tv World Business PBS November 7, 2010 11:30am-12:00pm PST
>>this week on world business... >>after leaping ahead in the boom years the celtic tiger of ireland is now limping and faces some very tough times ahead. >>i think things are probably going to stay at this level for a number of years, i think there is a long tail attaching this recession for ireland in particular. >>how clothing brand uniqlo is shining bright despite the recession >>they are talking about selling literally millions of units in any
particular season. >>and how jordan is addressing the issues of energy and water security. >>we have probably one of the most pressing water situation on a global level, it is basically a survival issue for the country. >>hello and welcome. i'm raya abirached and this is world business, your weekly insight into the global business trends shaping our lives. ireland, once one of europe's hottest economies is in a sorrystate. laden with debt, but desperate to avoid asking for help from the imf and eu, the country hasto take drastic action. with four companies going bust every day, and unemployment soaring, it willtake all the luck
of the irish to get out of this economic mess. >>reporter: dublin by night is a city that glitters - but ireland and its capital have learned the hard way all that glitters is not gold. >>mcardle: it was more exposed than other countries in that our loan to value ratios were extreme, the indebtedness of the banks as well as the private sector was more extreme that elsewhere so when everything went into reverse we had a bigger problem. >>reporter: the irish government stepped in to prop up four of the country's major banks and financial institutions that helped underpin the runaway economic success of the last decade. >>the bad debts - mostly from property lending - that brought these banks to their knees have now been stripped out and placed in a so-called 'bad bank'. >>reporter: meanwhile property prices have halved - unemployment is at 14 percent, debt is at a record high of 98 percent of gdp and the budget deficit is equivalent to a third of the country's total production
>>mcardle: the markets are now dictating events and the interest rate at which the irish government and the irish banking system can borrow are between six and seven percent at the moment - that's not sustainable in the long term. >>reporter: the irish government is desperately trying to get its house in order. at the end of october, it announced 15 billion euros of spending cuts to achieve a budget deficit target of just 3 percent of gdp by 2014. there is general political consensus behind meeting that target - but the pain of achievingit will be borne by irish voters. in the corporate sector that pain is already apparent. company after company is shutting up shop. the number of firms going bust in ireland is at an all-time record - and likely to stay that way. >>fennell: things are probably going to stay at this level for a number of years. i think there is a long tail attaching to this recession for ireland in particular. we don't envisage the numbers rising significantly above the 15-hundred number
for the next year. >>muriel: dublin is a city that knows how to party ... ... but in the cold light of day - the economic party that went on here for more than a decade well and truly over. coming to terms with the new economic reality is tough. >>casey: i think there is a trauma, literally a reconfiguring. we fell far because we were exceeding - we were right at the top and i think there's been a huge trauma - but i think among the younger generation... if you spend enough time here you will see there is an energy but it's very underground at the moment. >>reporter: ireland's economic future depends perhaps more than any other eu country on that younger generation - with a third of the population aged under 25 it's the youngest workforce in europe. highly educated and technologically skilled they are one of the key attractions for multinationals deciding where to locate their european headquarters. the social networking phenomenon facebook arrived in dublin two years ago
at the start of the downturn and now employs over 200 staff here. >>long: we've almost had the market to ourselves in terms of recruitment because obviously it's been a bit of a depressed market so it's worked extremely well for us - we've found amazing talent in the market. >>reporter: the talent here in this room - creative and free-thinking - is the future for ireland according to one hugely successful online entrepreneur - the founder of social networking site - bebo. >>birch: i think what will happen over time is that the people who work at these companies there will be going into tech - as the leave more corporate jobs they'll actually be joining or starting start-ups themselves. >>reporter: birch was among some of the top names in the online world at a conference in dublin sharing their business experiences. among them niklas zennstrom - founder of skype and now a venture capitalist looking to tap into the talent here. >>zennstrom: it's actually beneficial to build a tech company here because its most likely gonna be easy to hire people, salary expectations are going to be
lower and when you have a crisis people tend to want to build their way out of the crisis so i think the crisis can be a catalyst for entrepreneurs to buildcompanies here - but there's a risk these entrepreneurs are moving abroad. >>reporter: emigration has been ireland's traditional response to economic hard times. around 28-thousand irish left the country in the year to april 2010 - not all of them by choice. >>coveney: what's ... depressing is forced emigration and we are starting to see some of that now and that clearly does have economic consequences in terms of the demand and profile for people who are looking tosell product directly to the irish consumer - there are less of them and they have less money. >>reporter: but the situation may not be that bleak. convenience food maker greencore sells mainly to the us andthe uk but is headquartered in dublin. it's ceo believes that the recession has in some ways made the countryore attractive.
>>coveney: ireland is more cost competitive today than it was 18 months or 36 months ago - there's no wage inflation coming through, there's wage deflation, people are more practical in terms of the cost pressures on business... professional services are cheaper now than they were two years ago. >>reporter: and with exports crucial to recovery, one of the government's key strategies is to attract multinationals to locate here; and has already secured trophy companies like microsoft, google and citibank >>clohessy: ireland's economic strategy going forward is based on export-driven growth and not on consumer driven demand and a property bubble 90 percent of ireland's exports come from the multinational sector and if you look at the latest figures for ireland's exports quarter on quarter the third quarter export performance of ireland was up 9 percent on the equivalent period last year. >>reporter: another string to ireland's bow in its push for fdi is a corporation tax rate of just 12 and a half percent . >>long: the corporation tax rate gets you on the list thereafter
its 'can you execute, can you find great people, can you build great teams, can you help us grow the company?' and if you don't do that the corporate tax rate doesn't really matter. >>reporter: but the irish government is in real danger of losing control of those taxes if it fails to meet its own tough fiscal targets and the imf or eu steps in to bail it out. >>mcardle: there would be some challenge to it were we to have to resort to a bail out - indeed it might be theprice of the bail out which is perhaps one reason why irish people will be willing to undergo an awful lot of pain rather than face that reality. >>reporter: ireland is now at a crossroads - the challenge will be to find a way out of this economic darkness. there are some glimmers of opportunity but it could be a while before the good times roll here again. >>japanese clothing company fast retailing is on a roll. it currently has 800 uniqlo stores in japanand aims to add at least the same number again in china alone by 2020. while
the company's sales fell by 25 percent in september, it remains unfazed in its drive for global market share. >>reporter: tokyo's shinagawa train station is one of the most crowded places on earth - close to a million commuters will transit here on an average day...not your usual location for a clothing shop...but the proprietor is no ordinary japanese apparel maker - true to its name, fast retailing and its uniqlo stores are on a breathtaking dash to the top...with their conventional stores already saturating the country...the company is now chasing potential customers too busy to visit a regular shop...selling cheap undergarments to busy commuters, just like newspapers and candy. >>craft: uniqlo is a retailing legend here in japan, its no-nonsense low cost socks and shirts are mainstay of japanese closets. now the company has vowed to make itself as much
a household name overseas as itis here in japan. >>otoma: our long-term vision is to become the world's top apparel company by 2020. >>reporter: that means boosting net sales from around $10 billion now, to more than $60 billion, in just a decade. bold words from a company that's still well behind global names like h&m, zara and gap -- but typical for japan's most-celebrated entrepreneur right now, tadashi yanai...since he took over the company in 1984, yanai has transformed uniqlo into asia's biggest apparel company - and become japan's richest man in the process, as diminutive in stature as he is brimming with confidence... >>yanai: our imitators will just stimulate overall demand. we are number-one by far. our competitors are effectively just advertising our products for us. >>reporter: yanai's rag-trade exploits
have made him a business guru here... >>yamamoto: he's racked up plenty of mistakes, but never takes risks that endanger his core business. that's thesecret of his success. >>reporter: within the conservative, cloistered and risk-averse circles of japanese apparel makers, yanai is cutfrom different cloth... >>yamato: a bit like a dictator probably. because as you said no other japanese retailer has done such a thing. no one has achieved such fast growth in the apparel industry. and their style is different from traditional japanese companies. >>reporter: yanai was the first japanese clothing retailer to knock out middlemen, and adopt western-style manufacturing and sales. by consolidating design, logistics and marketing under one roof, yanai was able to reap high margins that have fuelled a blistering pace of growth, throughout the recent downturn. >>larke:
uniqlo has built itself. its main core competitive advantage is volume. so the more stores they can open, obviously getting the right locations and maintaining their marketing the better they are going to go forward. and they're talking about selling literally millions of units in any particular season. and most of the other companies, even the global companies, aren't thinking along those lines >>reporter: uniqlo isn't really in the same business as the world apparel leaders it seeks to unseat -- instead of disposable instant fashion aimed at the young and trendy, uniqlo seeks to woo young, old and fashion-challenged alike with unglamorous but essential, well-made basics, priced to sell. these super-thin, heat-conserving garments, called heat tech, were developed in an unusual collaboration with toray, a leading chemical company. such high-tech materials undergird yanai's strategy for building a global brand. projected sales for heat tech underwear this season -- a whopping 70 million units.
>>yanai: people tend to assume underwear has to be made from cotton. but we're proving that synthetics are better than natural fibbers. it has a lot of potential. i want to show this to the world. our marketing strength, and japanese technology, is a winning combination. >>reporter: yanai's brash ambition aside, becoming the world's top apparel maker is virtually impossible, experts say, through organic growth alone... >>larke: it has a long way to go to overtake gap and h&m. probably the only foreseeable possibility is a major acquisition of either one of the global chains, or several of the second-tier chains. >>reporter: uniqlo is still very much a japanese company, reliant on its home market for sales. but for parent firm fast retailing, the company in a hurry, if all goes according to plan, the shift to global giantwill happen in just a few years.
>>still to come on world business... >>could jordan become a logistical hub for the middle east? we meet mega projects minister imad fakhoury >>and the peaceful sport of gliding gets competitive. >>silent soaring.... and the rest in just a moment on world business... >>for a non oil producing middle eastern country, that is essentially land locked, jordan is surprisingly successful. it managed to avoid recession and pre crisis growth rates were around 7 percent. the country is also addressing the issues that have held it back, such as poor water supplies and transport links and reliance on its neighbours for energy. heather scott sat down with imad najib fakhoury, the minister for public sector development and minister of state for mega projects
to find out more. >>fakhoury: jordan faces two critical challenges. one is energy and one is a water challenge. on the water situation, jordan is now the fourth poorest country in water per capita availability. we have probably one of the most pressing water situations on a global level. it's basically a survival issue for the country...so mega projects that are involved with solving and providing a long-term secure water source for the country and reforming the entire water supply and demand management pricing system is very critical for the future of jordan, so there are specific mega projects and reform that are attached in the water sector to deliver on that. one of our biggest projects, the desalination water conveyance system for one billion dollars, was financially closed in the year
2009...on the energy side, we're importing 96 percent of our energy needs. if you recall in 2008, when the oil prices hit very high rates, the import bill for jordan reached about over 20 percent of our total gdp, as a ratio...that's something that is extremely disruptive to a long-term developmental path for a country. we've made a very strategic decision th that we need to diversify our energy needsto reduce our inde...dependance on foreign imports for energy ...from 96 percent...we're trying toreach maybe 60 percent by 2020..and beyond that maybe also try to reduce that more. so we wanted to increase renewable energy inputs from one percent to about 10 percent. we've done also..we've discovered some gas fields..in the eastern part of jordan. there's been a concession that has been awarded to bp. so that should also increase the availability of gas, natural gas, to supply our electricity programme.
we wanted also to develop electricity using nuclear power... >>scott: what about uranium? will you be able to enrich, will you be able to reprocess? >>fakhoury: we're going to leverage our uranium deposits. jordan has aggressively now signed a very detailed mining agreement and long-term concession with arriva to mine the central part of jordan in terms of uranium. jordan has over ten countries that we've signed nuclear cooperation agreements with, leading countries in the oecd and globally, we're adopted a path to develop our nuclear programme in a way that it is a model globally and for the region. and, we are, jordan probably has the highest signatory to all the iaea conventions , we're following all the best practice models, looking at the us experiences, the eu, japan and leading countries in the world that have developed their programmes. we are making good progress on finalising the nuclear cooperation agreement with the united states.
>>scott: what about the national railways projects to connect aqaba to syria and beyond. how far have you gotwith that? >>fakhoury: it's proceeding quite well actually. jordan is also within its mega projects mix is looking at deepening its position as an important regional, logistical hub. that it's a trade gateway that sits atthe heart of the levant region, connecting the gcc with the levant and beyond that to the european side as well as to central asia through turkey. our programme calls for building a thousand kilometres of rail. the syrian programme is now about 100 kilometres away from our border. the saudis arealso very close to our border. so jordan is a critical building block in creating this new trade corridor. >>scott: going back to the hub idea,
how much better placed is syria than you are to be a hub in the region? >>fakhoury: actually, on the contrary, i think we all complement each other. syria's access to the gcc has to go through jordan. and our access to turkey and beyond has to go through syria so in essence we are all complementary building blocks helping each other create this network. it's important to point out that jordan has been very visionary and probably one of the leaders in the region in integrating infrastructure within the arab world. we have right now been the first to lead connecting the electricity grids in the region. egypt is connected with jordan and we're connected with syria and lebanon and beyond that to turkey. in gas, egypt is also providing gas to jordan and the gas pipeline goes through jordan and to supply gas to syria and lebanon and beyond that also to turkey. so you can clearly start to see how jordan 's
positioning as a hub point in infrastructure ...where we're connecting neighbouring countries through this hub which i think is going to be very critical to create an integration economically within the region...interdependence. and i think it will add to the factor to increase stability in the region because when there's co-dependency there's more potential tominimise chances of conflicts in the region >>gliders are, quite simply, remarkable pieces of equipment, able to soar hundreds, if not thousandsof kilometres. they can reach over 40000ft into the sky, and travel at speeds of over 170mph. till now though, one thing they haven't been able to do is make competitive gliding a commercially attractive proposition for sponsors and broadcasters. but moves are afoot to change that situation.
>>reporter: competitive gliding. where man pitches himself into the heavens...to battle the elements...and his fellow pilots...armed only with experience...guile...and what are true masterpieces of aeronautical design.... >>hibberd: this gliders made of carbon fibre. so quite expensive materials. carbon and kevlar same as racing cars and yachts... >>cowley: modern gliders have a glide angle of 1 in 40, 1 in 50. the best ones in excess of 1 in 60...which means for 1 mile of height lost you've got 60 miles gliding. that's pretty impressive tech. reporter of course, that technology tends to look more impressive airborne...but on this gloomy day at the british club class finals in husbands bosworth...the gliders were firmly earthbound...conditions...farfro ideal... >>skysbrook: there is a cumulus cloud there, there is another littleone there, and they are the sorts oflouds the glider pilots are looking for.
>>reporter: the basic problem is: this just enough heat getting through to bounce them back up? >>brooks: yeah, absolutely. that's the main problem. >>reporter: that's the technical analysis of it. >>yeah close enough. >>but on a good day and in the right place...gliding races can be truly spectacular...with pilots flying at up to 300km/hr most commonly by riding winds lifting off mountain ridges, or jumping betweenrising columns of air called thermals, in an elaborate game of 3d chess.... >>tribe: in simple terms you climb in thermals and then you glide losing height until you get to the next thermal. >>hibberd: i always look at gliding as it's an aeronautical form of sailing. making the most out of the weather. >>reporter: the thermals rise from patches of ground that have heated more quickly than surrounding areas. amonga multitude of strategic decisions...spotting good thermals is a key skill.... >>tribe: the clouds themselves are very good thermal markers. >>spreckley: then you're looking at ground features....you think oh there's a factory down there...that might be heating
up more than the surrounding area....so you have a go towards the factory... >>tribe: you're trying to string together areas of lift. >>johnson: we need a bit more brightness on the ground and very close, but not possible. >>reporter: it is very bright over there, behind you. >>johnson: it is too far away. >>reporter: while gliders can get airborne in dull weather...they won't stay up for long enough to cover any significant distance...which in this case made it an ideal time to go for a quick spin myself.... >>sorry i can't fly you like that.... >>reporter seriously? >>seriously. >>reporter: or not. too tall for the glider apparently. unfortunately, my inability to get airborne did reflect one of competitive gliding's major problems, in britain at least.... >>tribe: typically you could devote 9 days to a gliding contest and only fly on half of them. >>reporter: another problem preventing the sport from lifting off commercially is that the field of play is justtoo big... >>hibberd: the difficulty with gliding
competitions is that it's difficult for spectators to see what's going on. >>reporter: although moves are afoot to make the sport more commercially viable...and easier to understand....and the results are markable... >>reporter: real time graphics, combined with multiple camera angles, can produce spectacular images as seen here at a gliding grand prix in new zealand... >>reporter: but creating such coverage doesn't come easy....in this case it required over 50 cameras, not to mention one helicopter to relay the onboard camera signals...plus another shooting air to air footage...along with over 60 satellites that handled the gliders telemetry readings.... >>reporter: however, despite these impressive innovations...gliding remains stubbornly resistant to income-generating sponsorship or broadcasting deals.... >>reporter: there's no big money
tournaments. >>tribe: no, it's very much for the honour. >>skysbrook: i get a beer at the end of the night. it makes it all worth while. >>spreckley: there's no money in gliding. it's costing us...we're having to pay to do it ourselves... >>treadaway: tow plane pilot it's all about doing it for a hobby. so unfortunately you can't get paid for it. >>reporter: but while income is low...expenditure isn't... >>tribe: this one would cost you 20 thousand pounds upwards. 20-25000 pounds. >>hibberd: there are gliders on this earth that are worth somewhat more than 100 thousand pounds. reporter: gliders that mercifully got off the ground at last for a quick jaunt, from which they will hopefullyreturn in a few hours.... >>johnson: a quick six or seven rounds i think that would be a great result and we would feel slightly vindicated about throwing them out into this sky. >>reporter:
and sure enough...after a few hours....like well trained pigeons...they started coming home... >>reporter: challenging? >>fox: very challenging. yeah really challenging but really glad to be back. really glad to be back. >>reporter: have you been thinking a few times around there that you wouldn't make the round? >>barker: i was looking at fields. yeah. about a thousand feet you start field selection. >>johnson: well we've had 13 back which i think is very good given the circumstances. >>reporter: not bad at all...and not such a bad return for two days patience...as for the sport itself...it too must be patient...and hope that someday soon...it can translate the gliding experience, into something that can be followed, enjoyed, and funded...by more than just the few... >>that's it for this week's world business. thanks for watching. we'll see you again at the same time next week.