Star Tribune from Minneapolis, Minnesota • Page 35

7D and AAn economy at war? Star tribune MondayJanuary 141991 should fall to 6.75 in the winter of 1991. That's a large declir.e and it should help the economy. Outlook is poor, not crushing, economist says What does a fast, sure-fire resolution in the Middle East do for the U.S. months of a moderate recession. The Iraq invasion of Kuwait pushed us into a recession and we need a resolution of the crisis to rescue us.

Unless there is a long war, the bad news on inflation is behind us. One or two weeks of fighting with obvious peace at the end is obviously good news. If there's no quick resolution or a war that damages oil production equipment or hampers oil exports from the region, that's a different story. But it looks like we're going to get a resolution, one way or another, and we're betting everything will be over soon. 'i i I i is- i by $20.

In today's prices (after accounting for inflation), that's the equivalent of $30. In comparison, we're talking about a $7 or $8 a barrel increase, if oil fields aren't damaged by war. This just isn't the same order of magnitude of the oil shocks people remember and it's hard to predict these prices would bring chaos to the economy. One other point: Oil is only two-thirds as important to the U.S. economy as it was in 1980.

Today, the percentage of electricity generated by oil or natural gas is 1 5 percent, down from 25 percent at the start of the last decade. Energy spending as a percentage of household income was 9 percent in 1980. Now it's six percent. On the eve of a possible war in the Middle East, the government statistics mills in Washington, D.C. this week will churn out more readings on the state of the U.S.

economy. Just how resilient is the economy that ultimately will pay the price of events in the Persian Gulf? We asked Roger Brinner, chief economist at DRIMcGraw Hill, a Lexington, economic consulting firm. By Mike Meyers New York Correspondent New York, N.Y. Do you see any bright prospects in the economic data coming out this week? Mpt much, in the short term. The bad news will be in industrial production and retail sales, which we estimate both fell 0.3 percent in December.

That's a poor showing, but it's not a sign of an economy in a free fall. What about inflation? We believe the CPI advanced by 0.3 percent in December, the same as November, and forecast another high number for January, when new excise taxes on liquor, luxury cars and a few other consumer goods are picked up" in the data. But that's the end of Announcing THE DOWNTOWN RIVERFRONT EXECUTIVE HOMES Exclusively designed for distinguished Jiving. TAKING RESERVATIONS NOW FOR MORE INFORMATION CALL: 612340-9585 A Development of. SHEPMAN-BOOSAUS MINNESOTA LABELS 1 WEDGES allrw Local 881-0634 Out-State 1-800-899-0963 LANDINGS 'A AT SAWMILL Some economists doubt that the economy will rebound unless interest rates go much lower.

What do you think? The Federal Reserve was cautious about cutting interest rates but it started to act and I expect plenty more action. The one-year Treasury note was at 8.5 percent last year and WE'RE BARCODING software liiiiiiiialiaj PRINTERS BARCODES SPEED ACCURACY Government watch Ban on Canada sign exporter lifted Are you a mentor? Life-long resident of Minnesota with a Master of Business Administration degree from the highly acclaimed Wharton School and several years of work experience is seeking a mentor who can offer employment in the areas of management, marketing and finance. Mentor can be active in any type of service or manufacturing business located in the MinneapolisSt. Paul area. If you would like to feel the pride and satisfaction that comes from being a mentor for a creative, ambitious, knowledgeable and trustworthy individual please call (612) 561-1153 between 6:00 p.m.

and 11:00 p.m. Monday through Sunday. FOR SALE! NEW YORK BROWNSTONE OFFICE BUILDING DOWNTOWN MINNEAPOLIS economy? Consumer confidence, which has dropped like a rock, should begin to recover. Unemployment would peak sometime this spring or early summer at 7 percent. Employment is a lagging indicator.

Once businessmen cut back they don't add employees until they're really sure that circumstances are improving. The other good news the consumer will be seeing over the coming months will be lower short-term interest rates. If you have an adjustable-rate mortgage up for adjustment this winter, you'll see a 10 or 12 percent decline in mortgage payments. Millions of households will get the benefit of these lower mortgage payments, which will be a savings that's two and a half times greater than the average household cost of higher energy prices since the Persian Gulf crisis began. Isn't $25 a barrel a significant jump from the $18 price of a barrel of oil in early 1990? This is not a classic oil shock.

In the 1979-81 energy shock, oil prices rose Abrams said Minnesota has 31 state inspectors to police about 175,000 businesses, or one safety cop per 5,645 workplaces. Federal OSHA has about 800 inspectors to check on more than 3.6 million businesses, or one inspector per 4,500 workplaces. Firm's test kits approved Incstar Corp. of Stillwater, has won final approval from the Food and Drug Administration (FDA) for the sale of diagnostic test kits that measure the amount of cy-closporine in the whole blood given heart, liver and kidney transplant patients. Dr.

Orwin L. Carter, the president of Incstar, explained that cyclosporin is the substance given transplant patients to keep them from rejecting a new organ. Since cyclosporin is also toxic to the kidney, Carter said it must be carefully measured to prevent kidney failure while at the same time providing enough of the substance to help prevent rejection of a transplanted organ. Known as CYCLO-Trac SP Whole Blood Radioimmunoassay for Cyclosporin and CYCLO-Trac SP Serum-Plasma Radioimmunoassay for Cy-closporine, the kits were given preliminary approval by an FDA advisory committee last fall. Carter said Incstar is the third company given government approval to market such a testing device.

Store openings Family Hair of Eagan, a hairstyling salon, has opened at 3440 Denmark Eagan. First Place Small Engine Service has opened at 7658 Brooklyn Brooklyn Park. Funco a buyer and seller of used video games, has opened FuncoLand stores at the Lariat Center II, 8256 Commonwealth Eden Prairie, and in Rosedale Square, 1653 W. County Rd. Roseville.

Gingiss Formalwear has opened a store at Burnsville Center, Interstate Hwy. 35 and County Rd. 42, Burnsville. Notices of new Twin Cities retail stores should contain the name of the store, the address, when the store opened and a telephone number. Send to Jim Foster, Marketplace, Star Tribune, 425 Portland Av.

Minneapolis, Minn. 55488. "Try to hide from bankers in this environment and they will likely foreclose on your loan before you know what hits you," Zelbow warns. "What's more, they will dismiss any belated attempts to make amends and to work out a compromise. "Today, there is no tolerance for borrowers who fail to live up to any part of their obligations." Mark Stevens is a syndicated By Mick Rood States News The International Trade Commission (ITC) has lifted an order prohibiting a Canadian company from exporting certain commercial signs to the United States an order originally sought by 3M Co.

of St. Paul. Toe ITC had issued the order against Signtech, of Toronto, Ontario, in 1989 because 3M successfully claimed the Canadian firm was infringing on its patent for a signmak-ing process. Also affected were eight American import companies who were prohibited from buying Signtech products. A year-old patent infringement suit JM brought against Signtech was settled in a Texas federal district court.

In that agreement, Signtech was licensed to sell two of its products Using the 3M process, and 3M and Signtech jointly petitioned the ITC to lift the order. Neither company released details of the settlement, although the court confirmed in its order that 3M's patent had been infringed. The two products Signtech may now make and sell with the aid of the 3M process are Plastiprint brand thermally transferable ink and GlassKote brand coating products. Signtech is a major sign product company with operations in Canada and the United States. Criminal sanctions favored Eighty percent of federal Occupation- Small business What about the woes of the financial system, the failing and banks? I believe we would have avoided a recession if we hadn't had the invasion.

Exports booming, capital spending were positive and inventories were well managed. The only troubled sector was housing, which is only 4 percent of GNP (Gross National Product, the dollar value of all goods and services produced in the economy). If the economy recovers as quickly as we believe it will, the problems of the financial system will have time to work themselves out. People may be fearful that some monster is going to crush the economy, but the fears aren't justified. raised to $7,000.

David Abrams, commissioner of the Minnesota Department of Labor and Industry, isn't sure that criminal sanctions would work in Minnesota, which runs its own OSHA program. But he conceded that pursuing criminal penalties for employer negligence is "a matter of considerable internal debate." Violations of Minnesota OSHA regulations are misdemeanors, Abrams said. As a result, he said, a county attorney would not be likely to prosecute. Minnesota is one of 25 states that administers its own OSHA program. Those states have agreed to make their guidelines at least as stringent as the federal government's.

The inspectors questioned by the GAO enforce federal OSHA regulations in the 25 states that have chosen not to run their own programs. Abrams said the Minnesota department's Division of Occupational Safety and Health run by Peter M. Clark has never asked a county attorney to file a criminal action against an employer. Abrams questioned how criminal sanctions would help the state's overall enforcement scheme. "We basically have pretty good relations with our employers," Abrams said.

"It may be that we would run into more brick walls in getting cooperation from employers if we applied criminal sanctions." out of hand dustry management devised a plan to compensate by aggressively marketing its services to the fast-growing health care, industry. By showing how the company planned to win over new clients among medical and dental practices, management persuaded its bankers to stretch out the payment terms on the company's debt. Demonstrate that you are in tune with your banker's concerns by preparing a "worst-case scenario" for his review. This shows what you will do to repay your debt, even if the company's plans go awry and results fail to measure up to projections. With this in mind, you'll want to indicate that if all else fails, you will close down money-losing operations, sell off assets for cash or even arrange for the orderly liquidation of the business.

"The bankers will be looking for absolute comfort that assets sold at auction will bring sufficient sums to repay the loan," Zelbow said. "What complicates this is that asset values, including equipment, real estate and inventory have dropped substantially This means the principals may be asked to add more personal assets to the collateral pool." No matter how bad the situation becomes, avoid the temptation to try and hide from your banker. The failure to return telephone calls or to provide financial data is a red flag that prompts lenders to protect their interest often in ways that are detrimental to the borrower's interests. Roger Brinner it. After a short war, inflation rates should subside as oil prices fall to about $25 a barrel.

Many statistical gauges of the performance of the economy have plummeted lately. Why are you still convinced this will be a short, mild recession when there are so many uncertainties surrounding a possible war and deep problems in the nation's financial system? This is an economy in the opening From Washington al Safety and Health Administration (OSHA) inspectors believe more frequent use of criminal sanctions would greatly reduce workplace violations, according to a recent General Accounting Office (GAO) survey. But only a handful of sanctions have been sought by federal OSHA officials over the years, which has caused criticism by some lawmakers, including Sen. Howard Metzenbaum, D-Ohio. Metzenbaum charged that OSHA has been too timid about punishing employers who may have been negligent, particularly in cases where workplace deaths have been caused by safety and health hazards.

Metzenbaum's legislation to toughen criminal penalties and their enforcement failed in the last session of Congress. The maximum criminal penalty is a $10,000 fine andor six months in prison. Congress did increase the civil fine for a willful violation of OSHA law from $10,000 to $70,000. The maximum $1,000 fine for other types of violations was Small business Mark Stevens help in restructuring the debt, try to make the banker see that your problems arise from a specific hardship that will be overcome. For example, if a sudden bankruptcy of a major customer has deprived you of substantial revenues, identify this setback as the source of your ills.

Evidence that your debt payment problems are not the result of a general decline in business may encourage the bankers to work with you through a rough period. Develop a plan for reversing your company's fortunes by cutting costs and boosting revenues. Put this program into writing and present it to your banker. Cite business objectives, timetables for achieving them, methodology and financial projections. For example, when a beleaguered computer consulting company was hit hard by a downturn in its core market the financial services in Completely renovated.

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"T.M., Excelsior "All the facts well done. "D.S., Maple Grove "Clear, objective information. "J.B., Mpls. CALL FOR RESERVATIONS: 473-9550 AMERICAN ASSET MANAGEMENT One Carlson Parkway 110 Plymouth, MN Securities through LTPC, Ltd. Here's a lesson in crisis management.

Assume the sagging economy is taking its toll on your business, trimming back sales and profits from record levels. Faced with a diminishing cash flow, you are hard-pressed to repay loans and lines of credit secured in more optimistic times. With your financing, credit rating and even your survival at stake, you need to take actipn to prevent a bad situation from turning into a nightmare. That's where crisis management comes in. In this case, that means maintaining credibility with your bankers in spite of your company's economic woes.

"This is more critical today than at any time in recent years," said Martin Zelbow, who specializes in guiding troubled companies. "Before the current credit crunch, banks were often lenient with borrowers who needed assistance in meeting their obligations. But today, their attitude is much tougher. Unless troubled borrowers take swift action to come into compliance with all of their loan requirements, they run the risk of having their loans called and their bank deposits seized." Tne following steps can help to safeguard your banking relationships in difficult times: At the first sign of trouble, arrange a meeting with your banker, using the opportunity to present a clear and honest picture of your financial condition. If you are having difficulty meeting your obligations and need The Employee Benefit Consulting Firm of A.

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