tv BBC Business Live BBC News September 4, 2017 8:30am-9:01am BST
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 more missile launches. 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. also in the programme: 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 and that threat of sanctions.
we'll be getting the inside track on the cost of kitting kids out for school. yep, summer's officially over when children go back to school. we ask the boss of a major uniform maker is schoolwear getting more expensive? so today we want to know — congested roads and selfish drivers. does the school run make your blood boil? let us know. just use the hashtag bbcbizlive. yes, let us know. 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 most notably, china.
the latest figures show that trade between the us and china is worth nearly $650 billion every year. this makes china the united states‘ biggest trading partner. many experts believe that washington is leaning on beijing to isolate north korea. 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. robin brant is in seoulfor us. 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 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 wa nt to 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 just over a week ago. 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 in both texas and louisiana. 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 refining capacity offline. it's also believed the nation's largest refinery in port arthur may be shut for up to two weeks, sending petrol prices higher across the us. michelle fleury reports from houston. i'm standing by the upper houston channel. upper houston channel.
it is about 23 miles long and on each side it is lined with oil refineries. 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 just energy suppliers that come through here, consumer goods travel on vessels through here making their way to shelves of stores like wal—mart and costco. 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. shejoins us me now. 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 — clu eses will actually be insured, flood ex—clueses operating in the domestic insurance policies, ought owe motive industry affected, the amount of ca i’s 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. in the order of $100 billion, so even more than hurricane katrinalj wa nted even more than hurricane katrinalj wanted to ask you about how it co m pa res 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 yea rs of the indirect costs could go on for years of just trying the indirect costs could go on for years ofjust trying to put things right. where do we start in thatjob asa right. where do we start in thatjob as a loss adjuster, where do you start to look? there are so many different elements to this? start to look? there are so many different elements to thi57m splits different elements to this7m 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 coverfor 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 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 contracts and conditions. workers at cambridge and crayford in south—east london are on strike for 2h hours. the bakers, food and allied workers union, said staff want a wage of at least £10 an hour and more secure jobs. 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 power of white—owned businesses. the eu's brexit negotiator, michel barnier, says he plans to "educate" the british people about the price it would pay for severing ties with brussels. the european union suggested that little progress had been made in the latest round of talks. the british government has hit back, claiming that the eu was not co—operating in negotiations. 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?” 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 the fact that there are certain co ntra cts we 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?” into a crowded and competitive smartphone market? i think lg has aways been about choice, it may not be numberone in aways been about choice, it may not be number one in phones, 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 benefits but price it very well accordingly. injust a 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. studio: studio: 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? 0ur 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 schooljumper, one, they come home without the school jumper, nowhere to one, they come home without the schooljumper, 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, been through a period of decline, overa number of years, and been through a period of decline, over a number of years, and that forced a chain, in 2010. —— change. icame in 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, is it 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 sense that parents are forced to buy it, we have to buy the gearfor our kids and it is a huge expense, and forfamilies who kids and it is a huge expense, and for families who cannot afford it, it isa 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 forjoining us. matthew easter, managing director of trutex. ina 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 wa nt editors right around the world. and we want to hear from you, too, editors right around the world. and we want to hearfrom 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
we re 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 ta ke 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
wa nted 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. rather misty and murky started the
day across many parts of the uk, rain, drizzle, coastalfog as well. through today, while most of us it will stay cloudy, with some outbreaks of rain, for some of us, brighter skies developing. those brighter skies developing. those brighter skies developing. those brighter skies primarily toward central and eastern parts of england into the afternoon, further north and west, likely to stay cloudy, drizzle continuing around the coast. in the north—west of scotland, and indeed the north—west of northern ireland, a bit brighter, coming through during this afternoon, lots of hill fog around the peaks and the latex, coastal mist around wales, cloud as well. some rain and drizzle at times as well, one or two showers affecting central and eastern areas but there will be a few breaks,
feeling warm and humid, where that cloud breaks up, template is up to 23, 20 4 degrees. as we cloud breaks up, template is up to 23,20 4 degrees. as we get cloud breaks up, template is up to 23, 20 4 degrees. as we get through the evening, like rain moving south, before it re—intensified, a cold front redeveloping, as we go through to the early hours of tuesday morning, likely to bring heavy rain towards the northern and western areas, into the early hours of tuesday morning, quite warm, quite muqqy' tuesday morning, quite warm, quite muggy, i guess, across england and wales, temp reaches 15 to 17, a bit more fresh further north and west, this area of rain will move east, heavy rain for a time in north—east england, for the northern rush—hour, watch out for that. the rain breaking up as it moves south and east, not much to talk about across southern areas, brighter skies developing. sunny skies, scotland, northern ireland, feeling a tad fresher in the north—west as well. throughout tuesday evening, the cold front will clear out into the near continent, and then we have this
westerly flow, fresher conditions, quite breezy for many of us, wednesday not too bad for most, mixture of sunny spells and one or two showers around throughout the day, most share was confined towards northern and western parts, top temperature, 15 to 18, perhaps up to 20 celsius. going to the end of the week, it will turn much wetter, much windier as well, temperatures still up windier as well, temperatures still up into the high teams, the low 20s. that is it for me, the by. —— high teens. —— that is it for may, goodbye. —— that is it for me. hello. it's monday, it's 9 o'clock. i'm victoria derbyshire. welcome to the programme. the united states says it is ready to use its nuclear capabilities to defend itself and its allies against threats from north korea.
translation: the test of a hydrogen bomb designed to be mounted on or intercontinental ballistic missile was a success. any threat to our territories, or our allies will be met with a military response. there are signs this morning that north korea is preparing for more ballistic missile launches in wake of that nuclear test. we'll bring you reaction throughout the programme. the