Detroit Free Press from Detroit, Michigan on May 19, 1990 · Page 12
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Detroit Free Press from Detroit, Michigan · Page 12

Detroit, Michigan
Issue Date:
Saturday, May 19, 1990
Page 12
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12A INSIDE: STOCKS Pages 13-16A. Saturday, May 19, 1990 NYSE, Page 13 Amex, Pagel4 Mutual funds, Page 15 Call Business: 222-8765 Detroit 4frce te r 3 ill H 1 Stock market retreats as traders watch rates h THE DOW Market details Page 13A The stock market retreated, running into resistance after Thursday's rise to a record high. Analysts said traders seemed reluctant to chase after the rally that has carried stock prices sharply higher this month. Much of the impetus for that advance came from an abrupt downturn in interest rates as fears of high inflation eased. Now, brokers say, investors seem inclined to wait for evidence that interest rates can go lower still. The Dow Jones average of 30 industrials dropped 11.80 to 2,819.91, reducing its gain for the week to 18.33 points. 200 VIPERS: Chrysler Corp. announced officially it will produce its expensive Corvette competitor, the Dodge Viper, with the first 200 to be available in the 1992 model year. Chrysler Chairman Lee Iacocca said the Viper, which debuted in prototype form at the North American International Auto Show in Detroit in January 1989, was expected to generate 400 horsepower from its all-new V10 engine and would cost "under $50,000." PENNEY'S PREDICTS: J.C. Penney Co.'s strategy of targeting middle- to middle-upper income shoppers by offering affordable, quality merchandise will lead to consistent growth during the 1990s, Chairman William Howell said at the company's annual meeting in Kansas City, Mo. Howell said Penney, with more than 100 million square feet of mall space, plans to open 50 stores this year. NO PROMISES: Although it has no immediate plans to close more assembly plants, Chrysler Corp. will not rule the closings out, said Vice Chairman Gerald Greenwald. "We're in a tough and dynamic business. I'd like to say there will never be another plant closing in the Chrysler system, but I just don't know," Greenwald said. "The market's going to tell us that." M00 NEWS: Is "Moo" too close to "Mooo"? That's what a state court is being asked to decide in a suit filed by Lubbock, Texas, restaurant operator Yet Inc. against its parent chain, Georgia-based Western Sizzlin' Inc. Yet, which operates two Bob York's Western Sizzlin' restaurants, filed suit against Western Sizzlin', charging that the chain has begun using "Moo" on a number of advertising properties .while Yet has been using the "Mooo" slogan as its trademark since 1984. FORD IDLES PLANT: Ford Motor Co. said it will idle its Atlanta assembly plant for one week starting Monday because of a shortage of dealer orders for its midsize Ford Taurus and Mercury Sable cars. Ford's Chicago plant, which also builds those cars, was closed this week for the same reason. COLOMBIAN CARS: Toyota Motor Corp. will produce commercial vehicles in Colombia in a joint venture with a subsidiary of France's Renault and Mitsui & Co., company officials have announced. Land Cruiser production is to begin in October 1991 with an annual output of 4,000 cars. Hilux production is to start in April 1992 with a target of 3,000 vehicles. NEW CHIEF: Daniel Burke has been elected to replace Thomas Murphy as head of Capital Cities-ABC Inc., the company announced. Capital Cities owns the Oakland Press in Pontiac; the County Press, a weekly in Lapeer; Reminder Newspapers, weekly papers in Oakland County; House Hunter s Guide in Oakland County, and Detroit radio stations WJR-AM and WHYT-FM. ON THE BLOCK: Pan Am Corp. put its Pan Am Shuttle service up for sale in an effort to raise money for the operation of its biggest subsidiary, Pan American World Airways. in Michigan TWO PROMOTED: Manufacturers National Bank of Detroit promoted two men to executive" vice president positions: Joseph Buttigieg III, who will oversee commercial banking, and Edward Miller, in charge of institutional trust and investment management. Buttigieg, 44, has worked for the bank for 19 years, most recently as senior vice president. Miller, 43, a 20-year veteran, also was a senior vice president. At the company's annual meeting, Chairman Gerald MacDonald said the company achieved record earnings in 1989 and told shareholders that first-quarter earnings which, although disappointing, principally reflect low fee income growth and loan volumes caused by the weak economic environment. UAW ELECTIONS: In a stunning turnaround, incumbent president Dick Long and all but one of his supporters have swept back into office at UAW Local 653 at the old Pontiac manufacturing complex in Pontiac. Last year, New Directions dissidents swept 22 of 23 convention delegate spots. Elsewhere, incumbent president Joe Duplanty, an independent, defeated Don Harris at UAW Local 659 at the old Chevrolet manufacturing complex in Flint. Phil Keeling and Dave Martin each received 831 votes for president of UAW Local 3000 at the Mazda plant in Flat Rock; a recount will be held Monday. ARBOR RATES: The June issue of Fortune magazine names Troy-based Arbor Drugs as one of its companies to watch. The magazine credits the drugstore chain's concentration on its pharmaceutical business and customer service as strengths that have nearly doubled drug sales since 1982. Regulars mourn temporary closing of Carl's BY CHERYL JACKSON Free Press Business Writer It wasn't the chefs surprise Detroiter Bill Ernest was looking for. Ready to do lunch and a bit of business as he pulled into the parking lot of Carl's Chop House Friday afternoon, he was greeted by locked doors and a sign announcing the temporary closing of the Detroit landmark. Ernest, a Delta Manufacturing construction supervisor who has dined at Carl's weekly for the past six years, planned to meet another Delta executive there. The restaurant has been a popular setting for business lunches, dishing up hearty steaks and baked potatoes since the early 1920s. But management locked Carl's doors after closing Wednesday night to avoid a possible strike by the Hotel and Restaurant Employees Union. The union, representing about 100 workers, voted Tuesday to strike. "We do a lot of business stuff here, I'm waiting for a guy to talk about a business deal now. We have an account here," Ernest said. But he is quick to add that when business is done, the place is also a nice "hangout." "There's a good atmosphere here and it's good for sports," Ernest said. "It's just a super joint." Josh Smith, the other Delta executive, agrees. The pair said Carl's was the place to be to view hockey games as well as to drop in before and after other sporting events and plays. Even as food was being moved out of the restaurant Friday afternoon, Ernest said he continues to keep the faith that he will meet clients and co-workers and cheer on sports teams there again soon. Smith said he doesn't put a lot of faith in reports that the Chop House is being sold to Frank Passa-lacqua, owner of another Detroit landmark restaurant, Mario's. Pas-salacqua said he doesn't plan to change anything if the sale goes through. "They've been selling this joint for years and years and years," Smith said, adding things wouldn't be the same at the establishment without restaurant founder Carl Rosenfield, now 95. Rosenfield HUGH GRANNUMDetrolt Free Press Carl's Chop House has been a popular setting for business lunches. opened the forerunner to the present eatery in the early '20s and moved it to its current location just off the Lodge Freeway at Grand River Avenue in 1932. "I'm going to miss the old man. V When the old man leaves, I leave. "They've got to reopen. We'll be lost without it," Smith added. "It's the greatest place in the world." Free Press Staff Writer Molly Abraham contributed to this story. Kroger turns merger tables Chain s expansion fills a promise BY JOANN MULLER Free Press Business Writer By agreeing to buy 34 Great Scott stores, Kroger Co. is making good on a 1987 promise to its cashiers to expand in Michigan. As part of contract negotiations with union leaders three years ago, the Cincinnati-based food giant promised to stay in Michigan and invest more money in its stores here within five years. It was an important attempt to smooth relations with workers after a bitter contract dispute in which the company shut down all of its Michigan stores for several weeks in 1984. But that expansion plan was chucked after a hostile takeover battle in the fall of 1988 forced Kroger into a $5-billion financial restructuring that left the company virtually paralyzed by debt. The nation's second-largest grocery chain was forced to sell more than 100 stores, close four of its 38 food manufacturing plants and lay off 300 workers at its headquarters to raise cash for the takeover defense. Although its 54 stores in Michigan were spared, any expansion was out of the question. But since the restructuring, Kroger's operating results have improved significantly, and at the end of 1989, the company was able to refinance its loans to increase its flexibility. Kroger has been in Michigan since 1917. :V?C ''III (fix?''- IV-v;'-V '''' r'"- L t w' 1 vf '- no II ii - ml HUGH GRANNUMDetrolt Free Press Dorothy Szott shops at a Great Scott in Dearborn Friday. Three chains survive area's grocery battles Great Scott to be sold O J BY JOHN LEAR Free Press Business Writer Where once six supermarket chains battled, three will remain. The trend among Detroit-area supermarket chains in the last decade has been consolidation, and mergers and closings have taken a toll. ' So Great Scott's demise should come as no great surprise. Ten years ago, the competition was Farmer Jack, A&P, Kroger, Great Scott, Chatham and Meijer. Since then: er, Allied Supermarkets Inc., reorganizes in a complex deal. The result: The 22 Great Scott stores and Abner Wolf food distributors are purchased by Meadowdale Foods Inc., a private company formed by former Allied executives. Great Scott in September 1987 buys three Chatham stores and closes two of them. By the end of the year, Chatham is gone. Kroger in July 1984 closes 70 southeastern Michigan stores after workers reject wage and benefit concessions. Within a month the two sides reach agreement, but only 45 stores reopen. Chatham Super Markets Inc. in May 1985 is sold to Nu-Trax Inc. At the time, Chatham is the area's third-largest grocer, with 33 supermarkets and eight Pak-n-Save Food Warehouses. By the end of the year, some stores are for sale, and Farmer Jack buys nine. A dispute over worker concessions results in the July 1986 closing of 17 of 20 remaining Chatham stores. Some reopen, but the chain falters. By the end of August, A&P and Great Scott pick off nine stores. In June 1987, Chatham's owners go into bankruptcy. In July 1987, Great Scott's own- Bin a December 1988 bombshell, A&P acquires Farmer Jack in a $76-million deal, giving A&P control of more than half of the area's chain supermarkets. Farmer Jack's owners faced losses because of the 1987 Western expansion and employee buyouts. A&P keeps the Farmer Jack name. It initially plans to drop the A&P name IocaUy, but later abandons that idea. Great Scott's owners in February 1989 buy seven stores from Farmer Jack and A&P, continuing an expansion that in a year will push it past Kroger as the area's second-largest chain. Kroger and Great Scott announce Friday that Kroger will acquire most of Great Scott's assets, including 30 operating stores and four under construction. That leaves Farmer Jack-A&P, Kroger and Meijer in the chain competition. KROGER, from Page 1A jor factor in the decision to sell. "In view of our limited financial resources, we believe this transaction is the most responsible one we could undertake for the benefit of both our employees and the community at large." Meadowdale, once a 440-store chain known as Allied Supermarkets Inc., has had its share of financial problems. The company survived bankruptcy proceedings in the late 1970s and then went private in a complicated deal with California-based Vons Cos. Inc. in 1987. Industry experts said Kroger should consider the lessons learned from the rocky marriage of A&P and Farmer Jack in January 1989. Although the Great Atlantic & Pacific Tea Co. said at the time that it intended to convert all its Michigan A&P stores to Farmer Jacks, the company backpedaled after loyal A&P customers complained. Instead of enjoying control over 40 percent of the Detroit-area market as expected, A&PFarmer Jack's joint market share slipped to 30 percent. Therefore, the New Jersey-based parent company decided to operate the two chains separately. Kroger and Meijer benefit ed from customer dissatisfaction with the merger, local , industry experts said. They said the melding of Great Scott and Kroger should go more smoothly because, unlike Fanner Jack and A&P, many of the chains' operating philosophies are similar. Both Kroger and Great Scott have similar merchandise, pricing policies and store layouts, said Ed Deeb, president of the Michigan Food and Beverage Association. By acquiring 30 Great Scott stores "and four under construction, Kroger would jump from third in the Detroit market, behind A&PFarmer Jack and Meijer, to second. Kroger's market share is expected to grow to about 21 percent, according to estimates by the Associated Food Dealers of Michigan. The Great Scott-Kroger combination is subject to the approval of the Federal Trade Commission. Analysts expect the merger to receive the FTC's blessing. Kroger is the nation's second-largest supermarket chain, with 1,234 stores and 1989 sales of $19.1 billion. Meadowdale's 1989 sales for the supermarkets and its wholesale division were about $460 million. Shoppers angered by plans BY CECILIA DECK AND RICK RATLIFF Free Press Business Writers Great Scott shoppers were saddened and angry Friday to learn that their favorite supermarket may change over to Kroger. At the Great Scott at Michigan and Greenfield in Dearborn, Kathleen Riley of Dearborn said Great Scott's selection and prices are better. "I like Great Scott better because everything's always fresh and they're always very friendly," said Lucille Crawford of Detroit. "The lines at Kroger are so long I could just tear my hair out," said Dorothy Szott of Detroit. Kroger said Great Scott stores would be converted to the Kroger format. Officials at the unions that represent workers at the two companies said it is too early to tell how the merger would affect workers. In a prepared statement, Ron Brown, president of United Food and Commercial Workers Local 876, said his local will be meeting with both companies as soon as possible to work out details. Richard Leebove, a spokesman for Teamsters Local 337, said the union had met with Great Scott representatives who "more or less explained to us what they put out on their release." The union has not met with representatives from Kroger. Local 337 represents 325 Meadowdale truck drivers, warehouse, office and clerical workers. It is also unclear what will become of the advertising efforts of the two chains. "We've been given very strong marching orders that it's business as usual," said Russ Ciliary of Ciliary & Partners, the Connecticut-based ad agency for Great Scott. Joseph Ungaro, chief executive officer of the Detroit Newspaper Agency, which handles advertising for the Detroit News and Free Press, said it was difficult to tell whether the two chains, once merged, would do less advertising than they did as competing companies. "For Kroger, doubling the size of their operation might mean they would have more desire to compete in the marketplace by increasing their advertising," Ungaro said. "Sometimes these things work as a positive. ... It depends on the attitude of the company and how they want to compete." Late last year, the A&P chain acquired stores of the Farmer Jack chain and published joint advertisements in local newspapers. But a DNA official wouldn't say how that merger affected advertising. How The Chains Compare Stores Chain State Area total total Kroger 54 29 Great Scott 38 ' 38 Farmer Jack 78 70 A&P 53 49 Meijer 46 12 Includes lour stores that wM be acquired by Foodland. Also, four of these stores are under construction.

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