The Indianapolis Star from Indianapolis, Indiana • Page 23

Section YTKP A 'uAj JLJLWA Indiana Economy By THE STAR'S BUSINESS STAFF A IS ANNUAL MEETINGS The Indianapolis Star TUESDAY, OCTOBER 4, 1988 4 thrift flKS GUESS WHO'S COMING TO DINNER "There are two ways to get good shareholder attendance at the annual meeting," says Dan W. Mitchell, chairman of Evansville's Old National Bancorp, "either feed them, or omit the dividend." Mitchell made the comment recently at the Columbia Club where Old National sponsored a "dog and pony show" to encourage Indianapolis stock brokers to push Old National stock. TAXES MORE BACK TAXES The tax litigation may go oh for awhile for Eli Lilly and Co. A recent 7th Circuit Court of Appeals decision left unsettled how jnuch back taxes the Indianapolis pharmaceutical manufacturer would have to pay for years 1971 to 1973 in its dispute with the Internal Revenue Service concerning income from its Puerto Rlcan manufacturing operations. After ruling on the issues in the complex case, (he appeals court in Chicago sent the case back to the U.S.

Tax Court to recompute the tax deficiency. The Tax Court already had cut the original $34 million deficiency filed by the IRS by about half, and the appeals court ruling likely would cut that again. Before that can happen, though, the court will have to deal with an objection filed by Lilly on a technical point, regarding pricing, says the IRS. Meanwhile, the IRS has until mid-October to decide whether to appeal. Meanwhile, a similar dispute concerning the years 1974 and 1975 has been filed with the U.S.

Tax Court. For those two years the federal government says Lilly owes about $24.4 million in taxes, not all of which Is related to Puerto Rico. Lilly has noted in its annual reports that the IRS is seeking a total of $159.6 million for the years 1974 to 1981 Only six more years worth of taxes to haggle over. STAR STAFF ILLUSTRATION JOHN BIGEL0W F. Blake Wallace, the general manager of Allison Gas Turbine, has led the turnaround at General Motors Corp.

division. ENTREPRENEUR The division now has a delicate bal By BILL KOENIG HARD WORK PAYS OFF In a ceremony at the White House today. Indianapolis businessman Gabriel E. Afiulrre will be honored by President ance. Some companies are partners on one project and competitors oh others.

wtamgnnmf 3 A Moreover. Allison Gas Turbine research programs aimed at pro Dynamic ducing long-term results. And it sought to improve its manufacturing; techniques a potentially sensitive Reagan as the "National Minority Entrepreneur of the Year." Agulrre is president of Sani-Serv, a Westside manufacturer of ice cream machines and beverage dispensers. The company has grown from sales of $700,000 in 1977 to an estimated $30 million this year and employs more than 160 people. iAguirre joined SaniServ In 1955 as a refrigeration repair- A rlnf Intn mn.M.

area as far as the union was con uture cerned. Military contracts Allison Gas Turbine's big tradi tional strength was the helicopter engine. The division believed the basic ing. Up the ladder he went and Aguirre in 1977 he bought the firm from General Foods. technology could be adapted to new The company manufactures a wide array of food uses.

Industry machinery frozen custard dispensers, The big success so far is obtaining a production contract for a new type of aircraft, the V-22 Osprey. The Allison Gas Turbine looks to expand markets soft-serve ice cream machines and the like and registers sales both in the United States and craft is known as an "aerocopter" shaped much like a plane, but with abroad. Recently, SaniServ Joined Curtis Interna tlpnal another Indianapolis company, in joint venture to build a chain of fast-food restau rants in Poland. propeller blades enabling It to take off STAR STAFF WRITER Not so very long ago. Allison Gas Turbine was thought to be in decline.

"The perception of the industry through the late 1970s and early 1980s was General Motors was going out of the jet engine business," says F. Blake Wallace, the division general manager imported form General Electric Co. in 1983. These days, Allison Gas Turbine executives describe the division as solidly profitable, though GM does not break out results of individual divisions. Wallace says GM Is a supportive corporate parent.

"General Motors has met or exceeded" promised resources, he says. And the future? Well, executives say they expect a bright one. Allison Gas Turbine will re-enter commercial aviation after decades of being primarily a military contractor. The division also may be producing engines for missiles as well as its traditional position in helicopters and other aircraft. Yet, it's not all smooth flying.

Take labor-management relations, for instance. "The whole organization has not bought Into the fundamentals of doing things in a partnership mode," says Don Newton, chairman of the Allison Gas Turbine bargaining committee of United Auto Workers Local 933. Whatever one's perspective, however, one thing Is clear. The Allison complex on the Southwestside is one of the most dynamic GM units in the state. During Wallace's tenure, the division has developed new products (engines for the bread-and-butter defense business) and engaged in research that could yield more.

It is a place where things are done and land like a helicopter. The vehicle produced by divisions of Tex Agulrre has traveled extensively overseas to tron Inc. and Boeing Co. can travel arrange these contracts. At home, he spearheaded formation of the Greater Indianapolis Hispanic Chamber of Commerce and he has been involved up to 350 mph.

Allison Gas Turbine was awarded the contract In December 1985. The with Mayor William Hudnut's Humans Relations Pentagon will start buying the Osprey Task Force. Aguirre is president of the Brownsburg in 1991. Board of Police Commissioners and active in sup Also pending is another big Penta porting Police Athletic League programs for young' gon decision. The military plans to sters.

produce the LHX helicopter, which would replace several Army models. INDUSTRY A partnership between Allison Gas Moreover, executives would report to an Indianapolis-based general manager, instead of looking to Detroit where Detroit Diesel was based. And the automaker went outside of its ranks to hire Wallace as the general manager. As It turned out, the formation of Allison Gas Turbine was Just one step in a GM plan to increase defense business. Two years later.

GM bought Hughes Aircraft Co. Partly the purchase was made to tap into Hughes' high technology base and adapt it to automobiles. But it also happened because of Hughes' defense contracts. In any case, Allison Gas Turbine was on a new course. It looked to develop new engines for the military and to cultivate new customers.

Where it didn't have the expertise in house, Allison sought partnerships. differently than before. Hourly workers consulted with management on some projects. The division has the potential to grow at a time many factories are losing workers. The resurgence In the operation's fortunes began five years ago.

At the time, the aircraft engine facilities were part of another GM division. The main business of that unit. Detroit Diesel Allison, was transmissions and components for heavy-duty trucks. GM decided not to sell. The early 1980s saw a massive military buildup by the Reagan administration.

The Indianapolis operation benefited. So GM opted to make the aircraft-engine portion a separate division. That would mean that aerospace-oriented executives would take charge of marketing and production. Turbine and the Garrett Engine divi TARNISHED IMAGE BUT CLEANER AIR sion of Allied Signal Inc. is competing construction ban on major industrial projects In with Pratt Whitney and the Lycom ing division of Textron for the con two northwestern Indiana counties will hurt the area's image a bit, but economic development tract.

officials say the resulting cleaner air will be a plus, I U.S. Environmental Protection Agency or But Allison Gas Turbine also is looking to use the basic technology dered the ban Friday, saying the state had failed to developed for helicopters and use it control ozone problems in Lake and Porter coun elsewhere. A major initiative is providing en- ties. The EPA also said It was continuing a similar ban already in effect for Chicago and surrounding See FUTURE Page 5 Illinois counties. order prohibits new or modified major Dukakis' health-care plan gets mixed reviews sources of volatile organic compounds that lead to the creation of ozone.

The ban applies to Industries that annually produce 100 tons or more of the compounds, including vehicle painting operations, petroleum refineries and certain pharmaceutical manufacturers. By CHRISTOPHER BARTON STAR STAFF WRITER The EPA also Imposed the ban on heavy Indus- trv in Clark and Flovd counties across the Ohio ernment restrictions on business, McAlister said. The Indianapolis Chamber of Commerce echoed those views. "What we oppose is the government rather than the businesses, themselves, establishing ben-efit policy," said Rebecca L. Hopewell, a spokesman for the Indianapolis chamber.

"Although his intent is a good one. we are against any government program that tells a business what to do. We don't think employers should be mandated to do anything." Because most large employers already provide employees with health-care insurance programs, the impact of such a plan would be on small businesses, Hopewell said. Hopewell pointed out that the 1986 White House Conference on Small Business, a delegation of small business owners who meet with the president to discuss small business concerns, set "opposition to mandated benefits" as its number two priority. "We feel any time employers don't have the flexibility to run their business in the most cost-effective way possible or anytime that they are mandated to run their business in a certain way it's going to run up the cost of business," Hopewell said.

The Indianapolis chamber offers a low-cost See PLAN Page 5 Jones pointed out that Bush said he would address the problem by encouraging more people to buy into Medicaid. "People who are making minimum wage can't buy into anything," he said. Dukakis' national plan would cover a basic package of benefits, including hospital, physician and diagnostic services: preventive, prenatal and well-child care; and mental health. Under the Massachusetts program, employers will be required by January 1992 to contribute the equivalent of 12 percent of the first $14,000 in wages per employee a year to a state Insurance pool from which employees can purchase coverage. The plan in Massachusetts excludes businesses with five or fewer employees and offers other protections for small and new businesses such as different benefit packages and special tax considerations.

Indiana associations representing business had a little different view on mandated benefits. "I'm assuming that it's based on the law in Massachusetts and that's got a lot of bad features in it." said Frank C. McAlister, senior vice president of human resources for the Indiana Chamber of Commerce. "First of all it's a whammy on small business. "Our concern is businesses that don't have the money to do it.

And if you don't have the money to do it, you simply can't do it." The state chamber's policy is to oppose gov River from Louisville, Ky. The Indiana Retail Council calls It a "a burial The four Indiana counties have a mandatory plan for small business." auto emission testing program for vehicle exhaust. State leaders of the AFL-CIO laud it as a which contributes to ozone pollution. solution to a national health-care insurance prob- lem. The issue that's prompted such definite stands INSIDE ln the business community is mandated employer- paid health-care Insurance, a central debating SEED COMPANIES Most companies say stored nominee seeds will lessen impact of drought Page C3 Mchaef Dukakis, the plan would require most COMPUTERS Problems with the phone lines businesses to provide employees with a health- kcan be remedied with the help of certain computer fare program largely by requiring employers to pay paoe re the premiums.

rose proposa, based on a that Gov HIGH FASHION Christian Dior exec tells IU Dukakis helped enact in the state of Massachu- students success lies with extra work Page C7 setts. Vice President George Bush, the Republican presidential nominee, opposes such legislation. Briefly 4 "We have to have a health-care Insurance Business Computer 6 program or we've got to take care of those that do Company Spotlight 2 not have one," said Ernest C. Jones, president of Data Bank 3 the Indiana AFL-CIO. Indiana Report 2-3 "Sick people have to be provided facilities and Meetings 11 there are many employers who are escaping that Newsmakers 12 expense because they do not make health-care Stock Tables 7-11 insurance available to their employees," Jones Update 3 said.

"In reality, the taxpayers are paying for it anyway." A.