic case of boardroom fighting and contract law. Jim Boulden has followed this closely.
We now know-I now understand why the board is involved. And why they can't just sell it, it is because of this agreement.
JIM BOULDEN, CNN FINANCIAL CORRESPONDENT: What is so interesting is that Justice Floyd now has to look at this, not as a sports story, at all. In fact, if you look at this case, this is the Royal Bank of Scotland versus Mr. Hicks and Mr. Gillett. Not-because they are the ones who took the loans, not Liverpool Football Club. They are the ones that owed the debt. They are the ones who need to pay back RBS. So, RBS has taken them to court, because of a breach of contract. It is that-I say it is that simple, but if you know what I mean, it has nothing to do with football at all.
Did they breach their contract? Their agreement back in April when they signed the deal with RBS that they were going to sell the club? Well, it kind of looks like Gillett and Hicks are saying well, maybe they did breach the contract, but they don't think the process that was going on was fair.
QUEST: And the idea of moving the board around, or sacking half the board.
QUEST: I assume is to get their own people on the board so they'll vote for whichever Hicks and Gillett want?
BOULDEN: When this first came about everyone kept thinking, wait a minute, if you own the club.
BOULDEN: And there are five members of the board, how could you not control the board? Well, they only had one seat each, then you had the two independent directors who have worked for Liverpool. Then you had the chairman that was brought in by the Royal Bank of Scotland. That is how come. So they didn't control the board, but they think, well, we own the club, we can sack who we like to sack. But if they hadn't signed that deal with RBS, says the lawyers in court today, you could have sacked anybody you liked. But they didn't pay back the loan when they were supposed to so therefore they lost that, sort of, right, to be able to sack the board.
But that is-could you imagine any other company, when you owned 100 percent of the shares-100 percent of the shares.
QUEST: That's the point. That's it!
BOULDEN: You don't control the board and you can't decide who you are going to sell to. Well, that is why they are saying this is ridiculous. We have-they think-better offers coming through on the last couple of days, we now know some of the names of these people coming through. And they think those offers should have been looked at. But the Royal Bank of Scotland says we had a deal.
QUEST: I'm a huge football, or soccer, aficionado.
BOULDEN: Even though you are from Liverpool?
QUEST: I was about to say, even though I was born and brought up in it. I actually supported the other lot.
BOULDEN: The Blue.
QUEST: I did. I supported the other lot. Growing up I lived closer to that bit.
But look, I have completely forgotten the question. No, I know what I was going to say.
But from Liverpool as a football entity, it is a pretty abysmal year.
BOULDEN: It is. It is an abysmal year on the pitch. And you can never say that the players are immune from this. Because how can they be immune from this. They lost their coach. They have had all these arguments. Arguably the players that been bought and brought in this summer, have not been of the caliber of players that Liverpool has lost.
QUEST: Who do you support?
BOULDEN: Arsenal (ph).
QUEST: At that point, we'll say thank you, very much, Jim Boulden.
QUEST: We're going to take a look at how social media is empowering you and me against big business. Yet, The GAP has discovered the GAP between customers and their view of the world can often be quite large. It is all to do with this little logo.
QUEST: The social networks have spoken.
(DESK BELL CHIMES)
The public are saying no. GAP has learned that you can only take the wrath so far. That is enough of that.
GAP is known for its casual look clothing and the simple square logo on the right. That is the old logo. But when the company put a new version on its Web site, last week, the other one on the left, there was a customer backlash on Twitter and Facebook.
Now GAP defended the new look. Saying that it brought the company into the modern age.
On Monday, GAP did a U-turn saying it would revert to the original logo. They-one of the big complaints, which I really had not thought about it, they call this Helvetica. This is the Helvetica type font. And everybody says Helvetica wasn't a appropriate to use in this situation. But there you are. Those are the two logos.
Now, GAP-this sort of fiasco over logos and branding isn't the only example. If you'll join me, over in the library, you'll see. Take for example, this one. Tropicana with its iconic orange, and its straw. Now Pepsi, which owns Tropicana, replaced the simple packaging in a $35-million deal they got rid of this. They made it-according to the company, by e- mail, and phone, there was a backlash. The company said people had a deep emotional bond to the old logo. So, they kept it like it was. That is what happened, $35 million down the drain.
United Airlines, which of course, now, has a new logo, of the Continental variety. But the reason we're showing you that logo is they crush a guitar owned by a musician, David Carroll (ph). And they consistently ignored his request for compensation. Then Carroll made a music video called, "United Breaks Guitars". It went viral. United paid up.
This one is interesting, Doritos. Now, Doritos, which is the chip maker. I mean, chip as in chips you have with salsa and guacamole and dips and things. Well, you know the sort of thing I'm talking about. Well, anyway, consumers create adverts for Doritos from the "Super Bowl", since 2007. Amateurs have submitted adverts online. The Web sites lets other people vote. And before long you have a very good dialogue between consumers, the advertising, and the company.
These are all examples of where the company has perhaps failed to deal with the reality of that connection.
GAP has now learned, to its cost, exactly what it means.
Peter Shankman is a branding and specialist-media specialist. He joined me on the line from New York. He is the founder and chief exec of Heat Company. I asked him whether The GAP logo debacle-well, was it just a publicity stunt by GAP?
PETER SHANKMAN, BRANDING EXPERT, CEO, THE GEEK FACTORY,: Well, you are always going to have people who think it is-anything is a publicity stunt. But you know, when you look at it, it really was a case of waffling on The GAP's part. They had a very simple project to do. They wanted to change and update their logo. And they could have done what normally-it is one thing to crowd source and idea, it is another thing to crowd source an idea that is already known and respected by millions upon millions of people. You are always going to get dissension when you get crowd source.
The problem with GAP was I think they didn't go to their main audience, the people that buy from them on a regular basis. They went-they crowd sourced on the Internet. They went to random people, they said, what do you think? And it really sort of diluted the whole concept of what The GAP is. You had people chiming in who may have never even shopped there. And it just-it just became a mess. It was just easier, at the end, for The GAP to say, you know, what, we're going away. Back to the old logo.
QUEST: I mean, the speed with which they capitulated is somewhat astonishing. It hardly shows much backbone, does it?
SHANKMAN: Well, it really doesn't? I always joke when I talk about this kind of stuff to universities and things. I always say, imagine what would happen if new Coke, unveiled new Coke, at the time of the Internet. You know? It would have lasted maybe for about four sips, instead of the five or six months that it took to pull the brand.
Never underestimate the speed in which a unified crowd can hate something. It really is amazing what the Internet has done. The majority of it was on FaceBook, but then you had Twitter linking to Facebook. You had Linked-In linking to Twitter and FaceBook. And then, of course, you had the news media focusing on all three. So within 24 hours it became the perfect cyclone of information, all damning toward the brand that was GAP.
QUEST: Should they have stuck with it?
SHANKMAN: Well, I think it wouldn't have hurt them to stick-look, people have an incredibly fickle memory. You know, and what they hate last week they are going to forget about as soon as something else comes up. You know, the people who were hating Lindsay Lohan are now up in arms about Miley Cyrus. So we had a very fickle memory as a society. But, you know, in the end there were so many people really, really upset with the logo. And look, let's face it, the only time Helvetica should be used is on the New York City subway system. Other than that, you really sort of want to stay away from it.
And it was nothing. It was a logo. It was the word "GAP" with a little blue box. Someone said it best on Twitter. They said, this looks like this was created with Microsoft Word in 1992. And for a crowd sourced application, you really would have expected a little bit better. Had it been a better logo, a little more edgy perhaps, I think they should have stuck with it. But this could have been done by, you know, a 16-year-old intern on an old Macintosh SE.
QUEST: Finally, what lessons do we learn, do you think from this?
SHANKMAN: I think the number one lesson is listen to your audience, go internally first. Go with your audience. Go with the people that shop at GAP. Know your audience and start with them before you crowd source it out to the masses and make a big media production about it. Go with a few 100 people within your stores that use you on a regular basis ask them what they think. Then bring it out, slowly and slowly and slowly. And by the time you really do have something to show, then bring it out to the masses. The Internet will be very, very mean, very, very quick. You have to have your ducks in a row before you go live.
(END VIDEO TAPE)
QUEST: Now, earlier today, I saw an interesting discussion piece -- an article on this branding issue. The author lists five things about what the Gap situation teaches us about brand management. Consumers own brands, not management, for example. I posted it on my Twitter site, Twitter.com/richardquest. Join in. Have a listen. Have a read and perhaps give me your thoughts and Tweet back to me.
Almost there -- 33 trapped miners are preparing to be pulled from freedom after a 68 day ordeal. These are live pictures from Chile.
We'll be back in just a moment with that story.
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And here, the news always comes first.
And the world is watching tonight as freedom could be just hours away for Chile's trapped miners. Chilean officials say they hope to start hoisting the 33 men out of the collapsed San Jose Mine by the end of the day there. They'll be brought up one by one in the Phoenix capsule, fitted with oxygen masks, hard hats, communication equipment. Officials believe each extraction will take round about half an hour to an hour each, depending on the condition of the miners involved.
French labor unions are on strike. It's the fourth time in a month. They are protesting against government plans to reform the pension system. About one in five regional trains are running in France and more than a third of flights in and out of Paris have been canceled. The unions object to the raising of the retirement age from 60 to 62.
A national day of mourning in Ukraine after a train slammed into a bus and killed at least 50 -- 42 people. Officials say the unguarded crossing where the collision happened was close to cars and warning lights were on. The driver, apparently, of the bus ignored them and survived the accident.
A hearing for the man accused of gunning down and killing 13 people at the U.S. Army base in Texas last year has adjourned just after it got underway. Lawyers for the U.S. Army major, Nidal Hasan, had asked for the adjournment. The hearing will determine whether Hasan will be court- martialed, which could potentially lead to the death penalty.
The top story now. And for weeks, we have followed their plight -- days we have wondered just when the rescue would begin. Now, it seems the 33 trapped miners trapped for 68 days below ground in Chile, their ordeal is starting to come to an end.
Tonight, they are -- they will begin to be winched from the mine 600 meters below ground. These are live pictures. I suspect that is the mine -- the winch head that we are looking at. It's a delicate operation which will start late on Tuesday night. Each miner will be hoisted up and assessed. They'll be rescued in a capsule called the Phoenix. The concrete base for the winch system that will raise and lower the capsule is now being built and hardened so that when it dries, the rescue proper can begin.
Laurence Golborne, the Chilean mining minister, had this to say about the impending mission.
(BEGIN VIDEO CLIP)
LAURENCE GOLBORNE, CHILEAN MINING MINISTER (through translator): We're not yet about declaring mission accomplished. We wanted to make sure we met the necessary conditions to carry out a rescue attempt. Until the day before yesterday, we didn't have a tunnel. What we did here was to build an alternate rescue shaft. This is what enabled us to keep these miners alive.
(END VIDEO CLIP)
QUEST: Now, how exactly does this operation work?
Come over here to the big screen and you will see what I'm talking about.
Now, here we have -- as you can tell, it's complex. But this is the way it works. This is the Phoenix rescue capsule that has six hours before the mine's -- before the rescue starts. Each miner will be switched to a liquid diet of liquids and minerals. Then, one by one, in this capsule, with oxygen, communications, they will be brought to the surface.
There you see it one more time again. The Phoenix is the rescue capsule. They are interesting, they are concerned, to some extent, obviously, about those who are slightly ailing. They are concerned about those people who -- those miners who may have sores. And that, of course, will be their concern in the hours ahead.
So that capsule is just basically about the width of myself. It will be used to pull the men up to safety. And each trip will take about 15 minutes.
Let's go to the -- to Chile and our correspondent there is Karl Penhaul.
He joins me now -- Karl, the excitement and the mood must be -- well, the tension must be phenomenal.
KARL PENHAUL, CNN CORRESPONDENT: It absolutely is, Richard. And I can see it on the faces of the families, the families that we've got to know so well over the seven weeks that we've been here. And one of the miners' wives was saying to me, she said, you know, of course, I'm happy. My husband is coming out. But she says, I'm nervous. I feel stressed. There's really not even a word that I can put on this.
And she said, to be honest with you, I've called a friend of mine to see if she can bring up a couple of tablets for me, just to calm my nerves. And I think a lot of -- a lot of the family members are feeling exactly the same.
The other thing that's adding to that threat is that we don't know exactly what time the first miner will come to the surface. The mines minister, Laurence Golborne, though, certainly said that all systems were pretty much go.
This is what he had to say.
(BEGIN VIDEO CLIP)
GOLBORNE (through translator): With regards to the rescue operation itself, everything is being prepared for this event. We have installed the lifting system. We've built the foundations or -- for this. This was done last night, around 9:00 p.m.. This morning, the concrete is already settled and we are anchoring the lifting system and the connection with the winch that is going to move the rescue capsule.
(END VIDEO CLIP)
PENHAUL: Now, we know now that that concrete on that platform has hardened. We know that the winch and pulley system is in place. And I believe, as you were saying, that those are some of the pictures that the government is showing us from the extraction site. They themselves said they would put those pictures up six hours before the extraction process started.
So minimum, I would say, we're six hours away from extraction. Laurence Golborne, the mines minister, has said that he hopes to have the first of the 33 back on the surface by midnight local time tonight -- Richard.
QUEST: When they -- when they get back up -- please God -- above ground and they're on safe, firm territory, Karl, they are heroes. There will be many who wish to make commercial advantage, whether it's from films or books or stories or buying the rights.
How much of a concern is this, that the circus is about to enter town?
PENHAUL: Well, certainly. And I'm going to get our -- our cameraman to show you around a little bit. You know, talking about circus, when I first got here seven weeks ago, there were probably eight or nine different media organizations here on a permanent basis and one or two popping in from time to time.
Now, there are 1,500 journalists from 39 different countries representing 300 different media outlets. The media circus, in a sense, has already begun.
But you mentioned the commercial propositions to the miners.
QUEST: Oh, well. Well, there we are. Those are pictures of the -- the top of the mine shaft, we believe, the -- the head of it. What a shame. We were -- we were just getting to the business bit with Karl.
Karl, we lost you for a moment, but I believe you're now back with me.
We were just getting to the interesting bit...
QUEST: -- as you were going to describe the commercial opportunities for these people.
PENHAUL: Absolutely. But I saw a letter from one of the miners sent to his sister only this morning. And he says, textually, in that letter, please tell them, the answer to the requests for an interview or even an exclusive is no. He said the 33 of us have taken a pact of silence. He said we have taken a vow of silence. We will never tell what has gone on in this mine.
I don't know what that is about, Richard. His sister couldn't exactly tell me. I do know, over the last few weeks, some of the miners have complained in letters to their families that they believe that this has been treated a little bit like a reality TV show. And I don't know whether, down in that mine, there have been arguments and discussions that they would really best forget about. We really haven't heard too much of that publicly. But maybe stuff has gone on there that they really don't want to talk about too much and they want to put this behind them, even if that means turning down big offers for interviews, for films, for books, that kind of stuff.
We're going to have to wait and see on that one, Richard.
QUEST: Right. Finally, Karl -- and, again, you know, we are a business program, so we have to look at that side of it. Tell us, are many companies in Chile -- are many commercial companies trying to attach themselves to what has been an outstanding public rescue operation?
PENHAUL: Yes and no. They've been trying to do it in a very discrete fashion, I would say. It's been -- this has obviously been a multi-million dollar rescue effort. The Chilean government itself, so far, is not putting a figure on it. They just say that human lives are way more important than the cash involved.
Blat the drilling companies, for example. Schlumberger, the oil services company, one of the biggest oil services companies in the world, was there providing the drill bars for the Plan C drill. Centerock Inc. of Pennsylvania was providing the drill bits for the Plan B drill.
There are Canadian companies there. There are the owners of the Plan C rig and also, in terms of the miners' clothing, we understand that the high tech sportswear that they've had to wick away the sweat and such like, we understand that's been provided by North Face. And we understand that when the miners come up to the surface, they've got to protect their eyes in case of retinal damage from the bright sunlight. They're going to be wearing Oakleys.
So you can imagine that maybe, down the line, some of those companies may want to cash in on the roles that they've played in this -- Richard.
QUEST: Karl, you're going to need that voice of yours in the hours ahead. So you'd better go and have -- have a drink of your own, as you talk us through the detailed maneuvers as they bring them up.
Karl Penhaul doing sterling work for us in Chile tonight.
Now, in a moment, we'll be looking at the priciest of tourist destinations -- space. Virgin Galactic is hoping to bring suborbital travel to the masses. We're going to talk to that, to the company and to one of the com -- the customers, who's actually booked well, not one, but three tickets.
QUEST: It probably doesn't count as a giant leap for mankind, but Virgin Galactic has reached a major milestone in its efforts to take tourists into space. On Sunday, Spaceship 2 -- that's the bit you can see in the middle of this picture. You've got the two bits on the outside and the Brit (ph) in the middle of this picture. You've got the two bits on the outside, the Brit (ph) in the middle. It made its first manned test flight. It detached from its mother ship, White Knight Two, at an altitude of 14,000 meters. The pilot then glided it back home to the Mojave Air and Space Port in California. And there it goes.
They'll have to do that many more times, of course, before the fare paying passengers will be put on board.
Virgin says 370 customers have put down deposits for the $200,000 tickets to the edge of space. One of them is the property mogul, Nick Candy.
I joined -- I was joined by Nick Candy along with Stephen Attenborough of Virgin Galactic's astronaut program.
And I asked them how many more test flights -- I asked Stephen -- would be needed before customers get to experience the final frontier.
STEPHEN ATTENBOROUGH, ASTRONAUT RELATIONS, VIRGIN GALACTIC: The test flight program started in December 2008 and it will continue until we're absolutely certain that we understand the vehicles and that this trip is going to be as safe as it possibly can be. But it was a good -- you know, it was a good milestone yesterday, an important one.
QUEST: You've got three tickets on this -- on this creation. You have a vested interest in its safety but it -- and its success.
Are -- are you comfortable with what you're seeing at the moment?
NICK CANDY, VIRGIN GALACTIC CUSTOMER: In terms of safety, I think having Richard Branson behind it is a phenomenal mark of achievement and success. And I think it will be actually fine. I think the new levels of safety that the private world will bring, rather than the government -- governmental world in this -- in this field will help enormously.
QUEST: You bought three tickets, 200K, 600 in total.
What was the attraction for doing it?
CANDY: I think I've had a number of experiences on land in my life, on sea. And I think it's -- you know, it's to be able to be -- experience and see earth from space and be one of the first 500 astronauts in the whole of mankind to be, you know, up in space is going to be unbelievable.
QUEST: I know you've done the sermons and everybody else who asks you, the -- how many minutes of weightlessness does he get?
ATTENBOROUGH: About five or six minutes at most.
QUEST: Right. So -- so you've done -- you advertised that in between the cost.
Do you still think it's worth it?
CANDY: Definitely. I'm really looking forward to having it. It's worth it. And, you know, I just bought two tickets for my brother and his new wife.
You know, what do you get the -- the guy and the couple that have got everything on planet earth?
You send them to space.
QUEST: When is he going to be a -- I know you're going to tell me when it's a -- when the first -- what, realistically, is the date that you are now looking at?
ATTENBOROUGH: Well, I -- you know, I am going to give you a predictable answer to that, it's the -- which -- which is that we -- we're not going to put a date on it. I mean I -- I would say that the test flight program is going incredibly well. You know, we're six years into this project. We're on the final stretch. I hope that we'll put the space ship into space next year as part of its test flight program. And then it will be shortly after that that we'll start commercial operations. So we're not that far away.
QUEST: How worried are you about the competition, because Boeing has now signed up as competition?
ATTENBOROUGH: Well, you know, I think, like every business that we run at Virgin, we'll welcome competition. You know, it -- it will be -- it will make the business better. It will make the industry better.
As far as the (INAUDIBLE)...
QUEST: Right. But let me ask you...
QUEST: If the competition suddenly offered it quicker and said that you could have a year, would you ask him for your money back so you could go elsewhere?
CANDY: No, I'm pretty comfortable with Virgin as a brand and what they've achieved already and where they're going. I mean they've done lots of research. They're six years in, as they say. It's not something that they just dreamt up overnight. This is six years. And it -- it's still going to be several years, probably, still, before we all get up there. And that's fine. You know, we want to get up there safely and we want to return safely. You know, I mean...
QUEST: That's right. It's no achievement to send them up. It's...
UNIDENTIFIED MALE: Right.
QUEST: The real achievement is...
ATTENBOROUGH: No, we -- we only sell two way tickets, you know.
(END VIDEO TAPE)
QUEST: Two hundred thousand dollars is one way to have a break. But for those of us of more modest means, how about one of these -- have a break, have a Kit Kat. For 75 years, this has been one of the top selling biscuits in the world. Nestle says every five minutes, enough Kit Kats are made to out stack the Eiffel Tower. When we return, the Kit Kat conundrum.
QUEST: Now, this is one of the most well known signs in the confectionary industry -- the Kit Kat. And for 75 years, we've been enjoying them around the world. Have a break, have a Kit Kat was an extremely successful advertising slogan.
But why, now part of Nestle's, is Kit Kat still so successful?
Well, if you take a look, Kit Kat has just been celebrating 75 years.
And as Ayesha Durgahee now explains, it's part of the tradition of the biscuit that's the reason for its success.
(BEGIN VIDEO CLIP, COURTESY NESTLE UK)
UNIDENTIFIED MALE: Have a break, have a Kit Kat.
UNIDENTIFIED MALE: What do you think?
UNIDENTIFIED MALE: You can't sing, you can't play, you look awful. You'll go a long way.
UNIDENTIFIED MALE: All right!
(END VIDEO CLIP)
AYESHA DURGAHEE, CNN INTERNATIONAL CORRESPONDENT (voice-over): Kit Kats have been giving millions of breaks for decades -- fingers of wafers and chocolate that started out as Chocolate Crisp in 1935, made by Rowntree's. The confection was renamed Kit Kat in 1937.
Then came the tag line that offered an excuse to take time out and take a bite.
UNIDENTIFIED MALE: Well, no rest for the wicked.
DURGAHEE: Bought by Nestle in 1988, Kit Kats are still made at the original Rowntree factory in York. Three million Kit Kat bars are produced here every day.
DAVID BROXUP, KIT KAT PRODUCTION MANAGER, NESTLE: In total on this side, we made 52,000 tons. Twenty-seven percent of that volume is exported. The Middle East is probably our biggest customer.
DURGAHEE: David Broxup has been working at the Kit Kat factory for 38 years and has seen a lot of changes, from hand feeding the chocolate into the machines to a completely automated process.
But what about the taste?
BROXUP: We basically have kept the original Rowntree recipe. There might have been small tweaks here and there, but predominantly, the recipes are identical to it was when Rowntree made it.
DURGAHEE (on camera): Can I have one of them?
BROXUP: You're not allowed to eat on line, I'm afraid.
DURGAHEE: Oh, my.
BROXUP: But you can taste them in our tasting room, that's for sure.
DURGAHEE (voice-over): Kit Kat is now sold in 70 countries, with different flavors to suit local taste buds. Green tea Kit Kats in Japan or peanut butter flavored Kit Kats in the U.S. Although consumers have been cutting back, chocolate remains a small and affordable indulgence. Between 2007 and 2009, chocolate sales in the U.K. increased by 9.2 percent, reaching an estimated $5.6 billion. And it's projected to grow even further, to $6.4 billion by 2015.
UNIDENTIFIED MALE: The thing about confectionary, especially in markets like the U.K., is that it's -- it's broadly recession-proof from a demand point of view. We have, also, real big challenges on our import costs. Cocoa has never been more expensive in the last 30 years. So we are experiencing some big food cost rises in cocoa at record highs.
DURGAHEE: Whether it's chunky or caramel, four fingers or two, 75 years on, Kit Kat is still as sweet as ever.
Ayesha Durgahee, CNN, York, England.
(END VIDEO TAPE)
QUEST: Oh, it's always worth celebrating a Kit Kat at a break.
Now, pictures live from Chile now. Let's have a look at the -- the arrival of the Chilean president, Sebastian Pinera, who is now being briefed by the -- the mines minister and by the various officials from Geotech and all the -- and Schlumberger and all the other companies for the -- who have put together this rescue operation. It is also expected the Bolivian president may be there, as well, for the one non-Chilean miner who will be brought to the surface in the next 48 hours.
To remind you of the way this pans out, they -- the concrete on the winch has now been set. It's believed that at midnight, they will begin the process of extracting the miners one by one. They've named the first miner who will be the first one. And bear with me while I just see. He's a 31-year-old Chilean miner, Florencio Avalos, according to one official, who will be the first to the surface. They will be brought up to the surface in three different sets of groups -- the most able-bodied, the weakest and then those that are beveled to be the most psychologically strong.
Add into that maelstrom -- add into that maelstrom, also, the fact that two rescue oper -- workers will have gone down there and now and will be the last ones out, you get a picture that over the next 48 hours, we're going to be seeing a lot of these pictures. But as I say, the picture amount going to leave you for the second with the Chilean president, who is now being briefed on the rescue operation at the mine.
I'll have a Profitable Moment in just a moment.
QUEST: Tonight's Profitable Moment.
So Gap has ditched its new logo within days because a few people made a fuss. And I'm pretty sure the rules of branding may have changed. The world of Twitter and Facebook became more powerful. Companies may ignore letters and phone calls, but it's hard to close off an avalanche of bad comments swirling in the digital ether. Gap said it didn't do enough to engage with the online community.
Huh. Maybe Gap should have been a bit stronger, sticking to their position on the new logo. Falling over just because those on social media who have the time and energy to vent their spleen.
Whichever way you look at this, Gap comes off badly. It was either a publicity stunt or they didn't do their research badly or they rolled over too quickly. As they used to say in the old days, it's no way to run a railroad.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest.
Whatever you're up to in the hours ahead -- hmmm, the bell or the Kit Kat?
I'll see you tomorrow.