The Morning Call from Allentown, Pennsylvania on October 13, 1988 · 38
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The Morning Call from Allentown, Pennsylvania · 38

Allentown, Pennsylvania
Issue Date:
Thursday, October 13, 1988
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THURSDAY OCTOBER 13, 1988 THE MORNING CALL B12 irn JuvJ Update Stock prices nosedive, with Dow losing 30.23 NEW YORK ( AP) - Stock prices took their sharpest drop in nearly two months yesterday as traders uneasily awaited the latest monthly report on the nation's international trade position. The Dow Jones average of 30 industrials fell 30.23 points to 2,126.24, for its largest loss since it dropped 33.25 points on Aug. 15. Declining issues outnumbered advances by nearly 3 iu i in nanonwiae iraaing oi iew y orK stocK Exchange-listed stocks, with 397 up, 1,114 down and 450 un changed. , Volume on the floor of the Big Board came to 154.84 million shares, against 140.90 million in the previous session. Nationwide, consolidated volume in NYSE- listed issues, including trades in those stocks on regional excnanges ana in tne over-tne-counter market, totaled 184.05 million shares. The day began amid widespread talk that the nation's trade deficit for August, due to be reported today by the Commerce Department, would be larger than previously expected. Please See STOCKS Page B1 3 TAKEOVER BATTLES Pillsbury Co. won a legal skirmish yesterday against Grand Metropolitan PLC when a judge issued a temporary restraining order that prevents the British firm from purchasing Pillsbury stock. But industry experts still said they believe Grand Met's $5.23 billion, or $60 per share, all-cash offer to buy the food and restaurant conglomerate should eventually defeat Pillsbury's defense. Pillsbury also announced yesterday that it has recruited several British financial advisers in its antitakeover efforts. Hennepin County (Minn.) District Judge Thomas Carey issued an order that blocks both companies from taking further action regarding the bid. The order temporarily forbids Minneapolis-based Pillsbury from making other acquisitions to thwart the takeover. Carey's order lasts until Oct. 27 ... An unwanted offer of almost $900 million by the country's top poultry producer, Tyson Foods Inc., for its nearest rival likely will have to be sweetened and could attract competing offers. The target of Tyson's attempt to grab a bigger slice of the chicken business. Holly Farms Corp., may look to the red meat side of the industry for a white knight seeking to break into an expanding poultry market. "You can bet Holly will accept a Tyson offer only as a last resort," said John McMil-lin, food industry analyst with Prudential-Bache Securities Inc. Another possibility is that management will pursue a leveraged buyout. On Tuesday, Tyson, based in Springdale, Ark., offered to pay $45 in cash plus one-quarter of a Tyson share for each Holly share, a proposal that put a value of $894 million on Holly. Tyson said it could raise the offer, and most analysts think that will be necessary. Holly stock soared $6.87 to close at $49.87 a share yesterday on the New York Stock Exchange. Tyson shares, traded over the counter, slipped 62 cents, closing at $1 7 . . . The Haft family of Washington, with one eye still on a possible merger with Kroger Co., now is seeking to buy $15 million of stock in Walgreen Co., the nation's largest drugstore operator. The Hafts' action is the latest in a series of forays against major retailing companies in recent years by the father-son team of Herbert and Robert Haft, who have gained a reputation as corporate raiders interested in profiting from the pursuit of companies rather than completing takeovers. The Hafts have bid unsuccessfully for Stop & Shop Cos., Safeway Stores Inc. and Supermarkets General Corp., making tens of millions of dollars from the sale of their stock in their targets. Walgreen Chairman Charles R. Walgreen said the Deerfield, III., -based company has been advised that the Hafts are seeking clearance for the stock purchase under the Hart-Scott-Rodino Antitrust Act. The Hafts refused comment on their interest in Walgreen, but Walgreen officials said they consider the Haft overture serious and vowed yesterday, "to take all actions necessary to protect our company and our shareholders" . . . Shamrock Holdings Inc. turned up the pressure yesterday in its battle to acquire Polaroid Corp., charging in newspaper ads that the instant camera giant is fanning "fear and concern" among employees. The full-page advertisements in two Boston papers follow a sharply worded exchange between the presidents of the two companies over Polaroid's rejection of Shamrock's request to meet with stockholders about its $42-a-share tender offer. Separately, the parties squared off in federal court in Delaware over Polaroid's lawsuit seeking to block Shamrock from acquiring additional shares in the company that introduced instant snapshots in 1948. 9 BANKING The House Rules Committee yesterday killed a bill that would have pumped $5 billion into the fund that insures deposits in the nation's 3,000 savings institutions. The measure, sponsored by Rep. John LaFalce, D-N.Y., would have increased the borrowing limit of the Federal Home Loan Bank Board from $10.8 billion in bonds to $15.8 billion. The committee decided to indefinitely postpone floor debate on the measure by the full House after members argued that any attempt to bring more money into the ailing insurance fund should wait until early next year when a study of the industry is completed. With only about a week before Congress adjourns for the fall election campaign, the action effectively blocks the bill until next year . . . The House refused yesterday to abolish the much-criticized federal agency created to manage and sell off the worst assets of insolvent savings institutions. The House voted 247-130 to approve the measure. Under the procedure used, however, two-thirds of those voting had to be in favor of the legislation for passage, and the House failed to reach that margin by five votes. Even if the House had approved the bill, there was little chance for passage by the Senate, which hasn't considered such legislation. The Federal Assets Disposition Administration, a quasi-public organization, was formed by the Federal Home Loan Bank in 1985 to assist the Federal Savings and Loan Insurance Corp. in the management and disposition of acquired assets. Lawmakers have accused it of favoritism, conflicts of interest and mismanagement of the $3 9 billion in loans and real estate in its care. B FORECAST The next president could very well be forced to preside over a sharp decline in U.S. living standards unless he acts quickly to deal with pressing international economic problems, two staff members of the private Council on Foreign Relations said yesterday. The president's ability to deal with economic problems has been fundamentally altered by the fact that financial markets have coalesced into a single worldwide market, the specialists wrote in a new book, "After Reagan: Confronting the Changed World Economy. The next president will face more difficult constraints and more difficult choices than any of his predecessors over the last 40 years." C. Michael Aho, one of the authors, told reporters at a briefing. Aho and his co-author. Marc Levinson. pointed to the worldwide collapse of stock markets last Oct. 1 9 as a warning of what can happen if investors lose confidence in the ability of governments to manage their international affairs. Compiled from news services Trymp to buy lastem shyffile w irauuoom) By DAVID LYONS KNT News Wire NEW YORK Troubled Eastern Airlines, saying it needs the money to fly through unrelenting labor turbulence, cashed in 27 years of aviation prestige yesterday by selling its popular Northeast air shuttle to Donald Trump, the real estate tycoon, for $365 million in cash. At a mobbed press conference at the opulent Plaza Hotel, which Trump just bought recently, the billionaire said he would run the shuttle "like a diamond, an absolute diamond." Frank Lorenzo, the chairman of Texas Air Corp., Eastern's parent, said the sale "is a win for all concerned for our passengers, for Eastern and our employees, and of course for Donald Trump." Consistent with the office buildings, hotels, casinos and condominiums that bear the Trump name, the Eastern Air Shuttle will become the "Trump Shuttle." An oversized model of a Boeing 727 with "Trump" on the tail stood near Lorenzo and Trump, who both grew up in nearby Rego Park, Queens. "I want the employees to be well taken care of," Trump said. "I want everybody to be happy. I want to run it immaculately clean, as we do with this hotel, as we do with whatever we do." For his money, Trump will receive 17 Boeing 727s, landing and takeoff rights at Washington's National Airport, New York's LaGuardia Airport and Boston's Logan Airport, and ground equipment and terminal facilities. Although Trump and Lorenzo put a festive face on the shuttle sale, the labor unions at Eastern immediately vowed to sidetrack the deal in court. Despite Lorenzo's denials, union officials and their lawyers insisted that liquidation is exactly what the chairman has in mind. "Of course we'll challenge it," James Linsey, an attorney for the Air Line Pilots Association. He likened the shuttle sale to the movie, "Texas Chainsaw Massacre." "It's like they took the film and spliced it with the film 'Wall Street'," he said. Trump and Lorenzo said the jobs of the shuttle's 850 employees will be protected. Lorenzo said Trump will honor all labor contracts with the pilots, machinists and flight attendants unions. Lorenzo said all Eastern employees will be given the chance to bid on jobs at the shuttle, which means junior workers could be bumped off their jobs by employees at the main airline. Lorenzo and Eastern President Philip Bakes said the deal would not affect any other part of the airline, including its r . - & -. ."a -i 7" I si V- 1 s I v ; i4 -- mm umg jVmmmmir ""maSsT" ' l'l,'IIIUMSB8Mjks ''-! ' ' ' " fj' S,. I if; Associated Press Eastern Airlines President Frank Lorenzo (left) and developer Donald Trump announce Trump's purchase of the Northeast shuttle. regularly scheduled flights that serve Washington, New York and Boston from other U.S. cities. People who fly the shuttle will be able to apply the mileage toward the frequent flier program at Eastern and Continental Airlines, another Texas Air subsidiary, they said. Trump, who owns casinos in Atlantic City, N.J., and already operates a helicopter service there, said he might use some of the shuttle planes to ferry gamblers, but remained noncommittal. The deal, which was signed only minutes before the midmorning press conference, is scheduled to be closed Dec. 15. Eastern's board of directors approved the deal's concept on Tuesday. Despite protracted bargaining, Trump and Lorenzo turned part of their announcement into a mutual admiration session. Trump: "I have a great respect for Frank. He has taken on certain things that maybe aren't very popular, but they had to be done. "He's able to go up and stick up for his rights and fight for what is right, and I think he has done a very effective job." Lorenzo: "We ourselves could not think of a more appropriate investor and owner for this national institution." But Lorenzo said the sale "is not our preferred course." He implied that the shuttle would still be part of the airline if Eastern's unions, particularly the International Association of Machinists, had agreed to concessionary contracts. He accused the National Mediation Board, which is in charge of the IAM talks, of delaying the process. August Help-Wanted index ranks Allentown tops in region By NANCY M. FUNK Of The Morning Call Wanted: Full-time help sought immediately for growing area with an employment crunch. Allentown, which a major research firm recently ranked the highest among Middle Atlantic cities in its Help-Wanted Advertising Index, could well have placed that ad. The latest index from the New York-based Conference Board also shows that the growth rate of help-wanted advertising in Allentown is more than double the national level. And that yardstick of Allentown's employment market indicates what businesses here already know: It's becoming tougher to find employees. "We've seen that the Lehigh Valley economy is very strong and has been," said Edward J. Murray III, executive director of the Private Industry Council of Lehigh Valley Inc. "There are more people working than have been at any point since 1974, and yes, that does present some temporary shortages. "These are some unique circumstances that businesses here haven't seen for a long time," he added. The Help-Wanted Advertising Index measures classified advertising volume in 51 major newspapers across the nation, looking for growth or decline in the number of ads being placed in a region. The index does not specifically reflect numbers of jobs in an area, but notes changes in labor demand and general economic conditions. Higher numbers generally denote rapid change in an area's business climate, such as migration of new business and increased development, said Conference Board economist Kenneth Goldstein. Goldstein said August's index, which shows very little change nationally from June and July results, is generally representative of the year. As the labor market has tightened here, Allentown's index results have grown and have generally led the Middle Atlantic region. Allentown scored a 397 on the August 1988 help-wanted index, up from 379 for August of last year and more than double the 160 score in all 51 cities combined. By regional comparison, Philadelphia scored 73 in August, down nine points from last year. The second highest help-wanted ad growth in the region occurred in Albany, N.Y., which scored a 235. In 1979, Allentown's index rose to 155, then dropped to 90 in 1982. By 1984, Allentown's score reached 155 again and continued upward for the following years, reaching an average of 245 for 1986 and 350 for 1987. During the same period, unemployment in the Lehigh Valley was declining, reaching a 14-year low of 4.1 percent during August. "If the index is valid, then it must mean that businesses in Allentown have had growth and that a number of companies have moved into the area recently," said Goldstein. So far, though, 1988 hasn't brought major swings in the index for Allentown or the nation. Nationally, help-wanted advertising volume for August rose only slightly in five of the nine regions studied. The East South Central U.S. had the biggest jump with a 4 percent increase, followed by the Pacific region (3 percent), the Middle Atlantic region (2.2 percent), the West South Central region (2.1 percent) and the South Atlantic region (1.5 percent). Jobs usweiis neiit veBitus By RON WOLF KNT News Wire SAN FRANCISCO - Steve Jobs, the entrepreneur who pioneered the personal computer industry more than a decade ago, lifted the curtain yesterday morning on a black cube that he hopes will launch another era in the computer industry. This time, Jobs wants to transform nothing less than the entire process of education and learning. The machine, which will be shipped in volume in July, initially will be sold only to the academic community at a sharp discount The machine itself will sell for $6,500, but it will cost $10,500 with an optional hard-disk drive and a high-speed printer. Non-academic customers probably will pay much more when it is eventually sold to a broader marketplace. Jobs, chairman of Next Inc. of Palo Alto, Calif., demonstrated his long-awaited new machine, called the Next Computer System, before 3,000 reporters, educators, industry executives, suppliers, employees, friends and fans at Louise M. Davies Symphony HalL Jobs also announced an extraordinary deal with International Business Machines Corp. of Armonk, N.Y, that will make Next's "user interface" technology available for nearly all of IBM's computers, ranging from its more powerful personal computers to its mainframes. The system includes a central processing unit, a high-resolution, 17-inch gray-scale monitor, keyboard and mouse It also includes a library of software to generate complex graphic displays, create new programs, gain access to vast data bases and mix all these elements in a computerized educational stew. "It's the first machine that has the power and performance of a real work station at the price point and ease of use of a personal computer," said Mitch Ka-por, chairman of On Technology Inc. of Cambridge, Mass., and a prominent high-tech entrepreneur who has worked closely with Jobs for six months to develop the machine Under the glow of a spotlight in a ,w : f . 'A - U -;S Associated Press Personal computer pioneer Steve Jobs addresses an audience of 3.000 at the glitzy introduction of his Next computer workstation. darkened hall. Jobs presented the computer by himself, pausing during numerous rounds of applause Clad in a conservative business suit, he constantly described his one-foot cube machine as "a partner in thought" and said it was within "striking distance of a mainframe" After talking for about a half-hour. Jobs said be would let the computer speak for itself. He pushed a button, walked off the stage and let the computer, equipped with a stereo sound system, detail its features for about 10 minutes on a screen. Jobs co-founded Apple Computer Inc. of Cupertino, Calif, in 1976. He formed Next in 1985. shortly after he was ousted as chairman of Apple. He launched the company, formed with five other Apple colleagues, with $7 million of his own money. Jobs, 33, invested $5 million more last year. He also raised $20 million from Dallas electronics mogul H. Ross Perot and $1.3 million from Stanford University and Carnegie Mellon University in Pittsburgh. I r, s t 7$tL it, -v , V " '" ' - BethForge president resigning By PAUL WIRTH Of The Morning Call Jack G. Faryniak, president of the troubled BethForge Division at Bethlehem Steel Corp.'s local plant, will leave at the end of this week to head a Pittsburgh-based company. Faryniak will start Monday as president and chief executive officer of Pittsburgh Forging Co. The 45-year-old Lower Sau-con Township resident will get an ownership position in the company and will take a seat nn thp hnarri of directors. Faryniak "This is one of those opportunities which comes along once in a lifetime," Faryniak said yesterday. He said his motivation was "99.9-percent financial," and the decision had nothing to do with the future of the BethForge Division. BethForge has accumulated millions of dollars in losses over the past few years, has been unable to negotiate labor cost concessions with its union employees, and needs a costly major furnace upgrade to be fully competitive. The 825-employee division was expected to lost more than $10 million in 1987, Faryniak told workers in an employee newsletter. Losses were cut during' 1988. Faryniak said, but he would not reveal specific financial figures. BethForge was spun off as a separate division of the local plant in September 1985. The division makes steel in -electric furnaces and forges it into giant power plant generator shafts, nuclear reactor components, gun barrels for military tanks and other specialized products. BethForge has asked the United Steelworkers union to begin negotiation for labor cost concessions. Faryniak said in an interview earlier this year, but so far no talks have begun. Uniop leaders say they are afraid any talks with BethForge will jeopardize an on-going job-cutting agreement being implemented throughout other areas of the Bethlehem plant. A $10 million facelift of Beth-Forge's electric furnaces is needed, Faryniak says, and the Department of Defense is willing to contribute $5.5 million to help pay for the job. But the remaining $4.5 million must be raised from "private sources," he said, including the Bethlehem Steel board of directors. Ron Saukko, BethForge vice president of operations, will be acting president until a decision on Fary-niak's replacement is made. Pittsburgh Forging Co., recently purchased by its 270 employees from previous owner Ampco-Pittsburgh, has three plants and makes products for the aerospace automotive, off-highway and railroad markets. Faryniak said. The company does compete in some areas with BethForge. he said, but "there is not a lot of customer commonality."

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