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Cyber Heist Charges; State of the European Union; Cameron Calls for Reform; Britain's Role in Europe; European Markets Slightly Up; Slovenia Austerity Measures; Dow Inches Up; Coke's Calorie Counts; Dollar Reaches 100 Yen Mark; Make, Create Innovate: Online Translation

Aired May 9, 2013 - 14:00   ET


RICHARD QUEST, HOST: You can call it a global cyber heist. The New York fraud that netted $45 million.

Not so happy Europe Day as the riffs widen. Tonight, I talk to the British business secretary.

And Coca-Cola. It offers a sweetener in the fight against fight -- fat, even. Tonight, the president of Coke Europe joins us.

I'm Richard Quest, and I mean business.

Good evening. It was a theft from the world's financial system that caused $45 million in losses, according to US prosecutors. But here's the interesting thing about this theft. There were no armed robberies, apparently no guns were used, no vaults were blown open.

The authorities say it was a crime by computer. This was a global cyber heist, and tonight, seven people have been arrested and charged in New York. Mary Snow is in the city for us tonight. What an extraordinary story this is. Give us a thumbnail sketch of what they did.

MARY SNOW, CNN CORRESPONDENT: Well, Richard, if you were familiar with the movie "Oceans Eleven," the US attorney here in New York is saying that this is being compared to "Oceans Eleven," but the cyber version. US attorney Loretta Lynch says this is the largest theft of its kind that's known about in a sophisticated network that involved hundreds of people.

The target was credit card processors, and here's how the prosecutor described how it works. She said there were two strikes. The first one was in December at a credit card processor in the United Arab Emirates.

The second was in February in Oman. The target was pre-paid debit cards, and that hackers would get into these processors and that they were able to steal PIN numbers and also eliminate withdrawal limits.

Those numbers, that information, was sent to cashers, and the investigation here in New York focused on suspects in New York who are cashers. And in February, the prosecutor says that this was the larger target: $2.4 million was withdrawn as these cashers fanned out across the city, going to ATM machines, withdrawing money.

And in this case, personal accounts were not involved, but the prosecutor says ultimately, in the end, consumers will pay the price.

QUEST: Right. Now, this is fascinating, because what we have here is they hack in, they get the PINs, they change the limits, and they then go and withdraw the money. How did they think they were going to get away with it?

SNOW: And especially since here in New York, the cashers, there is evidence that law enforcement was able to obtain of the suspects posing with cash, right? There were surveillance cameras that also photographed - - allegedly photographed some of the suspects. So, that also helped law enforcement crack this case.

What is unknown, though, Richard, is where exactly the hackers are located, and that's something the prosecutor didn't really talk about because she said this investigation is still ongoing. But the US attorney credits law enforcement in 16 countries with cracking down on this operation.

QUEST: Fascinating story. Mary Snow joining us from New York tonight. What an extraordinary story.

Now, in case you may have missed it in the course of your busy day, today was Europe Day.


QUEST: Happy Europe Day, one and all.


QUEST: As the European Union marks 63 years since the vision began, today leaders are calling for urgent reform while the euro-skeptics are calling for speedy breakup. And all this on Europe Day. Join me in the library.

We start with Jose Manuel Barroso. He is, of course, the president of the Commission, and he gave his State of the Union speech in Florence. He says confidence is key, urgent need for more cooperation, and that the point of which he, of course, is much more in favor of a federal system for Europe. He said in hard times, we must not waste a crisis, and Europe must pull together.


JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: I do understand anxieties and even the pessimism of European citizens faced with a fast- changing, inter-dependent competitive and unpredictable world.

But we have to confront these causes that call for an inward-looking, sometimes nationalist approach.


QUEST: "Inward-looking, sometimes nationalistic." Could he be talking about the British government? David Cameron repeated his call today to renegotiate a British role in the EU. The British prime minister says financial transaction tax will be a mistake, an he says Britain can still change Europe, can reform the EU from within.


DAVID CAMERON, PRIME MINISTER OF BRITAIN: People who say there is no prospect of reforming the European Union, you simply have to leave. I think they are wrong, too. I think it is possible to change and reform this organization and change and reform Britain's relationship with it.


QUEST: That's David Cameron. Unfortunately, the British prime minister is under heavy pressure at home to take a tougher line. A group of his own MPs want to bring his promise referendum of 2017 forward, preferably to this year or next. And they're even trying to amend the legislative queen's speech.

You'll be aware, of course, that a very senior British politician, Lord Lawson, has said he would vote for Britain to leave the union. So, with calls for early Europe and the whole question becomes -- well, that worked extremely well. Just like that. With calls for new Europe, the UK business secretary Vince Cable says the country's Europe dilemma is already affecting investor confidence in Britain.


VINCE CABLE, UK BUSINESS SECRETARY: It is somewhat damaging, and it would be seriously damaging if there were a serious expectation that we were going to leave the European Union. But the chances of that happening are very, very low, and I think most overseas investors understand that very clearly.

And the figures we produced today show that Britain remains the number one investment location for foreign investors in Europe. Over the last year, a 45 percent increase in the number of jobs created or safeguarded, 160-odd thousand. Britain remains a very attractive place for inward investors.

QUEST: So, how would you characterize the current disagreement in the larger part of the coalition, in the Tory party, on this question of a referendum sooner rather than later?

CABLE: Well, it's not my party, so I don't want to take on the role of speaking for them. The formal position is that parliament has agreed, and that's the conservatives and the liberal Democrats, and Labour is banned by this, too, to have a referendum on British membership of the European Union should the constitutional position change, which it may well do, as a result of the changes in the eurozone, and changes that subsequently we have made to British membership.

I don't think anybody would expect that will happen in this parliament. But there may well be some conservatives who want to press ahead rather quicker, and before they know what the outcome of any future renegotiation actually are.

QUEST: The president of the Commission, President Barroso, in his State of the Union today, really says there's only one way forward if this whole thing is going to work, and that is a closer federation of nations, where intergovernmental niceties cannot necessarily -- I'm paraphrasing -- be of concern.

CABLE: Well, that may be a consensus view within the eurozone, because if the eurozone problem is to be resolved, there needs to be closer fiscal policy, coordination, and that tends to bring with it closer political integration.

But Britain is not a member of the eurozone. We have no plans to become members. The -- those of us who are committed to making a success of the European project accept that we will do this primarily as a result of our remaining members of the European Union and playing an active and constructive role in the single market, which is a rather different trajectory from the one which Mr. Barroso is describing.


QUEST: That's Vince Cable, the UK business secretary. We thought that even though it's Europe Day, balloons and bunting might be a little out of taste in these austere times.

The Bank of England in London kept interest rates on hold as expected. It was generally a decent session across European markets.


QUEST: They were closed in Zurich, but look at the way the rest of them -- a strong rally, up 2.25 percent in the Athens composite. The Frankfurt DAX all -- barely changed, really.

Markets -- and you can see very little movements, bit of a wobble there where New York cuts in. And if you look at London as well, you'll also get an idea of how the session traded, just up nearly a fifth of a percent, 6,592.

Slovenia has unveiled a set of austerity measures as the country tries to avoid a bailout or the enhanced economy and balance procedure where, of course, it would find itself very much possibly facing fines from the European Commission. Slovenia is widely believed to be a country that might be the next candidate for a bailout.

VAT is due to rise, that much we know, and the country -- the country is selling off 15 companies.


QUEST: Who knew that Slovenia, while we knew they owned Telecom Slovenia, so they're going to be sold off, but apparently, the government has a stake in a spa center called Terme Olimia, which offers all sorts of exotic and delightful treatments.

So, you can have an airport, you could buy a spa company, you could buy a telecoms company, but this --


QUEST: -- has to be the best one. Paloma, which is the toilet paper company. Yes, I promise you. Slovenia's government through a stock-joint company owns a toilet paper company. Let's see what they make of that in Brussels tomorrow.

US stocks have been fluctuating, the Dow moving a fraction higher, investors cautious, even as the data shows jobless claims fell to a new five-year low, over 300,000, but it was a really impressive number. The Dow is just up some 20-odd points.

Ahead on QUEST MEANS BUSINESS, Coca-Cola is on a health kick of its own, promising to do more to fight obesity. The firm's European boss joins me. We will put it to him, what's it all about? QUEST MEANS BUSINESS.


QUEST: Coca-Cola easily the most recognized brand in the world, and the third-most powerful brand, according to "Forbes," is now trying to take the front foot in the world's fight against obesity. There are 139 calories in each can of Coke. In comparison, Pepsi tips the scale at 142.

Now, there's little doubt, Coke's challenge is to get consumers to burn these 139 calories off, and the company has now determined on a global scale -- global scale, mind -- that it is going to put the detail -- nutritional details and fight obesity.

Joining me to talk about it is James Quincey, the president of Coca- Cola in Europe. You have put numbers on cans in mature markets like the EU for a long time, correct?


QUEST: So why -- why didn't you do it everywhere else, and why are you doing it everywhere else now?

QUINCEY: Look, I think the -- it is true that a number of the things in these four commitments we've done in some of the countries before, and that's -- what's important about today is that we're taking those things that we think are starting to contribute to the problem -- to solving the problem -- and taking them global.

So, what today is about is global scale and reach. Getting everywhere in the more than 200 countries that we operate in around the world and being public about it. Joining very publicly in the conservation and inviting --

QUEST: But what is that conversation? I mean -- I'm just going to go and grab one of your cans, if I may. What is your conversation actually really all about. Is it saying, well, there's 139 calories, but there's 35 grams of sugar in it as well. Is it telling people, this is good, this is bad, this is what you need to do?

QUINCEY: What it's about is getting people the information. So we -- as you can see, we've got already here in the UK all five -- or five different ingredients on there, both the calories and the sugar.

What we believe in is providing people information and providing them choice of drinks so that whether they've got calories in the drinks or not got calories in the drinks, they can help manage their balance of intake versus what they're burning off, which is -- getting off the sofa is the other half of the problem.

QUEST: And how are you -- and I know Muhtar Kent, of course, your CEO, is passionate about this issue. But you need to do more, don't you? And you said you were going to do more.

QUINCEY: Yes, we believe these four commitments: offering more low and no calorie beverages across the 200 countries we work in gives the choice. Putting the calories on --


QUEST: I'm going to come back --

QUINCEY: -- gives the information. Yes, of course.

QUEST: I'm going to come back to this -- I'm coming back to this thing on the can. You know and I know, it's not the caloric content per se. And it says it here: 139 calories is 7 percent of the recommended daily -- but it's the 35 grams, which is nearly 40 percent. That's the bit that has to be reduced.

QUNICEY: Absolutely not. When we talk about obesity, that's not the case. When we talk about obesity, a calorie is a calorie. The experts are clear -- the academics, the government advisors, diabetes associations -- we need to have balance of the calories. And if you're taking in too many or not burning them off, that's a problem wherever they come from, a calorie is a calorie.

Now, Coca-Cola can have a role within a balanced diet. If you're taking in too many calories, try a Coke Zero. Nice black can here with no calories in it.

QUEST: Right. It's important to point out here that whatever anybody might think of what you're doing, the reality is, you are the largest -- one of the largest -- in the business. So where you go, others will follow, and it is up to your company to be that model, that role model, to some extent, isn't it? In the same way that one can arguably say about McDonald's in fast food.

QUINCEY: Yes, we're a big company. We're a leader in our industry, and we believe that businesses need to exert leadership and always engage with government and society in the big issues of the day.

We may only account for 2 to 3 percent of the calories in the countries in Europe, but we believe we need to engage and take a leadership position, and that's what these four commitments are about, being a leader and being public about it.

QUEST: Fascinating. Thank you very much, indeed, for joining us.

QUINCEY: Thank you very much, indeed.

QUEST: You've got enough of those. You don't anymore, though. Thank you very much.


QUEST: Too many calories. Or not? I've just got your well-being at my heart. Now, when we come back in a moment, let me tell you about tonight's Currency Conundrum.


QUEST: The euro -- here's a good one. The euro wasn't the first monetary union of its kind. In the 19th century, five countries tried their own monetary union. What was the reason for its failure? They couldn't agree on a design? There were stabilization problems? Or there was too much public opposition? The answer later in the program.

Now the currencies themselves. The dollar is up against the euro, the pound, and the yen. It reached the 100 yen mark for the first time since 2009. The yen is under pressure. Those are the rates --


QUEST: -- this is the break.


QUEST: Oh. Whatever language you speak, translation is a multibillion-dollar business. And, indeed, that's exactly how it would translate into Spanish. Or, indeed, we could select Arabic, using these new technologies.

Online translation services have made the process far more reliable and, indeed, of course you can use it on your mobile phone and speak the words in -- when it works.


QUEST: What time is it please?


QUEST: Oh, excuse me, excuse me!

QUEST (voice-over): And at just $5, Jibbigo repeats the phrases back to you in Mandarin.

QUEST (on camera): Oh! She speaks English! Good food. Cold food.



QUEST: Well, now a big step forward comes from a German mathematician. In our Make, Create, Innovate, Nick Glass went to meet the mathematician with the knack for language.


NICK GLASS, CNN INTERNATIONAL CORRESPONDENT (voice-over): With its myriad attractions and cosmopolitan reputation, London, as we know, attracts millions of tourists every year. On the streets, you hear so many different languages, more perhaps than ever before.


GLASS: Once upon a time not so long ago, many English speakers struggled with other languages at their comic peril.

GLASS (on camera): "The Luck of the Bodkins" by PG Wodehouse from 1935, an opening sentence that reads, "Into the face of the young man who sat on the terrace of the Hotel Magnifique at Cannes, there crept a look of furtive shame. The shifty, hangdog look, which announces that an Englishman is about to talk French."

GLASS (voice-over): These days, even if we can't speak a language, we can at least have it translated for us instantly on the internet, thanks in no small part to an Edinburgh-based German mathematician.

PHILIPP KOEHN, CHAIR OF MACHINE TRANSLATION, EDINBURGH UNIVERSITY: We try to translate foreign languages into English, or English into foreign languages. The main difference of what we do than what has been done before is that we collect large amounts of translated text, use statistical methods to learn automatically how to translate.

There's been progress in the field. The very early models just look at word translation, tried to figure out what is the best translation for each word and treating each word independently. One step forward was to translate larger chunks -- so, phrases -- at a time.

And currently there's a lot of interest to when you do these translation models to also consider syntactic structure and build up syntactic structure, so you build grammatically-correct sentences.

GLASS: Remember "The Hitchhiker's Guide to the Galaxy" in 2005 and the Babelfish, which could speak and translate even alien tongues. Koehn admits machine translation isn't perfect. The aim isn't precision, but basic meaning. As we all know, things can sometimes get lost in translation.

The Kentucky Fried Chicken slogan, "finger-licking good," translated back by some search engines as "eat your fingers off."

GLASS (on camera): Of course, at the British library, there are hundreds and hundreds of thousands of books that have been translated from the Greek, from the Latin, you name it. Machine translation isn't intended to compete with this. It's purely complementary.

KOEHN: If you can translate a web page and you basically understand what it means, even if it's not perfectly fluid language, that's useful. So, this is what Google Translate basically has on the web right now and what people use millions of times a day.

Another level of quality is if it's faster to just post machine translation output by hand instead of translating everything by yourself, that's another level of usefulness, if you can increase the productivity of translators, that has real economic benefits.

GLASS (voice-over): As software becomes more sophisticated, the computer codes, the algorithms more complex, so machine translation will become ever faster and more accurate. Philipp Koehn is on a quest for perfection, mathematically.

KOEHN: If you have a billionth of words of translated text, then the secret how to translate must be somewhere in there.


QUEST: Absolutely fascinating, machine translation. After the break, new excuses. South Africa's national planning minister, Trevor Manuel, said it's time for his country to take responsibility for the lagging economy. Our interview with Trevor Manuel is next.


QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes first.

A huge rally in Islamabad for Imran Kahn's PTI Party. Just moments ago, the cricket star turned politician addressed a crowd from a hospital bed. Kahn suffered an injury during an election rally earlier this week. Pakistanis go to the polls on Saturday.

The accused kidnapper Ariel Castro has made his first appearance in a Cleveland, Ohio courtroom. He's been charged with four counts of kidnapping and three counts of rape for allegedly holding three women captive for a decade. The judge set bail at $8 million. Castro did not enter a plea in court.

US prosecutors have charged alleged members of a cyber theft ring with stealing $45 million from financial institutions around the world. Prosecutors described it as a massive, 21st century bank heist that reached across the internet.

David Moyes will succeed Alex Ferguson at Manchester United. Moyes said, "It's a great honor to be appointed as the new manager of the English Premier League champions." Here's the point: he joins from Everton. He won no trophies or no major trophies in his 11 years at the helm.



QUEST: Trevor Manuel is one of the most respected names in international finance and now says South Africa must move on and stop blaming the apartheid era for its economic problems. The former South African finance minister is now the country's minister for national planning. Robyn Curnow spoke to him at the World Economic Forum in Cape Town.


ROBYN CURNOW, CNN HOST: You recently got yourself into a bit of trouble by saying that South Africa needs to stop looking backwards, blaming apartheid for its problems.

TREVOR MANUEL, SOUTH AFRICAN MINISTER FOR NATIONAL PLANNING: It was a funny kind of trouble, partly because it seemed like there was a repudiation and then a withdrawal of the repudiation, partly because --


CURNOW: From the president himself?

MANUEL: -- from the president himself -- partly because it's something that the president has said and something that the president, I think related about Africa at the A.U. summit in Addis in January. In fact, on the issue of infrastructure, he was making strong points about taking responsibility so --

CURNOW: Not blaming colonialism, for example?

MANUEL: -- not blaming colonialism.

CURNOW: Because the IMMS (ph) has come out recently, saying that South Africa doesn't have more inclusive growth. There is risk of social instability. I mean, this is potentially a political powder keg.

MANUEL: There is no disagreement on this issue. The key challenge for us is to understand it and do something --

CURNOW: And how to fix it.

MANUEL: We have to fix it --

CURNOW: And the political will to do that.

MANUEL: -- that what we're staring in the face. It's about making the choice. And it's not just going to be easy. There are going to be some pretty tough things that have to be done. But they must be done if we understand the importance of transforming this country on a permanent basis.

CURNOW: Some Western governments, even one or two African governments, have said that they're concerned in terms of their foreign policy towards South Africa. Is that South Africa has to succeed. With that in mind, the caveat that there's a potential that this democratic experiment is perhaps at risk. I mean, is that overstating it?

MANUEL: I do think we're overstating the problem. You know, there are various measures of succeed. You yourself would recognize that we have been pretty successful.

CURNOW: Absolutely.

MANUEL: But I think they are challenges. And as some analyst put it to me, we were doing very well for a period when the rest of the world was kind of lagging. Now there's much stronger competition from the rest of the world.

And we must not be seen to be lagging. It's like the 100-meter sprint. You know, 40 years ago, you could do it in 9.9 seconds and be good; 9.9 seconds wouldn't get you into the race right now.

Usain Bolt is not going to think about you at 9.9; the world has moved on. And I think, you know, in a similar way, we, as South Africa, must understand that we will drive the changes by having better education, better public services overall, but also continuing to invest in R&D and ensure that we provide the intellectual feedstock for our industrial base.


QUEST: Trevor Manuel talking to Robyn Curnow.

Straight ahead on QUEST MEANS BUSINESS, showcasing your way into work: it's clear to see potential employees will see straight through this scheme. It's an unusual way to get noticed on the High Street, and we'll explain after the break.





QUEST (voice-over): Tonight's "Currency Conundrum" answer, I asked for a reason why monetary union failed in the 19th century. The answer is instability. In 1867, Latin monetary union united France, Belgium, Switzerland, Greece and Bulgaria based on gold and silver. They were both valued varied too much and it destabilized the whole lot.


QUEST: It's been three years since Greece received its first international bailout worth nearly $150 billion. And the country remains in deep crisis. The unemployment rate announced today reached a record 27 percent in February -- 27 percent is the headline number. That's up nearly a point from January.

Now for young Greeks, it's even worse. Nearly 2/3 of those aged 15 to 24 are out of jobs, 64.2 percent and extraordinary number, one that tells of great social misery and unrest. From Greece to Denmark, where the country's white-collar unemployment problem is now out in the open quite literally.

A union has taken extreme measures to highlight the issue, allowing more than a dozen jobless professionals to sit in an office window -- literally an office window display. The novel idea seems to be catching employers' eyes. I spoke to the chief executive of Reputation. That's the ad agcy in Copenhagen behind the stunt. And I asked on reflection the idea why and where.

ALEXANDER PEITERSEN, CEO, REPUTATION INC.: There were so many academic people that were unable to get a job here in Denmark. You are, we are also protected by the European crisis. And the paradox is that a lot of the academic, the more highly educated people, are actually the ones that are unable to differentiate market. Almost 41 percent unemployed a year after their master education.

QUEST: And isn't that interesting? Isn't that interesting because not only are they the ones you would have thought would have walked into jobs, but they're the one group of people you'd have thought would not want to sit in a shop window, hawking themselves like ladies of the night.

PEITERSEN: That's exactly the right. That's why we, as an ad agency, created that mismatch, because that's the disruptive part of the idea in the sense that you are matching something that would never be seen in this segment.

And that created this really big success, you know, people are already lining up. They want to sit in the window. And it just kind of reflects the willingness to differentiate in this job market.

QUEST: And how do you prevent this from turning into a circus, a show-and-tell, a sort of an exhibition of the most grotesque kind?

PEITERSEN: Well, actually, it is an exhibition, but it's not the grotesque type. It's actually a way of putting emphasis on the fact that there is this huge unemployed segment that are unable to differentiate.

I mean, I, as a CEO of an advertising company, get about 40 applications every week. And they are very generic; they are very the same, very formal and very kind of like, you know, just similar, similar, similar.

QUEST: But and it -- but to the critic who says, well, it's all very good for your agency; you're getting lots of publicity. But you are exploiting these people in a way -- they're unemployed and this is exploitative.

PEITERSEN: Well, that's why we teamed up with one of the leading trade unions here, you know, wanted just to, first of all, to get a partner and here if they supported the idea, because we would never do it alone. So it's together with one of the biggest trade unions here, DRIF (ph), who represents the academics in Denmark.

And the second thing was that we -- it's all on a voluntarily basis.

And thirdly, people are getting jobs. So headhunters find this very interesting; they approach and already one of the 15 persons are today employed. So we regard it as a very big success despite the controversial edge to it.

QUEST: Where are they sitting? Show me the geography of what people are sitting at and all that sort of thing.

PEITERSEN: So now I'm walking up and walking a little bit down. And it's here you can see the desk and the chair and there's a poster, which you only see the back side of which is the description of the individual's CV. And it's paired with a QR (ph) code, which then links to a video interview of the person sitting in the window.


QUEST: Sitting in the window; one way to get a job.

Jenny Harrison is at the World Weather Center for us this evening.

Good evening.

JENNY HARRISON, CNN METEOROLOGIST: Well, good evening to you, Richard. Some pretty nice weather across some parts of Europe. You've got a few showers putting into London at this particular hour. But they've held off throughout most of the day. But you can see that curl of cloud across the U.K. That is the next area of low pressure. Quite unsettled across these central areas.

And it's going to stay this way for the next couple of days. But look at the temperatures across central regions, these orange dots showing you where the locations are, well above the average, Kiev 28 degrees Celsius. The average is 18. You can do the math, 10 degrees above. In fact, in Warsaw, 27 degrees Celsius the average is 18.

So really has been very, very warm indeed. Not quite that warm across the northwest, but even right now we've got 11 Celsius in Glasgow, the same in London, 15 in Paris. But with the rain pushing, it certainly is going to feel quite a bit cooler. So this, as you can see, is the last 12 hours, some heavier thunderstorms at times as well.

And nothing really that violent, but enough that we might even see some localized flooding. But it didn't put off these dances. This is Holston (ph) in Cornwall. This is actually just a day ago. Everybody dressed up in their finery.

Now, Richard, I don't know about you, but I haven't actually heard of this. It's called Flora Day. And as I say, it's (inaudible) down in Cornwall. It's also known as the Flora Dance and also known as the Fairy (ph) Dance. I don't -- I couldn't work out why it's known as the Fairy Dance.

Well, yes, I know you're thinking of that, aren't you? Yes, (inaudible).

QUEST: (Inaudible) the Flora Dance.

HARRISON: Oh, is that what it is? OK. All right, then. Yes. OK.

QUEST: (Inaudible), "All together in the Flora Dance."

HARRISON: OK. Right. Well, yes, well, they do it in Cornwall and they did a lot of it. Look, everybody having a whale of a time. But yes, that was before the rain came through. It's been coming through. It'll be bringing in with it the cooler air as well across much of the west of Europe. Warm ahead of all that, as you can see.

That'll take us into the first part of the weekend. But look at this: I'm afraid the next system coming through will take those temperatures below average across the U.K., very unsettled, nice across the south. There's those temperatures ,east-west split, warm across the east, cool in the west. And Richard, I had no idea you had (inaudible) tune. Very nice.

QUEST: I can't -- I can't really (inaudible).

All right, Jenny Harrison at the World Weather Center, with the Flora Dance.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. Thank you for your time and company. Whatever you're up to in the hours ahead, I hope it's profitable.




QUEST: From Krakow in Poland, this is MARKETPLACE EUROPE. I'm Richard Quest.

The country which escaped the Great Recession is now facing an economic slowdown. All the numbers show it. Poland has rising unemployment and slower economic growth. And at a time when the country needs to modernize industry fast. So on this program, we'll look at the challenges facing two companies with manufacturing at the heart.


QUEST (voice-over): Coming up, the Polish window company that's fighting back with new export markets in Europe.

And the chief exec of ArcelorMittal's Europe operations tells me overcapacity is crippling the steel industry.

SANJAY SAMADDAR, CHAIRMAN, ARCELORMITTAL: We want to produce steel. But we cannot product what we cannot sell.


QUEST: Forgive me if you will. I've come to Oknoplast outside Krakow to get a window on the European economy, as growth slows down.

Countries like Poland were great beneficiaries as manufacturing moved east in the past decade or so. Now with the slowdown underway, companies like this are having to come up with strategies to deal with the cold chill.



QUEST (voice-over): There are large ones and small ones, windows of all shapes and sizes, 45,000 of them leave Oknoplast's factory every month.

MIKOLAJ PLACEK, PRESIDENT, OKNOPLAST: Last year was the first year when the most of our production went to exports. We export only to the European Union countries. The export is profitable when you export up to maximum 2,000-2,500 kilometers from the factory.

QUEST (voice-over): It's a delicate financial balancing act. When the company decided to expand outside Poland, Italy was identified as a potential market. And now it's the company's biggest export region.

QUEST: You sure about this?


QUEST: I have to say, it is an extremely odd experience, being on a piece of glass, jumping, even though they tell you I could jump up and down and it wouldn't break.

QUEST (voice-over): This tempered glass is made of tougher stuff than the European economy. Not only the Eurozone growth in Poland slowing down.

PLACEK: Naturally, I'm worried. But the key factor is to be better than our competitors and thus we have to -- we have to work harder. We have to lower our costs and we have to -- we have to be more competitive in service. We have to be more competitive on flexibility and that's it.

QUEST (voice-over): The recipe is not new; the implementation in Poland is vital if the country's going to have a future in manufacturing.

PLACEK: But what we can do now is to use this advantage that our labor costs are lower than in Western Europe.

QUEST (voice-over): With half the sales in Poland and half to the rest of Europe, Oknoplast is pretty much balanced. It means the recession in the continent is hitting it right in the middle.

QUEST: Unemployment is going to go up in Poland and exports to the European Union are going to fall; 60 percent of your exports -- of your business -- 60 percent of your business goes to the European Union. You're going to face trouble.

PLACEK: We will see how we looks like a future. But I don't think so, because our plant is -- we are very aggressive. So what we -- what we -- our plan is to take over our competitor, Xidex (ph). And that's it. And only in this way we can develop faster.

QUEST: You're going to eat their lunch?



QUEST: You don't have to look very far in this part of Poland to find steel. It's pretty much everywhere at a time when Europe's steel industry is in crisis. After the break, the chairman of ArcelorMittal's East Europe division tells me what he wants from Brussels. Otherwise, there will be cuts.




QUEST: Welcome back to MARKETPLACE EUROPE in Poland. This is the ArcelorMittal hot strip rolling mill, the most advanced steel mill of its kind in Europe. When it opened in 1954, it was the pride of Socialist Poland. At its height, it employed 38,000 people and manufactured 6.5 million tons of steel. Today, 4,000 employees make 1.5 million tons.

European steel is in crisis. At ArcelorMittal, along with other steel producers, it's looking for help.


QUEST (voice-over): The battle promised to be ferocious. ArcelorMittal planned to cut jobs and close facilities in France, Belgium and Luxembourg. It triggered violent protests and a serious battle with the French president. Those plans to close plants have been put on hold until June. That's when the European Commission is to unveil proposals designed to save Europe's struggling steel industry.


SAMADDAR: Right at this moment, the steel industry is struggling to remain viable in the recessionary conditions which we are in. And it's finding it tough and challenging to face the impact of the climate change package and the energy crisis.

We want to produce steel. But we cannot produce what we cannot sell which means we have to optimize our asset portfolio in a manner where we produce something which is in tandem with the market-to-mark.

QUEST: Right. That's a -- that's a polite way of saying if we can make it and sell it at a profit, we'll do; and if we can't, we won't.

SAMADDAR: Yes. But we have to make it at a cost which is efficient, which is competitive and we have to produce only what the market can take, which means our costs have to be managed better and to have a good and efficient cost, we need certain supporting mechanisms like the climate change laws and the energy crisis and the ability to optimize when there's no other solution.

QUEST: The European Commission is due to produce its plan for the future of the European steel industry by June. What is it that ArcelorMittal wants?

SAMADDAR: We cannot continue like this for too long. So we need a review of the climate package. And the current -- in the current configuration of the climate package, it is, in our opinion, unachievable. The expectation to reduce emissions by a certain level, by 2020, we believe these expectations are unachievable, given the current state of the technology.

Any new technology costs a lot of money, is expensive; which the steel industry cannot support at this current moment. Our second point is that energy crisis in Europe are almost three times that of the U.S.A. So at these levels of energy crisis, steel production or cost-efficient steel production is almost impossible.

QUEST: But you know as well as I do, if the commission or the -- gives you a break, if it shifts the goalposts for you, everybody is going to be coming along. They didn't do it for aviation and they had half the world's airlines in countries threatening boycotts.

SAMADDAR: What we're asking for is a level playing field because these conditions are not applicable in the other countries. And when you have to compete with imports, then you don't have a level playing field as it stands now.

QUEST: Anybody not in the steel or construction industry simply says, well, if we can't make steel, so be it. There are better countries that can do it at a cheaper price. So tell me, why is a steel industry important for Europe?

SAMADDAR: Important, a healthy steel industry means a healthy coal mining industry. It means a healthy transportation industry because of all the wagons and trains which transport our steel. So several industries are interlinked with steel.

So the same concept is as much applicable for Europe. Construction will happen; replacement demand will come this way or the other. And steel being the fabric of life, you see it in the cars you drive, in the building you sit in and the washing machines and the coins in your pocket. These fundamentals will not change.

So we remain very optimistic that steel is important, will continue to be important for Europe. And we will make steel in Europe, but in a more cost-efficient way.


QUEST: The chairman of ArcelorMittal here in Poland.

And that's MARKETPLACE EUROPE for this week. I'm Richard Quest in Krakow in Poland. I'm going to leave you with the bugler at St. Mary's Basilica.


QUEST: As always, whatever market you're in, I hope it's profitable. And I'll be playing next week.