Welcome to hardtalk. Im stephen sackur. Every day, the havoc wrought by the coronavirus pandemic worsens, on Public Health and on the global economy. Economic activity beyond the barest of essentials has been frozen across much of the world. What on earth will the economic landscape look like when this is over . Well, my guest is ola kallenius, the ceo of one of europes biggest vehicle manufacturers, daimler. What will it take to survive the greatest economic shock in most of our lifetimes . Ola kallenius in stuttgart, welcome to hardtalk, and let me begin with a simple question what impact is this terrible Coronavirus Crisis having on your business . Stephen, thank you for inviting me to hardtalk. This is a most unusual and very challenging situation for our industry. We at daimler are focused on two main priorities as were tackling this challenge. First and foremost is the health and safety of our employees around the world, taking measures in accordance with the authorities, starting in china a couple of months ago, but now also in europe and in the United States, taking measures to protect our staff, and also help authorities and societies to flatten this curve of this pandemic. And of course, second, its the health of the company, so taking measures to protect our cash, managing our cash throughout this most unusual of times. Lets start with the human elements. I think im right in saying that you have roughly 200,000 workers across the world. How many of those people are currently working . Stephen, its even more than that. Were actually 300,000, and its different from country to country. In february, we stopped our production operations in china for a couple more weeks to then start gradually ramping up again. We have Just Announced this past week that we are stopping production in most of our european operations, and also some of our north american operations. So tens of thousands of people at the moment are home, but also, a large part of the company is still working. Are you paying those members of staff who are not working . This is an issue across the world now, of what happens to workers who are laid off as a result of this pandemic. What are you doing . There are different regulations with regard to this around the world. Here in germany, there is a model that has worked quite well for the economy here. Its a law called short working, where you can send people home for reasons of lack of demand or things like this very unusual situation, and the government pays for part of the cost of the wages and we pay for the rest. You are one of europes, one of the worlds, most famous, lauded, historical manufacturing companies. Now, Companies Like yours are being asked by governments around the world to do some pretty extraordinary things, for example, to give over some of your engineering and assembly capacity, to shift from making in your case cars to making ventilators. Are you prepared to do that . We are taking a range of actions to help. This is one of the situations where Everybody Needs to come together and see what we can do to tackle this crisis. And, yes, were helping on many fronts. Of course were donating money. We have donated 110,000 of the masks that we would normally use in our paint shops and in other parts of the operations. Even to what youre mentioning, we have had the first request for making individual components, and we have quite a capable 3d printing operation, and some prototype parts are being made as we speak. So, if and where we can help, were very happy to do so. Lets talk about the financial state your company is in. We all know that the car industry has been under very heavy economic pressure, long before the coronavirus struck, and i believe im right in saying that in the last quarter, daimler actually made a loss, something almost unprecedented in your company. You are in a very weak position, are you not, to withstand the new pressures that come with this crisis. The Auto Industry as a whole is in transformation, a fundamental transformation, where you could almost argue that we are at the point in time where we have to reinvent the original invention that was from the Founding Fathers of daimler. Were talking about moving towards c02 free mobility. The digital revolution changes our products and also the way we work. So, yes, you could argue were turning the company upside down. With regard to our financial results, we have taken measures to strengthen our Balance Sheet and our profitability. Let us be honest are you now in a battle for survival at daimler . At this stage, we are not in a battle for survival. We have a strong growth Liquidity Position and, of course, now were adjusting our production capacities to meet a period of lower demand, which is caused by the covid 19 pandemic. So were very carefully managing cash. At the same time, its uncertain how long this crisis will go on. And, of course, at some point, the industry as a whole, as well as our company, we have to try to get back up again to normal operations and generate more revenue. Yeah, i understand your wish and your desire, but lets look at reality investors are losing confidence in your future it seems. I note that your share price, before recovering a little bit in the last couple of days, your share price has sunk over 40 since this Coronavirus Crisis really hit home. Investors are losing confidence. The whole sector, and other industries as well, have been hit very hard in this very volatile and uncertain financial market. So we have had some big swings in the last couple of days, as you mentioned. It went back up again, unusually high. I think that is a reflection of the uncertainty. How long is the pandemic going to go on . When can the economy pick back up again . So its not something that is specific to daimler. But in a situation like this, its our task to manage our business, manage the cash and make sure that we navigate through this crisis in the best possible way, and thats what were focusing on. Some fundamental weaknesses, it seems to me, have been exposed in your Business Model in the last couple of months, not least your massive and growing reliance on china and the chinese market. You sell more cars by value to china than you do in germany and the us combined, and that has really hurt you as the coronavirus effectively closed down much of the chinese economy from the beginning of this year. Can you learn from that . Over the last five to ten years, china has been an absolute Success Story for us and, yes, we have grown significantly to the point where china now by a wide margin is our biggest market. As the corona outbreak started and measures were taken in china, of course we ramped down production and demand fell away, but its also the first country where we can now see a gradual return to some sort of normalcy. In our production, in our operations in china, were almost back up to normal production and showroom traffic is starting to pick back up. So it could even be an opportunity as europe and the United States now, some couple of months later, hit this crisis, that we can gain revenues in china. So in general, the reliance of china is also an opportunity, notjust through a situation like this, but also for the future. Well, to be honest, that sounds like youre not learning any lessons at all from what has happened to you over the last three months. Do you really want to go forward with china being so utterly central to your entire Business Plan . I know its the biggest Consumer Market in the world for you, but surely youve learned something about the fragility of your model. China is the biggest Automotive Market in the world, by a large distance to number two, which is the United States. If you are a global player, in our case, the leading premium and luxury player in the world, not to focus on china as a Growth Market i think would be a strategic mistake. So of course, this black swan, the covid 19 crisis, has exposed Global Supply chains being dependent on each other. In this situation, our procurement and supply team has actually mastered this very well to make sure that where we could keep operations going, we could also have the supply secured. To turn away from china this point, which we also feel in the next ten years provides the biggest opportunity for growth, i believe would be a mistake. We are going to increase our activities in china and try to grow there. That doesnt mean that other markets are not important for us, of course europe and the United States and other places around the world, we will also seek growth. But were not ruling out one region as a strategic priority just because it happens to be a bigger leading market. Mr kallenius, let me ask you about germany. Heres a quote from your chancellor, angela merkel. She said, since german reunification then she corrected herself and said, no, since the Second World War there has been no challenge to our nation that has demanded such a degree of common and united action. When you look at germany right now, do you believe youre seeing a response from the government which meets the scale of the challenge . The response from the German Government has been comprehensive and, in my view, a good and measured response. What we need is a combination of solidarity and flexibility. Solidarity in terms of taking all the measures that need to be taken to flatten this curve, everything from social distancing to making sure that we have all the equipment and everything that is needed to tackle this medical crisis. But also flexibility, in the economy, for the companies. Yes, were ramping down production now, but we also need to be ready when we come out on the other side to go back up again. And especially, as i mentioned before, the law of short working, that you can quickly take out capacity without having to lay off people, to then be able to turn it back on again, is i think something that is perhaps even unique for germany, and is a good tool that the government has given industry in this situation. So the country is pulling together and we are in a constant dialogue how to manage this very delicate crisis. We are used to germany being literally the engine, the motor of Economic Growth in europe, economic stability. That looks as though its going to be challenged. To quote the president of the ifo institute, clemens fuest, who hasjust released figures suggesting a collapse in Economic Activity in germany in the last month, the German Economy is speeding into recession. There are leading economists who think the countrys gdp for this year could contract by up to 9 . As one of germanys signature companies, businesses, you must accept that this is an environment in which your company is not going to be immune, is facing a profound crisis. Theres no doubt that this challenge is twofold, both a medical one and an economical one. That is why we took such quick action with regard to matching our production capacities with the demand situation that we are now seeing in the market, really managing cash. And i think its absolutely crucial as these things unravel that we watch when can we turn back on again . How can that be done in a responsible way . That is being discussed now, but i think it is maybe a bit too early to make a final prediction of where this is going to go. But, at the same time, being very realistic that yes, of course, this will have an economical and Financial Impact on everybody. Well, let us compare and contrast europe and the United States. Across europe, from your own situation in germany, where the regions and the government are, in essence, operating a form of lockdown, not entire, but a lockdown, to italy and france and spain, where the lockdown is complete. We see in europe a very dramatic and indefinite freeze of Economic Activity, but then we contrast that with Donald Trumps message to the American People where he says, i want america to be back open for business, people back to work, he says by easter, which is mid april. Now, which approach do you believe is the right approach . In the european situation, i think the situation is being managed day by day. So, at this point, we dont know when you can responsibly start picking up activity again, so theres not an exact time frame on that. Weve seen in the United States, many citizens, many regions are acting in a similar way to europe, but also keeping Economic Activity down the road in the back of our minds. What will have to do over the next few weeks is really to calibrate this. How can the covid 19 curve be flattened so that the Health Systems can cope with it . And then be able to, step by step, turn the economy back on again. If i may interrupt. Sorry, youre being very measured, youre giving me a very dispassionate answer, but ultimately this is about an emotional as well as a logical reaction. Donald trump says there is a danger that the cure, i. E. Total lockdown, is worse than the disease, and he sort of implies in the end of societies is how to sacrifice a little bit, maybe the lives of some of the older and more Vulnerable People in society, to ensure the economy can keep going, that masses. Millions of people have work to do, that they do not go hungry, and that society continues to function. Where do you, as a business leader, sit on that argument . Do you feel any sympathy with donald trump . For us, as i said, two Priorities Health and safety of our employees but also the health of the company. Thats why we are also going through a balancing act. We have not turned off the company completely, we have stopped many of our production operations and weve stopped also many of our administrative operations, but most of our r d is still going. We are of course taking measures, we are dividing Development Teams into two groups. Even the board of the company has been divided into two groups. As we are navigating through this crisis, we are trying to do both. Its a balancing act and i dont think its a situation where its either or and i think everybody realises, including the politicians in europe, that the economy is important and that in a responsible way we are looking for a scenario as to how to get back up again and into operations, as we can see happening in china at the moment. You told me earlier that right now you dont feel this is a battle for daimlers survival, but it could come so. We dont know how long europe and the United States are going to be in the midst of this crisis, we dont know how deep the recession economic depression that comes as a result of this economic shock is going to be, but there are clearly people in germany who are extremely worried. There are ministers in your government who are saying, we may lose some of our greatest and best businesses, and we will, if necessary intervene to do whatever it takes to ensure they are not sold off cheap to foreign interests. We are, and im quoting now the Justice Minister speaking just recently, we are prepared to take National Stakes in these businesses, partial or full stakes, if necessa ry. Could that happen to you . Well, the first thing that needs to happen, and action has been taken here, is when you lose the revenue side for a period, for some companies, and this is very important for our supply base down to the tier two, three and four, is to provide liquidity and credit. This is happening in an unbureaucratic way so that companies have access to liquidity. That is the first port of call in this management of the crisis. In our own case, being a company with a healthy gross liquidity, of course we are managing our cash, so we are now adapting our production to meet demand and looking at every expenditure in the company to make sure we can weather this storm. Its too early now to say how long it can be. Can Something Like that go on indefinitely . No, it cant, but as we sit here today i dont want to speculate about what the world looks like in six months from now but rather focus on the next weeks, months to manage this as best as we can and be in an open dialogue with government as to how we can turn the economy back on again. But put it this way, is it conceivable to you that if the crisis goes in the worst way, worst case scenario, is it conceivable to you that daimler could be nationalised . Its not a scenario were discussing at this stage, and i dont want to do hypothetical here. What were doing is protecting our liquidity and our cash position to make sure that we we best possible navigate through this very challenging crisis. Just a quick thought about lessons to learn. Some people are saying the disastrous consequence of this is Companies Like yours, which are trying to spend a huge amount of your r d on electrification, creating a new wave of electric cars, youre not going to do that, youre going to have to withdraw a lot of that investment and actually youre going to lose out in the long run because innovation and electrification will have to take a back seat. We are on a Journey Towards a c02 neutral mobility, and weve set as an ambition for the company to, across the board over the next couple of decades, to go co2 neutral. That is a strategic decision that wont change. All our r d projects, as we sit here today, are alive and on track. Of course will monitor the situation and how deep this crisis goes and manage our cash accordingly, but it doesnt change the Strategic Direction and were doing everything we can to protect this seed for the future, if you will, as we managing through this crisis. A final thought. Youre one of the most Global Companies one could imagine, your supply chains, your markets, theyre all over the world, they rely on an open, interconnected world. Globalisation is under real threat. It may never be the same again after this coronavirus pandemic. That is perhaps your biggest problem of all. Globalisation for the past decades for the world but also companies, or industries, Companies Like ours, Industries Like the Auto Industry, has been a big and if it. Its created growth, its created jobs, and its created also financial strength so we can invest into these huge technologies we were talking about, so we are a strong promote, proponent of keeping the system of global and open trade alive. Now, the covid 19 crisis has been an absolute stress test for these Global Supply chains and has been an unwelcome opportunity for us to see how they work. Ive been absolutely amazed at how well across countries, from china to europe to the United States and many other countries, weve been able to manage the supply chains. That doesnt mean were going to idly sit back and not have some Lessons Learned from this crisis. We will look at where we need to make supply chains more robust. But i want to underline we are a company that fully supports and thinks its best for everybody if we keep the globalist idea alive. And who knows, maybe we can say they view business trips now that we know that digital tools, videoconferencing and other tools work well for many meetings as well. Ola kallenius, this particular digital connection has to end right there, but thank you very much forjoining me on hardtalk from stuttgart. Hello. In more ways than one, a lot has changed over the last week, none more so than in the weather, where we saw on tuesday last week the feel of late spring in the north coast of wales 19 celsius, 63 fahrenheit achieved. A week later, well, were lucky if we reach nine celsius in the same spot, even with some sunshine continuing. That colder theme continues through this coming 2a hours, but a little less chilly. High pressures moved further west so the winds more westerly than northern, and notice the gaps in the isobars, starting to widen, indicating it wont be as windy as it has been. That said, a noticeable north westerly breeze in parts of northern scotland bringing a few rain showers through the day. One or two rain showers in Northern Ireland and Northern England but many will stay dry. Sunshine coming and going through the day, the best of which will be in southern counties of england, east anglia channel islands, sunnier than in recent days, and the breeze wont be as strong as it has been, it will probably feel that little bit less chilly. Elsewhere, light winds, continuing through tuesday night into wednesday away from the far north of scotland. Cloud amounts often large in the night. A few showers in the north and west. Where you see any cloud breaks, a bit of frost around, the greatest chance in clear skies in southern counties of england. This is where itll be frostiest to begin wednesday morning. A chilly start, that ridge of high pressurejust in, but changes through the day in the north. The isobars tightening up again, coming closer, breeze picking up and that weather front set to bring some more significant rain orkney and shetland in the morning, and then through the day, the northern half of scotland. Away from that, a few showers, plenty of cloud around for the vast majority, and the sunshine will come out later in the north of scotland. While we could see temperatures peaking at ten, it will drop because cold air is on its way. This quite significant area of low pressure pushes from iceland towards norway, introducing gales quite widely across the northern half of scotland, if not severe gales, and a shot of cold air to see the week out, pushing its way southwards. So, for thursday, cloudy to begin with in the south. A few more showers pushing through the day. Brightening up in the north but showers turn wintry, sleet and snow quite abundantly, and temperatures in lower single figures. Whereas weve still got temperatures potentially around 12 or 13 in the south east corner. But the cold snap, thursday into friday, is short lived. Just notice by saturday and the weekend, milder air returns from the south. This is bbc news. Im Lewis Vaughan jones. 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