Arizona Republic from Phoenix, Arizona • Page 8

final The Arizona Republic MONDAY, JUNE 19, 1989 ardian empire still growing at 75 Bond rating for China put at risk Raising funds could be harder 1 1''' i Diversified firm weathers state's economic plight By Alan Thurber The Arizona Republic Picture this: A stale senator from Arizona flies to Las Vegas to watch the University of Nevada Running Rebels play a basketball game. lie stays at the Tropicana, drops a few bucks at the Holiday Casino and flics home. Or we can run the film in reverse, with a Las Vegas resident flying in for a Cardinals football game and staying at the Sheraton Phoenix. In cither case, our hypothetical traveler has never left Mardian territory. Mardian Construction Co.

of Phoenix built the Senate and the House wing of Arizona's Capitol Terminal 3 at Sky Harbor International Airport and the new and old control towers there. The company built the $112 million terminal at McCarran International Airport in Las Vegas, the basketball arena at the University of Nevada-Las Vegas and the Tropicana and Holiday Casino. Mardian handled a major expansion of Arizona State University's Sun Devil Stadium in the 1970s and built the Sheraton (formerly the Hilton, nee Adams) Hotel. A company can build a lot in 75 years. Mardian has.

Last year, the firm opened an office in Pasadena, Calif. Company executives say they opened the office for sound economic reasons but with a strong touch of nostalgia. Sam Mardian an Armenian carpenter who had spent time in Turkish jails before emigrating to America, began a home-building company in Pasadena in 1914. He taught the trade to his four sons, who moved the business to Phoenix in 1940. Aram, Dan, Sam Jr.

and Bob were all active in the firm at one time or another. i Aram, who died in 1984, established Glen-Mar Door an affiliate. Dan started Marco Crane Rigging, which is still in the family. Sam took enough time out to serve two terms as mayor of Phoenix. And Bob, an attorney, was an assistant attorney general in the Nixon administration.

Mardian Construction Co. was sold to Pirini a national construction firm, in 1974, but Dan and Sam remain on the board, and Bob is active as a vice president. "The firm was doing $14 million worth of business when it was acquired," said Dick Rizzo, who heads Mardian Construction as its president and chief executive. "We're at $150 million today. Pirini pushed us into geographic diversification.

Nevada had been a godsend, and now we're expanding west. L-. tS.rM.L,ii.. Michael MeisterThe Arizona Republic If By Bart Ziegler The Associated Press NEW YORK China's credit ratings arc at risk because of its political upheaval, and the nation may find it more difficult to raise money in world financial markets for economic-development projects, experts say. Moody's Investors Service recently put its ratings of Chinese bonds on review for a possible downgrade.

Japan's credit-rating agencies also said they are re-examining their assessment of China's debt. If the credit-rating companies lower their ratings, China might have to pay a higher interest rate on future bond issues. The price of existing Chinese bonds has plunged on European markets in reaction to the government's crackdown on pro-democracy demonstrators. China has more than $1 billion worth of bonds in circulation in those markets. The turmoil also has delayed a new $100 million bond offering in Japan by one of China's provincial development corporations, stalled a $120 billion Japanese bank loan to a Chinese petrochemical company, and held up a $60 billion agricultural loan from the World Bank.

Analysts say it is too soon to tell what lasting impact the upheaval may have on China's ability to borrow overseas from commercial and governmental sources. But many think damage has been done, no matter what the outcome of the nation's power struggle. "It's already going to be marginally more expensive (for China to borrow), but the question is, 'How much said Rick Harbaugh, an analyst for the WEFA Group, a financial forecasting firm. Harbaugh said he thinks China increasingly will rely on its $19 billion in foreign reserves this year for funding instead of foreign debt. These reserves consist of convertible currencies, such as dollars, pounds and yen, held by the Chinese central bank.

WEFA recently released a grim forecast for China's economy for the rest of the year. It said that production of goods has faltered and that the confidence of foreigners who invest in China has been shaken. China's reliance on foreign finance has grown as its free-market economic system has expanded. The nation has See UPHEAVAL, page C3 Blue streak shines Procter Gamble By Marybeth Nibley The Associated Press NEW YORK Consumer-products colossus Procter Gamble Co. is proving it can be a nimble profit maker, not just a diligent defender of market share.

The company has been beating earnings estimates by outside analysts. A push to enhance profitability, partly by changing management structure, has provided reassurance that Procter Gamble is among the bluest of blue-chip stocks. During its evolution since 1837, when candlcmaker William Procter went into business with soapmakcr James Gamble, the company has devoted enormous attention to research and development. The big budget paid off over the years in the birth of world-beating products. But, as the creation of such brands as Ivory soap, Crest toothpaste, Tide detergent, Crisco cooking oil and Pampers disposable diapers slowed with the aging of the consumer-products market, some stock pickers got impatient with the research obsession.

And they objected to the company's approach to making money. Research remains critically important but things have changed. From the Cincinnati headquarters to the numerous points dotting the globe from which directs its empire, operations are run differently. Jay Freedman of Kidder, Peabody Co. Inc.

said a new way of thinking has been cultivated among senior managers. Formerly, the company seemed to put unit volume sales and protection of market share ahead of profit growth. The attitude, Freedman said, was "as long as we protect our market positions, profits will eventually come through." A realignment of priorities, brought about by changing the chain of See PROCTER GAMBLE, page C4 i 7 A 4 Mardian President Dick Rizzo (second "We opened the new office in Pasadena because we wanted to establish a greater presence in southern California." The company is building a $35 million Ramada Renaissance hotel at Los Angeles International Airport. In the middle of that Phoenix-Los Angeles-Las Vegas triangle is Laugh-lin, Nev. Mardian has no need to establish a larger presence there, but it will anyway.

Last year, the company built the Ramada Express Hotel and Casino which has a train that circles it and Harrah's Del Rio Hotel and Casino. He heads an outfit called Shcshunoff Information Services, which provides reports, data books, surveys, software and manuals that are bought by 1 1,000 of the nation's 13,000 banks and 2,200 of the 2,970 savings firms. The Arizona Republic and hundreds of other publications print his comparative data on financial-institution performance. It is ironic that Shcshunoff has his office in Texas, where financial-institution performance has been the worst in the nation. From many of the windows of his firm's offices on the 11th, 12th and 13th floors of this fine, new building built for $20 million and you can have it for $8 million you can see the Bank Tower.

The tower's owner, Corp, a multibillion-doliar holding company, was a financial disaster. Last year, the nation's thrifts lost a total of $11.1 billion. Of that loss, $9.7 billion was in Texas. The economic and political climate of Texas these days makes you laugh or cry. Shcshunoff prefers to laugh.

"It's tough to be a healthy thrift or an honest congressman," he said. Shcshunoff, son of a Russian immigrant, is a quiet, smiling man who just might know more about how the nation's financial institutions are 1 "TTj Dick Rizzo, Mardian Construction Co. president, in front of one of the company's latest projects, the Ramada Gateway Hotel in Phoenix. "We're seeing a shakeout of the local construction industry. Ultimately that will make it healthier.

The best five will still be around." and later, armed with business and engineering degrees from Lehigh University in Bethlehem, worked for contractors in Maine and Massachusetts. He joined Mardian in 1977 as one of two project managers. "Wc have 20 today," he said. Arizona's economy has hurt the company to some extent, Rizzo said, but not as much as it could have. "Diversification helped," he said.

"Traditionally, we've done half of our work in Arizona and half outside. Today, it's 70 percent outside, and most of that is in Nevada. "Our clients have been good to us, too. Almost all of our business is negotiated, and 80 percent is repeat business. The manufacturing segment has been good, and the life-care centers.

We built the Beatitudes Campus of Care in Phoenix years ago and a lot since. "And we are not developer-oriented." Rizzo doesn't see Arizona's economy turning around soon, but he said that when it does, there will be solid growth. "A downturn separates the men from the boys," he said. "Some fail. Some move out of the area.

We're seeing a shakeout of the local construction industry. Ultimately that will make it healthier. The best five will still be around." Mardian expects to be one of them. Alan ThurberThe Arizona Republic savings and loan industry will survive culties. "Two thousand of the 3,000 thrifts are overcapitalized," he said.

"They have enough capital right now to meet the new guidelines (proposed in federal legislation to overhaul the nation's industry). Many others will have time to get there. "Over the longer term, the healthy will win. Americans will not have to go without homes." 'A oil' Jtfr" from left) holds a conference with Mardian This year it will begin the 18-story, Flamingo Hilton, which will be the largest hotel in Laughlin. The $95.8 million project is scheduled for completion at the end of next year.

One of the firm's most spectacular achievements was the razing, rather than the raising, of a hotel. Mardian demolished the old (although not original) Adams Hotel in downtown Phoenix by implosion in 1973 and built the new Adams, now the Sheraton. There have been other highlights. Patriots Square in downtown Phoenix is unique. Northern Arizona University's doing than anyone else.

At least he has the information at his command. Shcshunoff Information Services, one of his two companies the other is in consulting, training and services tracks, computes, compares and analyzes data on every bank and thrift in the United States. It puts out annual books with such catchy titles as The Banks of Oregon, and The of South Carolina, with midyear updates, The service provides computerized analysis of any institution in the country, or a comparative study of competitors. "We got into it almost 20 years ago, analyzing a Texas bank," Shcshunoff said. "No one else was doing it, so it seemed a good business opportunity." Did America's bank-information leader have a strong analytical background? "Yale, history major," Shcshunoff said.

"Then law school, which I nearly finished. Then I started a little venture-capital company. Lots of venture, little capital $7,000. "We helped one firm get started, and then got into the bank-analysis business." In 1972, national data became available through federal regulatory agencies, to which each financial 'f 'Wi'-'Stz-fl i to Soiithwest's going to rise again, financial-institution expert says Michael MeisterThe. Arizona Republic brothers, Dan, Bob and Sam Jr.

Ensphere dome, constructed in 1 976, is said to be the world's largest clean-span wooden (glue-laminated) dome. "I think I'm proudest of the airport work and the stadiums," Rizzo said. "A lot of our projects aren't statements, though. Wc do a lot of industrial buildings for the Salt River Project, Garrett and McDonnell Douglas. I'm proud of them, loo, because of their complexity.

But they aren't the sort of buildings that make people go ooohl and Rizzo, 45, got his start in the business with his father in Boston, 1 i Alex Sheshunoff believes the nation's despite its widely publicized problems. institution has to report, and Sheshunoff Information Services was on its way. With all of this data at his finger tips, literally, for' it is fed into his computer and appears in various forms on monitors at the touch of a key, Shcshunoff is in a good position see the whole picture. He believes trie thrift industry will survive its current turmoil and diffi I By Alan Thurber The Arizona Republic i AUSTIN "Arizona is paying the price of speculative excess," says Alex Shcshunoff, one of the nation's foremost authorities on financial institutions. His comment came one day after two savings and loan associations in Phoenix, Western Savings and Sun State Savings, were taken over by regulators.

"The bubble burst because of that excess," Shcshunoff said. "It happened in Texas, too. "The Texas real-estate boom was fueled by oil. In Arizona, it was the discovery of warm weather. "At one time, 20 percent of the work force in Texas was in building.

When real estate starts looking like a basic industry, watch out." In each state, Shcshunoff said, the developers and lenders went too far, and there had to be a correction, i Arizona and Texas will survive, he said. The Southwest will rise again. But it may take a while. I "Lenders will be overcautious," he said. "There won't be much venture capital." i From his office on the 1 1th floor of One Texas Center, Alex Shcshunoff watched the financial world of Texas crumble around him.

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