Star Tribune from Minneapolis, Minnesota • Page 19

Star Tribune Market was I closed -j- if- Saturday Apr! 21994 5B The markets Column six Bond orices nil inne while emnlnvment increases a symbol pf- s- sr sr js; sr- sr Fears grow that stock market will decline on Monday and that the Fed will raise rates the first two months of 1994 and the California earthquake in January. But most of it couldn't be explained Occidental still trying to overcome Love Canal stigma even after 15 years the past two months because higher rates on new securities hurt the value of existing bonds. Bonds pay a fixed interest rate. "It's reasonable to say the Fed is going to be upgrading its view of the economy," said Dana Johnson, head of market analysis at First Chicago Capital Markets. "You certainly have to think the Fed's response is going to be stronger than previously expected." In addition to a one-half point increase in the fed funds rate, the Fed is also expected to push up the discount rate, another important short-term rate, by one-half point to 3 servers into expecting swifter and more forceful interest-rate hikes by the Federal Reserve Board, which has been gradually raising rates since early February.

Now, the Fed's next action is expected to push up the federal funds rate, the amount banks charge each other for overnight loans, by one-half percentage point. Its previous two increases each were one-quarter point, nudging up the funds rate to its current target of 3.50 percent The price of the Treasury's main 30-year bond closed down 1 29-32 points, or $19.06 per $1,000 in face value. It was the biggest one-day loss since Aug. 6, 1990, according to Maria Fiorini Ramirez Inc. Associated Press New York, N.Y.

Treasury bond prices plummeted nearly two points as yields shot up to 14-month highs Friday in a sell-off touched off by news of the biggest monthly increase in employment since 1987. The plunge in bond prices, the steepest in nearly four years, was exaggerated because of extremely thin trading on the Good Friday holiday. Most of the few participating traders left around midday, and analysts were uncertain how closely the price drop reflected the general market view. But the surge in jobs that spurred the sell-off jolted participants and ob The bond yield, which moves in the opposite direction, jumped to 7.26 percent, its highest since Jan. 22, 1993, when it closed at 7.29 percent On Thursday, the yield closed at 7.08 percent Short-term Treasury securities posted even sharper losses.

Participants swiftly unloaded bonds after the Labor Department reported that non-farm employers added 456,000 workers to payrolls in March double many expectations. It was the biggest one-month increase since October 1987. Economists traced some of the jobs increase to pent-up demand for workers, after hiring plans were stymied by unusually cold weather in "People say 'Love Canal equals Thomas Truitt Occidental attorney away. "What we got is double what most analysts expected," said Sung Won Sohn, chief economist at Norwest Corp. in Minneapolis.

"If you look at the trend, it's clearly to more jobs." The employment increase suggests the sharp pickup in economic growth late last year is continuing into the first quarter providing the Fed more incentive to raise rates to curb the inflation that tends to result from economic strength. The rising interest-rate environment has hammered the bond market in percent. The discount rate is what the Bonds continued on page 6B The economy By David Germain Associated Press Niagara Falls, N.Y. For 15 years, Occidental Chemical Corp. has been haunted by what its corporate predecessor, Hooker Chemicals Plastics did at Love Canal half a century ago.

In the late 1970s, toxic chemicals buried by Hooker bubbled to the surface, seeping into homes and forcing the evacuation of about a thousand families from a suburban community built around Love Canal. Since then, the Occidental Petroleum Corp. subsidiary has been trying to shed its former corporate identity as Hooker, which Occidental acquired in 1968. Hovering over all the other ghosts of Love Canal the crying children Personal income shows robust gain of 1 .3 percent The rate exceeds consumer spending, which jumped 1 percent during the month Commerce. Personal income had dropped 0.3 percent in January after five straight increases.

The last previous decline was 0.2 percent in July. January's dip was attributable largely to the earthquake that month, which caused uninsured losses and lost rent from residential property. The government also blamed the drop on lower farm subsidies and retroactive Social Security benefit payments that had swelled December personal Analysts expect that this year's stormy winter in much of the nation and the lingering impact of the earthquake contributed to a slowdown in economic expansion in the first quarter of 1994, which ended Thursday. The economy grew at a booming 7 percent annual rate in the last three months of 1993, about twice the expansion economists predict for this year. The Commerce Department said in-Income continued on page 6B spending jumped 1 percent, the 1 1th consecutive advance.

The income increase was the biggest jump since a 1.4 percent rise in April 1993, and the spending surge was the largest since a 1.2 percent advance that same month. But behind the numbers were some unusual factors, particularly the impact of the Los Angeles earthquake. "Gains of this size most likely will not recur," said Robert Barr, an economist for the U.S. Chamber of Economists doubt that consumer spending, which represents two-thirds of the nation's economic activity, can continue to advance as rapidly- "Whether that will continue is questionable with interest rates going up," said Michael Niemira of Mitsubishi Bank in New York City. The Commerce Department reported that consumer spending edged up a mere 0.1 percent in January, revised downward from the government's 0.5 percent estimate a month ago.

Associated Press Washington, D.C. As the effects of the California earthquake receded, the incomes of Americans shot up in February and exceeded the rise in consumer spending. Analysts said they expected such increases to moderate in the months ahead. The Commerce Department reported Friday that income climbed a robust 1.3 percent last month. Consumer and hysterical mothers, the hasty moves from contaminated homes, Jane Fonda weeping at the edge of the upstate New York dump the specter of Hooker stands as a symbol of corporate irresponsibility.

Deserved or not, that's the image Occidental has tried to exorcise. The company has spent millions of dollars defendina itself in liability law suits brought by the federal and state Food companies governments and paying oil former Summary Love Canal residents who sued tne company. Number of new jobs in March reaches 6-year high "Love Canal is a buzzword, said Occidental attorney Thomas Truitt. The number of Americans finding jobs in March reached a six-year high People don know anything about Former Land O'Lakes exec leads buyout of ref rigerated-salad supplier as improving weather spurred construction, the government said, ne 6.5 percent unemployment rate was unchanged trom feoruary. ine nation's non-farm payrolls swelled by 456,000 workers, the Labor Department reported.

It was the biggest one-month increase since it, but they say, Love Canal equals Hooker's On March 17, Occidental was vindicated when U.S. District Court Judge John Curtin ruled that Occidental October 1987, when 556,000 new jobs were added. 1 his points to very solid, strong economic growth," said economist Michael Niemira of Mitsubishi Bank in New York City. But the report also raised fears that the stock market nervous about the possibility of higher interest rates might lose more ground when trading resumes Monday. Page 1A.

did not owe punitive damages for Love Canal. New York sought J25U Local group courting Wolves also wants hockey team million, but Curtin said the state failed to prove Hooker behaved recklessly. Occidental remains liable for up to $350 million in actual cleanup costs, plus interest. The retired insurance executive who has a tentative deal to buy the Minnesota Timberwolves said his group also is interested in acquiring a pro hockey team that would cohabit Target Center. But it's vital that the group first obtain an attractive lease at the downtown Minneapolis arena that would demand little or no rent and entitle the group to the Just as Occidental has done, many 1 Niagara rails residents nave xneo 10 put Love Canal and the stigma it gave the city behind them.

arena's concession money, luxury suite revenues and signage income, Bill Sexton said. The native Minnesotan, who quietly made a fortune selling insurance and buying real estate with partner Willis Heim, spoke by phone Thursday night from his home in Mesa, Ariz. Page 1A. "The rest of the country is very pas John Trucano of the Food Fund said Orval Kent "is a turnaround situation, but it's not hemorrhaging. It's about breaking even." The firm has lost grocery store business steadily to an increasing number of regional competitors such as Mrs.

Jerry's in Albert Lea, Trucano said. Fogg said he will recruit new people to the firm but keep current leader Larry Oberkfell, who contributed money to the buyout. Fogg is president, chief executive officer and a board member. "It's going to be fun," he said. "My wife tells me it's either going to be the smartest thing I've ever done or the dumbest." Fogg said in August that he left Ar-den Hills-based Land O'Lakes after airing strategic differences in a meeting with CEO John Gherty.

He would not elaborate on his departure from the cooperative. "I've got a severance deal that has me pretty much chained to the wall," he said. Foke is credited with helping to ad sive about it," said Occidental President J. Roger Hirl. "When you mention Love Canal, they recog-' Minnesota HMOs post hefty profits of $68.67 million Minnesota's nine health maintenance organizations which provide health care coverage for 1.4 million people recorded near-record profits of $68.67 million last year, according to figures released Friday.

The HMOs attributed their good financial year to controls on costs, Dick Fogg invested own funds in deal for Orval Kent Foods of Illinois from PET By Tony Kennedy Staff Writer Dick Fogg, who abruptly left the top marketing job at Land O'Lakes Inc. in August, has led a buyout of the nation's largest supplier of potato salad and other refrigerated salads. Fogg invested much of his own money to buy Orval Kent Foods from St. Louis-based PET Inc. in a deal that closed this week.

He said he and other managers will own about a third of the company, based in Wheeling, 111. Other major investors include the Food Fund, a Minnesota venture capital group, and Milwaukee-based Horizon Partners, a private group of retired chief executives who invest in buyouts. Fogg did not disclose the purchase price, but the acquisition is believed to have cost less than $20 million. PET paid $212 million for Orval Kent in late 1988, but the company has lost significant market share since then. Fogg said Orval Kent is the nation's nize it as a lanamarK situation envi-, ronmentally, but very few associated with Occidental." which they note is a major goal ot both state and national ettorts at Robin Shoemaker, a Lehman Broth health care reform.

The HMOs said they held premium increases to an average of 8.6 percent last year and predicted the increases this year will be even lower. Page IB. Dick Fogg ers analyst who follows Occidental Petroleum, said investors also large-, ly have forgotten about Love Canal. "I don't see it as a black eye now. WEEKLY INDEXES Occidental's track record in recent years is very good," Shoemaker said.

"They've had no major environmental problems or issues to deal with." Percent change from a week ago: biggest supplier of refrigerated salads, with 14 percent of the market. The company has three plants in the United States and one in Mexico. The Mexican plant specializes in fresh citrus salads and exports to Japan, among other countries. Orval Kent's 1993 sales were $131 million; about half its sales are to grocery stores and half to the restaurant and food-service arenas. The company is able to fill orders anywhere in the United States within 48 hours.

2.0 -2 0 NYSE am img (year ago: 1.78) wm In recent years. Occidental Petroleum has had bigger problems than vance Land O'Lakes from a maker of butter and cheese into a producer of ASEOTC (year ago: 8.28) -s-49 higher-profit processed foods such as Love Canal. After the death ot Chairman Armand Hammer in 1990, the 1.42152 Equity funds (year ago: 7.03) nonfat senr cream. company began selling off unprofit Taxable bonds (year ago: 3.67) able businesses, cutting employment Municipal bonds 3 57g iuear aoo: 1.77 9Jm 1.00 Training 0.07 0.04 Bond funds (year ago: 2.90) CDs (year ago: 3.43) Money funds (year ago: 2.33) Real estate (year ago: from 55,400 to 19,860. The restructuring resulted in losses of $1.7 billion in 1990 and $591 million in 1992, but the company earned $283 million last year.

People in Niagara Falls who weren't directly affected by Love Canal tend to tread lightly around the subject Occidental remains the city's biggest industrial employer, with 1,600 workers. Founder Larry Wilson moving headquarters i.45tia (Jewago: 41.42S4 05'P" of Pecos River Learning Centers to Minnesota Pecos River has signed a lease in Eden Prairie and has begun the mote Pecos River location, which does not have direct air service from most major cities, contributed to the move. Looking ahead Company will keep outdoor adventure site in New Mexico move, which is expected to be completed in June. Fifteen employees from New Mexico, including Wilson, his wife and his son, will join the 16- pcrson sales staff already here. An additional 10 to 15 people will be NEXT WEEK MahiIiiU hired locally, a spokesman said.

The National Association of Purchasing Management issues its The company, which has about 143 montniy survey on tne manuiaciunng sector. employees, will keep its Pecos River The Commerce Department issues its Leading Economic Indicators conference center and a sales on ice in The company today has a reputation as a community booster. Occidental contributes heavily to local charities and holds open houses for residents at its chemical operations. "They have an outstanding health and safety record, they are a very responsible company and a good corporate citizen," said Charles Steiner, who heads the city's Chamber of Commerce. But those evacuated from Love Canal remain bitter.

Lois Gibbs, who icd a Love Canal homeowners group, dismissed Occidental's good deeds as an attempt to whitewash its old business practices. Chemical continued on page 6B I Santa Fe, said Hcrsch Wilson, senior But the company has changed as well. Originally known for outdoor adventure and learning programs, it has added more conventional business-related programs to its menu. Among them are such topics as Partnering: Creating Customers for Life, a new training program to help companies invent "more mutually profitable ways of doing business." The move marks the return of Minnesota native Larry Wilson, who founded Pecos River in 1984 after he sold Wilson Learning Corp. of Eden Prairie.

vice president for adventure learning By John J. Oslund Suff Writer After more than a decade on the range, Pecos River Learning Centers or Santa Fe, N.M. the corporate training company whose clients have ranged from the Minnesota Vikings to IDS to Polaroid it moving its headquarter to Minnesota. Business is brisk at the nationally known firm, which expects 1994 revenues of $13 million. But most of the company's revenues come through a network of conference centers in 23 states and seven countries.

The re for reoruary, a.m. Wednesday Domestic automakers announce their sales figures for March. Thursday Tha I nhnr IVnarimpnl rpnrr1 nn initinl idhli'SS claims. programs and son ot the founder. Pecos River programs in Minnesota will continue to be held at the IDS Oak Ridge Conference Center in The Commerce Department reports on plant and equipment spending for the fourth quarter.

The Federal Reserve Board reports on consumer credit for February, I f. LI Chaska. 1 he nation largest retailers announce tncir saics ugurcs iui iviuilu..