The Los Angeles Times from Los Angeles, California • 46

COMMODITIES 1 1 197fs Housing Boom Failing to Materialize i JS 1 I ff 1 (f-" CAMPAIGN IN A SPIN C. R. Brown, left, general manager of Mazda Motors of America, examines eight-page newspaper insert to introduce the rotary-engine Mazda automobile with David Mills, account supervisor with Foote, Cone Belding, Los Angeles. Times photo by Frank Q. Brown ABOUT ADVERTISING The Motor Goes Round and Round and Comes Out Here BY JOHN A.

JONES Timet Staff Writer What happened to the building boom this year? People in the lumber and plywood business who predicted big thing3 for 1071 along with an expected economic pickup have had second thoughts since early spring. Priee3 have been coming down and building activity has been no more than average. "We're really in a quandary," says Don A. Stobaugh of Sun Lumber Co. in Los Angeles, trying to explain the situation.

"Usually, prices start coming down when business is lousy but business is not really that, bad. We're looking for a pretty good next two or three months." Locally, he says, construct ion isn't booming but there's been no lag in building plans, either. Stobaugh see3 more action among the very large builders, who have more financial resources to launch big, speculative projects, while the "little guys" are very quiet, A different perspective shows up from talking with an Eastern industry spokesman. Housing Starts Figures Frank Rice, vice president of She-pard Sr. Morse of Rrookline, said many industry watchers base their idea of booming or lagging construction on the annualized housing start figures announced monthly by the U.S.

Commerce Department. The latest figure, for March, showed a rate of just over 1.0 billion housing starts this year, up from 1.7 billion in February. The April figure is due for release this coming week, and many industry people and commodity traders expect it to be lower. "It's been our opinion for some time that to rely on these annualized figures is misleading." Rice said. "We're in a seasonal business with construction, so we get a distortion.

"Building is advancing in moderate fashion. The first six months this year should show a gradual improvement, then in the last six months we're really going to go. The last six months are the building season." Another point Rice made is that the trend-spotters don't consider bow much lumber and plywood i3 used in each new house or apartment. On Decline Last Year "Last year, the amount of these materials in each unit was definitely on the decline. There was less than vp were putting into houses built in 18 and I960, because the new houses are smaller.

Now we're gradually getting back to larger units, but. this is a long-term development." Those who feel disappointed at the lack of a building boom now "haven't read the signals right," Rice concluded. Warnings of rising interest rates on home loans, which have tapered off considerably since last, summer, may have led some commodity traders to expect a building decline. Industry spokesmen, however, felt this should not have influenced prices so quickly. Prices, at any rate, are down in futures trading.

The May lumber contract had a peak of about $117 per thousand board-feet in mid-February. It expired at $02.70 Friday, when the nearby July contract was selling for $07.50. Plywood showed a similar pattern. The September contract closed at $02.20 per thousand square feet, down from $111 in early March. One factor that may have caused the peak and resulting decline in plywood market prices is the nature of the futures trading itself.

Less than two years old, plywood trading on the Chicago Board of Trade proved attractive to speculators who looked for profit from price changes. But, brokers say, the commercial interests that should be using the market to hedge against Please Turn to Page 11, Col. 1 Wall Street Gets First Broad-Based OTC Market Index BY ROBERT A. ROSENBLATT Timei Stall Writer Wall Street, where statistics on stock prices are gobbled up like candy, will have seven new sets of numbers to ponder today. For the first time, a broadly based price index will be available to measure the group performance of the vast over-the-counter securities market.

The index will be based on prices of stocks carried on the automated quotation system (Nasdaq) of the National Assn. of Securities Dealers. The composite index will include all 2,100 over-the-counter issues listed by Nasdaq. This measurement is comparable to the common stock indexes prepared by the New York and American stock exchanges. In addition to the composite index, the Nasdaq system will provide six other gauges' of performance for over-the-counter issues.

These indexes will cover industrials (1.128 issues); banks (100); insurance (128); transportation (45); utilities (112); and other finance (287). The Nasdaq network links geographically scattered brokerage offices with a central computer, in effect creating an electronic stock exchange for securities traded by widely scattered brokerage houses. Starting in February the system began flashing stock prices on the screens of terminals linked to the computer. Each trade in any of the 2,100 stocks is entered into the system. Todav, the new indexes will be calculated by the computer and flashed to brokerage offices.

Each index was given a base value keved to the price of the stocks on Feb. 5, the day before Nasdaq began operating. Thus, the Feb. 5 value of every index is 100. The indexes will be updated every five minutes.

The performance guides will also he adjusted as new companies are carried by Nasdaq, others dropped, and as firms split their stock. no later than Sept. 30. There was no indication whether the prospective buyers had agreed to the new terms. Recrion, which also owns the Stardust and Fremont, hotel-casinos, reported last month that first quarter earnings from continuing operations slipped slightly reflecting increased losses from the Aladdin which lost $271,000 or 20 cents per share in the first quarter, compared with $103,000 or 8 cents per share in the same 1970 period.

In announcing the agreement to sell last February, Recrion did not name any of the prospective purchasing group, with the exception of Gardner, a former executive of the Horsehoe Club, a downtown Las Vegas casino. Gardner's attorney said his client represented himself and six other investors around the country whom he declined to identify. The attorney also said that some of the money for the purchase was be-. ing raised wit the help of a Chicago brokerage house which he also declined to name. Gardner could not be reached immediately for comment on the extension terms.

ROSSMAN Writer proclaim, "Tried the car with no pistons?" or "Tired of a noisy engine?" Tag line on each of six different billboards is "Rotary-engine Mazda." TV commercials lean heavily on quotes from enthusiast magazines such as Motor Trend and Road Test, as does the newspaper insert. "We wanted to build acceptance by showing that the experts accept the car," says Foster. "So we decided to have authorities say things for us rather than say it ourselves." But there was a pitfall, according to David Mills, account supervisor. Please Turn to Page 12, Col. 2 17, 1971 2 indicates they are "consistent with the recovery plan developed by new management after, taking office last January." He said he was reporting indications now because of "numerous inquiries regarding the heavy volume in Republic slock" on the New York Stock Exchange Friday.

Republic reported substantial write-offs and net losses in the fourth quarter of fiscal 1070 and the first, quarter of fiscal 1971. Sigoloff said second quarter results will be released before the end of the month. The World Canada plans a $475 million issue of new government bond financing. The Canadian government said it would issue the non-callable bond 3 today in three parts. The issue, to be dated and delivered June 1, will consist of maturities of two years and 10 months, five years, and eight years.

The Bank of Canada agreed to take down at least $175 million of the new bonds, without specifying which maturity. Proceeds will be used to redeem $125 million in bonds maturing June 1, and the rest will be used for general government purposes. Alcoa reportedly has cancelled plans for aluminum refinery in Okinawa. The Japanese news agency. Kyodo News Service, said Aluminum Co.

of America informed the government that it has abandoned plans to build the refinery. Alcoa cited as the reason to scrap plans for a 70.000-ton-per-year refinery, KNS said. Alcoa won approval for the plant last June despite opposition by the Japanese government which claimed Alcoa was trying to break into the Japanese market by setting up operations in Okinawa. The United States is expected to return Okinawa to Japan next year. Briefly Told U.S.

Financial Corp. of San Diego said a 30 growth in fully diluted per share earnings this year Is a "reasonable target." The United States Trademark Assn. said acquisition and merger activity fell sharply to 5,173 in 1970 from 6.107 a year before The New York Stock Exchange placed 100 margin requirements on Bausch Lomb and Electronic Memories Magnetics common stock, effertive today Factory sales of home appliances rose 2 in April to 2.486,200 units from 2.428,600 a year before Anaconda, American Smelting Refining and American Metal Climax raised the price of prime Western grade zinc to 16 cents a pound from I0V2 cents'. U.S. wheat sales to Europe are expected to soar to 150 million bushels this market year from 73 million bushels a year earlier Georgia-Pacific raise Ibe price on gypsum wall board by about $2 per thousand square feet on June 7 Vikoa Inc.

said it, will discontinue cable manufacturing, which currently accounts for about $8 million of its annual sales of about $21 million. WEEKS ENDING NEW YORK-Dow Jones overoge of 30 "industrial stocks stands or os the week opens, dewn 0.91 from a week earlier. The 1971 high pf 950.82 was sef April 28. The 1971 low of 830.57 was set Jan 4. bU 950 jHjt'j mrr 900 fH 24 1 1 1 22 ulU- 2oh--HJ ri1 1 18ESM iik 12 111 1 1 i I 10 Uaf-fll fl llllTyipMilitt 42 4,9 416 423 430 5:7 514 i MONDAY, MAY National RCA said its 1972 color TV sets will carry 5 higher price tags.

The new sets will be introduced to distributors with the higher suggested retail prices this week, RCA Consumer Electronics, an RCA subsidiary, announced. The increase also will cover color TV models introduced earlier this year. With a few exceptions, RCA said, the 5ro price increases will take effect at the distributor level as of May 19. The manufacturer said the prices are being raised because of significant material, labor and freight cost increasesbut it said the prices of TV receivers had been coming down for many years despite increases for other consumer products. The Treasury will seek $1.6 billion from new bids on a strip of bills.

The borrowing will be made at an auction of Treasury bills Wednesday, the department said. The auction will consist of reopening bids on a strip of outstanding bills which mature June 24 to Aug. 12. They will be reopened in the amount of $200 million each, the Treasury said. Marcona made a deal with Dravo to market its slurry handling system.

The recently introduced Marcona-flo slurry handling system will be developed and marketed jointly by Marcona Corp. of San Francisco and Dravo Corp. of Pittsburgh, the companies said. The system for loading, transporting, unloading and handling ores and other bulk commodities in slurry, or partial liquid form, will be adapted to new marine, land and ship-to-shore applications. Marcona will be responsible for technical development of the process and will will provide engineering and construction services for specific system applications.

An accountant proposed staggering the work-week to curb inflation. Reuben W. Abrams, partner in Laventhol, Krekstein, Horwath Horwath, outlined his plan in Management Adviser, a publication of the American Institute of Certified Public Accountants. He said production equipment should be run 24 hours a day by workers on round-the-clock shifts. The workers' schedule would he four eight-hour days followed by (wo days off, giving 81 weekends a year instead of 52.

This could be applied to all business activities and to the schools. Abrams suggested, and it. would cut, inflation by getting more production out of existing capital equipment. Sheffield Watch Corp. will decide methods to continue operating.

The financially troubled firm said It is holding talks with its lending banks, but has not yet reached agreement' on an extension of the due date of its debts. The company said the banks appear willing to await the outcome of a special meeting of directors on Wednesday when arrangements for its continuing operations will be considered. Trad ing in Sheffield stork was halted by the American Stock Exchange on May 7. It last traded at 6 14. Two firms ended a patent squabble involving the new soft contact lens.

National Patent Development Corp. and Griffin Laboratories filed a stipulation in New York Supreme Court ending suits against each other. National Patent is the licenser of Bausch Lomb whirh currenlly is marketing the new soft contact lens. Griffin had sued National claiming that its patent claims on the new lens were invalid, and National had sued Griffin charging the firm with stealing trade secrets involving soft lens. The suits were ended "without out prejudice," meaning either firm can reinstitute litigation if it desires.

California Flying Tiger Corp. cited progress in launching transpacific flights. Wayne M. Hoffman, chairman of the board, told shareholders at the annual meeting here that he's "extremely encouraged" about growth prospects of the routes, in which Flying Tiger has achieved of the total market. An offsetting factor, he noted, is military business which has declined with de-escalation of the Vietnam conflict.

Thanks to growth in' commercial traffic, Hoffman said, military traffic accounted for only 15 of revenues in the first quarter of this year down dramatically from 70 in 1969. Republic Corp. said it expected to report a "modest" profit for quarter Chairman and President Sanford C. Sigoloff said compilation of re-Eults for the quarter were not completed but preliminary information lOPartlll Prospective Buyers of Aladdin Ask Recrion for Additional Time BY CARL CANNON Timet Statf Writer BY MARTIN Times Staff It was, Jack Foster is quick to admit, an advertising man's dream. "For once," he says, "we had something new really new to say about a car." The car: the Mazda, built by Toyo Kogyo Co.

Japan's third largest automobile manufacturer. What, sets it apart: a rotary engine, a startlingly simple motor viewed by many in the automotive industry as the powerplant of the future. Mazda Motors of America had, in effect, walked into Foote, Cone Belding, Los Angeles, plunked down $2 million and ordered up a broad spectrum advertising campaign to trumpet the Mazda's entry to the California market. Rut how do you say unique effectively when everyone else is shouting unique? That problem fell to Foster, creative director at thp agency. And it was a problem, he concedes, "because the auto industry has bankrupted the language.

Blessing and Curse "We felt our biggest problem was to reflect the car's real difference honestly and directly. Really, this is Ihe kind of ihing they write about in the textbooks but it turned out to be both a blessing and a curse." A curse? "Well," he explains, "here we felt we had what everybody else has been promising but could we do it so it would not look like everybody else?" The campaign that emerged seems straightforward and simple, perhaps deceptively so. There was never any question of the central theme of the campaign "Mazda: The car with the rotary engine." An eight-page full color insert in every major market, daily newspaper in the slate bears the headline, "Finally. A new car that doesn't have the same old kind of engine." Inside, it adds: "No cylinders. No pistons.

No rods. No valves. No lifters. No camshaft." Billboards in the state's five leading metropolitan markets (Los Angeles, San Francisco-Oakland, San biego, San Jose and Sacramento) Recrion Corp. announced over the weekend that the prospective buyers of it -money-losing Aladdin hotel-casino in Las Vegas have requested an extension of time to complete the transaction.

Closing of the purchase agreement had been scheduled for Saturday. Los Angeles-based Recrion, formerly known as Parvin-Dorman, said that it had agreed to the request provided the buyers deposit an additional $250,000 in escrow by May 26 and deliver the rest of the purchase price by June 23. The original purchase price reported in February was set at S12 million plus assumption of a S4.5 million debt At that time the purchasers, still unnamed except for Walter Gardner, a Las Vegas business man identified as their representative, were said to have made an initial deposit of $250,000. The extension agreement calls for the closing of the transaction as soon as possible after the new deposit and the compliance with all terms of the original agreement with the final purchase taking place DECLINE IS MAJOR REVERSAL Federal Agency Debt Drop Aids Bond Market date June 1. 1970 and maturing June 1, 1971, would be" redeemed for cash.

Fannie Mae said there would be no bond issue in June to refund the ma-luring $150 million issue, which is guaranteed by the Government National Mortgage Assn. As long as this trend continues, the repayment of government-bark debt is a good thing for the bond markets, Homer says, simply because it reduces the total demand for credit, allowing more investor money to he spent on corporate, municipal and government bonds. "It. has helped to bring yield3 down," hr notes. But Homer believes "the large part, i of the agency repayment) 13 finished now they'll he net borrowers in the second half." For the next month or so, however, Horner says Federal Home Loan Bank debt repayments "are likely in continue" because of the continued deluge of saving3 deposits.

bond analyst and economist, the Federal Home Loan Banks have been repaying debts because of "a record-breaking flood of deposits into savings institutions." The deposits have enabled the to repay their borrowings from the FHLBs. Consumers have just been saving more, he says, anil investors who bought Treasury bills and other short-term securities at 7'r, and S'J, in I960 and 1970 have been putting the money back into banks and savings and loans as their securities came due. Those once high-yielding short term investments are now paying about half of what they used to. Similarly, the Federal National Mortgage Assn. has been repaying its debt because of large supplies of cash.

It simply doesn't need to borrow any more money at least for now. Just last week, the Federal National Mortgage Assn. said it3 88 mortgage-backed bonds BY JOHN GETZE Timet Staff Writer During the first four months of 1071, the privately held debt of all Federal agencies declined by an estimated $753 million. This sharp drop in agency debt a plus factor for U.S. bond markets is expected to continue at Iqast through the first half of this year.

Compared to recent years, the decline is a major reversal: In the January through April period of 1969, Federal agency debt increased by $1.9 billion; in the four months last year, the increase was a whopping $4.6 billion. According to Sidney Homer of Salomon Bros, (which supplied all the agency debt figures), the decline this year can be chiefly attributed to large debt repayments by the Federal Home Loan Bank3. In the first four months of 1970, the Federal Home Loan Banks (a group of 12 regional banks, which provide loans and supervision to savings and loan associations) borrowed about $1.6 billion through debt offerings. So far this year, the group has repaid more than $2.1 billion, Homer says. In addition, the Federal National Mortgage Assn, (a private agency, but since its securities must be guaranteed by a government agency, they are included in the Salomon Bros, figures) has repaid $120 million this year compared to net borrowings of $1.9 billion in the same period of 1970.

The Farm Home Administration and the Tennessee Valley Authority have borrowed less money this year than last. Why has this reversal taken place and what does it mean to the bond markets? According to Salomon's senior i.