St. Louis Post-Dispatch from St. Louis, Missouri on October 30, 1983 · Page 158
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St. Louis Post-Dispatch from St. Louis, Missouri · Page 158

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Sunday, October 30, 1983
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Page 158
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1 O a T! section ST. LOUIS POST-DISPATCH Dan Olin Tests Its Mettle On The Future Dorfman By Robert Sanford Dull Stocks M4 i juujia .iimiiw mu?m I 4 -JU ' "vl I mm m w& Of the Post-Dispatch Staff Around the world, the leaHino manufacturer of SDortine ammunitinn is wincnester, a division of Olin Corp. wun neauquaners m East Alton. unn also has a division in Fast Alton Olin Brass where the coins in your pocket or purse probably had meir oeginning in a rumace. Olin Brass and Winchester make un the complex at East Alton called the unn works. They are solid manufacturing operations that emnlnv i, peupie nere. A AArt l I aona out not static. If a visitor glances at Olin corporate publications or talks with executives, the wnH strategy" always seems to come un By strategy they mean business strategy, how to grow from solid uur growth area in metals, as we see it, is in electronics," said Donald w. oninn, president of the Brass Group of the corporation. "We're already involved in electronics in a big way. we suddiv Dractica v all of the copper ior lead frames domestically. Lead frames are the circuits that lead from a computer chip to other connections. "One of our allovs. called 104 i the leading lead frame material in the industry. It is licensed in Japan and Europe. We are going ahead. Olin has acquired two companies in Rhode island that make metals for electronics and metals for decorative use. "There are electronic circuits that are flexible, and we lead the industry in these. We can produce this copper foil at a thickness of 710.000ths of an inch. That's about five times thinner man a sheet of paper. The special uses in electronics can for extremely close tolerances and exact surfare characteristics. To be certain that there are no scratches or nits u inspect some of these products under 20-power magnification before we ship mem. inis sort of precise work could be compared to makine exnuisite jewelry." In the Dast Vear. Olin Winchester nas won two contracts from the Department of Defense for small caliber ammunition. The most recent, announced m September, is for 72 million rounds of 5.56 millimeter ammunition for the M-16 rifle. The contract will be filled in a few months, said H.E. Blaine, Winchester president. "We see defense and military work as a growm area for Winchester," Blaine said. "The 5.56 contract and an earlier contract for .50-caliher hlanlrc are the first Army ammunition orders to private industry and outside of government arsenals since the Vietnam War. ine .50-caIiber blanks contract is for three years and totals nearly $30 million. Winchester also makes 20mm ammunition for the Naw Phalanx Close-in Weapon System. The company has received two contracts totaling $28.5 million for 2.52 million rounds, ine specific area of defense ammunition business that Winchester participates in represents a tvm million market that is exnected tn expand to $750 million in four years, Blaine said. "Expansion bv 50 Dercent in four years quaimes as a growth market," Blaine said. "The fact that v): t Products . ' if ' . lW - f '' Winchester, a private company, won the defense production contracts would indicate that we have been successful in convincing the government that private industry cannot afford to maintain facilities, equipment and space to be prepared for mobilization unless we have some production business. To be prepared we must have business and we must pursue research and development. "The government has not pursued research and development in the ammunition field to any great extent Carr bm Luther King ,, .. i. . i ii mi j u iiuiiii.iiii iiiuiu A A i i . i r m I It Lnrr V : i t May Become Top Gainers Look for a choDDv. " sidewavs treacherous stock market the next few months with the Dow sliding to the 1150-1200 area. And then pow. A powerful second lee of the bull market will get under way, propelling the Dow io arouna iwu Deiore the end of 1984. The market's best bet over the next 12 months the seemingly "boring" stocks. These are the large, well-capitalized quality names, the steady growers, many of which are pretty cneap based on 1984 earnings prospects. Three tOD Choices, parh nf urhirh has the potential to turn in a snappy w-oo percent gain over the next year: A.H. Robins, UAL and Firestone Tire & Rubber. These are the views of a couple of men wun a pretty snazzy investment record Pete Hagerman and Bill Clayton, directors of Hutton Capital Management. HCM. a subsidiary of E F Hnttnn manages $650 million. 85 nerrent nf which is pension and profit-sharing iunus ana me rest oi which is in the accounts of individuals. Clients include cnrysler, Royal Crown, Litton industries, Kidde and the University " mii rrancisco. Minimum investment is $1 million. uver the 1979-1982 period, HCM racked up nearly a 22 percent annual gain vs. a 16 percent yearly rise in the Standard & Poor's 500-stock index. It was up just over 30 percent last year, compared with an S&P index rise of 22 percent. In the first nine months of this year, it trailed the market a bit, turning m a 17-18 percent advance vs a u percent rise in the S&P index A CHAT WITH CLAYTON and Hagerman is particularly relevant at this point, since their investment record shows a consistent ability to uuipenorm me market in down periods. Granted the Dow is not too far away from its all-time high. But since mia-june many stocks have been butchered, wipine awav substantial amounts of the bull-market gains. And currently market uncertainty and nervousness are ramnant. The HCM strategy is simple. It puts an equal aonar amount in just about every stock it buvs and it never huvs more than two companies in any one inaustry. "It's called disciplined diversification," says Clayton. "We'd rather be wrong on an individual company than wrong on 40 percent of an account Decause of excessive representation in anv one industry " Many fund managers take a "top- aown approach to the market, in effect, settine UD an ernnnmir framework and then determining what muusiries io rocus on. "Everyone does it, but we think it's risky," says Hagerman. "because there's a danger of overweighting your poruouo in a given sector. And what happens if you re wrong?" The effects of putting limited amounts of money in any one industry are dramatically illustrated in HCM's isu and iBf results. In 1980 when enerev was the rnoe HCM posted a 21 Dercent pain On the face of it, that's not bad. But since the b&P index was heavily weighted in energy companies, hum that year badly lagged the S&P advance of almost 33 percent. in 1981, though, the energy play came a cropper, and the S&P index suffered a 5 Dercent dron for the vear HCM, on the other hand, turned in an 1981 rise of more than 13 percent. ueany, a policy of trying to minimize risk is navine off for HfM Right now, the average HCM account is about 70 Dercent in eauities thnnoh it has been as high as 80 percent in mocks wnen tne money management firm is especially bullish. Obviously, given its concerns aDout a "choppy, sideways market" the next few months, HCM is playing things more cautiously. HCM's chief near-term concerns' Strong market worries about the rate of economic improvement. A lot of pros fear that the high interest rates could slow the economy or throw us back into a recession in early to mid-1984, a view not shared bv HCM. The strong competitive threat to stocks irom nign bond yields. At present, the yield on 10-year government bonds is close to 11 percent; the yield on stocks is only udoui percent, wmch is also the rate of inflation. 1 The prospects of a larger-than- expectea numDer of earnings disappointments among both weaker companies and biggies as a result nf the recessionary effects, high interest rates ano tne strong dollar, which hurts overseas business and encourages cheaper imports. we could have more Digital Equipments." savs Hairerman a reference to the fast drop of more than 30 points in the minicomputer Kingpin s snares in tne face of worse-! man-expected profits. CLAYTON HASTENED to point to me turmoil in Lebanon and Grenada! as obvious market worries. The question, he says, is: "How committed! are we?" Both Clayton and Hagerman expect See DORFMAN, Page 8 J "The West German defense forces have been working on . caseless cartridges and guns to fire them. Development of caseless cartridges could allow a soldier to carry a lot more rounds. The United States should be moving forward in developing innovations. We cannot stop." Winchester has spent millions of dollars on modernization of equipment and production facilities in recent years and is willing to spend more, Blaine said. The same is true at Olin Brass, Griffin said. IV -J J. since World War II. The bulk of innovations: has been developed in foreign countries. As an example, Winchester is marketing a French antitank weapon which we call Stingshot. It is the most powerful antitank, shoulder-fired weapon in production. It can penetrate the front plate armor of main battle tanks, or it can penetrate 7 feet of reinforced concrete. It's a tubular, shoulder-held launcher that weighs about 20 pounds. It fires one shot and then the tube is discarded. Post-Dtspatch MapChristine Casligliano expected to be large because there won't be much displacement. In addition, the city is seeking a grant from the Economic Development Administration, an arm of the U.S. Department of Commerce, to fund public improvements such as utility relocations and sidewalks at the site, Calhoun said. Should the administration money not be granted, PIE may seek other federal money for the work, he said. PIE is making title searches and doing other preliminary work in preparation for the land purchases. "By this time next year we hope to be doing demolition and site improvements," Calhoun said. Calhoun and David Fontana, PIE's director of development, said they expect the extension to fill up faster than the original King industrial park, which is much smaller and still, has five vacant acres four years after the first business moved in. The larger tracts that will be available in the extension should prove more attractive to business, they said. In addition, the area has more businesses already in it, which makes it more stable than the original park was when it was opened, they said. Area of Detail S . . if , i i & $ , " k f' - By) Dr. Martin Luther King Among the products made at the Olin Works in East Alton are metal sheeting, bottom, and ammunition, left. Workers on production line, above, are pouring metal at Olin Brass. ; "We have the best brass mill in the world," Griffin said. "We can say that because we can measure the performance financially and in the quality of the products. We've seen most of the others. "Since January we have been operating 24 hours a day, seven days a week. We are ahead of the industry in that regard. How did we get that lead? Because we have kept our facilities up to date and have maintained our ability to produce. We have earmarked several million dollars more for expansion in the next two years. "We lost a 100-million-pound copper market last year when the penny was changed from copper to zinc, but we still supply 100 percent of the clad metal used by the U.S. Mint. Coinage certainly is a good business, but its growth is linked to population and the gross national product. Growth in the construction industry and the automobile industry also gives us growth, but these things have been affected by the recession. Electronics offers growth. It's about 25 percent of our business." Both in metals and ammunition, the Olin executives say that imported products have offered stiff competition. Foreign competition has taken a quarter of the U.S. brass market, Griffin said. In ammunition, Blaine said, exports from South Korea and other countries have been offered at reduced prices. "We have met the prices when we could," Blaine said. "Their prices reflect the low pay for workers there. Our plants have union workers. How can we answer the imports? We can ask our engineers to devise the most efficient systems for production. We can make capital investments to bring See OLIN, Page 8 under construction at the site, which is near Highway 40 and Clarkson Road. The agricultural laboratory is to be completed early in 1984, the other two about a year later. About 800 researchers will work in the first four buildings. Beyond that, Ms. Rogers said, "If the site is developed fully the way plans call for it now, the population out there will eventually reach 7,500. ... But that's in 2000 and beyond." On Friday, Monsanto's board also declared the regular quarterly dividend of $1.05 a share, payable Dec. 12 to stock of record Nov. 10. Protein Research Earlier in the week, Monsanto signed a research agreement with BioTechnica International Inc. of Cambridge, Mass., for the study of protein-producing bacteria. BioTechnica will study a bacteria known as Bacillus subtilis, which "may be an effective one to use for the production of certain proteins," Ms. Rogers said. Such proteins eventually might be useful in food products, pharmaceuticals and specialty chemicals, she added. its chairman, and J. Fred Bucy, president. That announcement came simultaneously with the company's report that it had lost $110.8 million in the third quarter of this year, after a $119.2 million loss in the second quarter. The latest loss was in contrast to net income of $36.9 million, or $1.57 a share, in last year's third quarter. In home computer operations alone, the company lost $330 million before taxes, including a ' See COMPUTER, Page 8 Monsanto Adds Building To Research Campus Plan industrial Park Existing Extension r""""M" I i J I - - - ' 1 i I : Cole.; Or. Martin ! i ! r : ; i , ... L-.:.............l........;.: i. I 1 I Detmar Si t ., , -, .:. " " 3- i By David Nicklaus Of the Post-Dispatch Staff Monsanto Co.'s directors have approved construction of a fourth building at the company's new Chesterfield research campus. The company said the building represents a "multimillion-dollar" addition to the campus, but spokeswoman Karen K. Rogers declined to give a more specific figure. The new building will be two stories high and will house process-development laboratories that may develop new health care, animal nutrition and plant growth products. It is scheduled to be occupied by late 1984 and to be in full operation by March 1985. The project got the go-ahead because "several of Monsanto's products for human health care, animal nutrition and agriculture have reached the stage where facilities for process development are required," said Howard A. Schneiderman, Monsanto's senior vice president for research. Two general-purpose laboratory buildings and a third designed for agricultural research are already ii L i f-Washington . v, o in ...-.,.,3 Park Will Grow Texas Instruments Quits Home Computer Market Industrial By Paul Wagman Of the Post-Dispatch Staff A city agencv is preparing to hooin acquiring land for a 70-acre extension io ine ur. Martin i.uthm- King Industrial Park on the 1op of aowniown. The Planned Industrial Rynnncinn Authority plans to buy the land and ithen prepare it for develonment it !wants the site to be used for new light manuiactunng and warehousing ;concerns, and for expansions of businesses already there. The site is bounded eenerallv nn thp north by Carr Street, on the south by an alley between Delmar Boulevard and Lucas Avenue, on the east by 18th .Street and on the west by Jefferson Avenue. Called the Dr. Martin Luther King Industrial Park Extension, it is 'immediately west of the 22-acre King imausinai parK, which was also Ideveloped by PIE and which is now (the site of six businesses. About a dozen firms are atrpadv in the planned extension area. Most will be encouraged to stav. but a few be displaced. The rest of the land aoout nan the acreage is vacant. PIE. thinks the area is rim fnr development because of its proximity to a growing downtown, agency officials said. Among the businesses that may want to locate in it, they think, are suppliers to the offices, hotels and restaurants being built or planned for downtown. The Board of Aldermen passed an ordinance in March blighting the area. That legislation enables PIE to offer tax abatements on new development. The board also passed legislation authorizing a PIE development plan. Through a revolving credit arrangement with The Boatmen's National Bank of St. Louis, already has the money for the aCQUisition. said Dnue ralhnnn PIE land PIE deputy director. Estimates are that udoui wu,wu win oe needed, he said. But acquisition will not begin, he said, until PIE gets money to pay for relocating businesses that may have to be moved from the area. The city is expected to apply to the Department of Housing and Urban Development for that money next month as part of its application for Community Development Block Grant money. Calhoun said he couldn't say exactly now mucn oiock grant money wouia oe neeaea ior tne project but mat relocation expenses aren't e1 963, New York Times Service NEW YORK - Texas Instruments Inc., battered by its second huge quarterly loss, has announced that it was ending production of its 99-4A home computer and pulling out of the home computer business. "In order to limit further financial drain on TI, we have made the decision to withdraw from the consumer home computer business," the company said Friday in a statement i attributed to Mark Shepherd Jr., ' m i ii .f AUirf mi

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