The Los Angeles Times from Los Angeles, California on October 11, 1982 · 52
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The Los Angeles Times from Los Angeles, California · 52

Los Angeles, California
Issue Date:
Monday, October 11, 1982
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USINE Coo Aujjclco (Timcfi 1oiul.i. (Vtokr II. m: (( Export Bill Is Step in Right Direction but No Panacea, Experts Say 4 Unomploymont 18 V RatO Britain and City of Coventry r14 iff- Kty Britain f 1 Coventry L J 12 10 'IS i T I If YV fc w Coventry Economy Goes From Boom to Gloom Dying Industry, Traumatic' Jobless Rate Prompt Fears of Worker Exodus y Hv WILLIAM TUOHY. Times Staff COVENTRY. England-"I worked with the same company in Coventry for 30 years until I was laid off two years ago." Saiian Singh said. "And now I question whether I will ever again find a steady job." Singh. 58. a stocky man whose dark hair is flecked with gray, was paying his daily visit to the Coventry jobs center a few blocks from the famous cathedral and going over the 3-by-5 cards listing the few available opportunities, and not finding anything. "There is something wrong with a system where you have qualified persons ready and willing to work hard, who can't find any jobs in Coventry." he said. Singh, an immigrant in a city of immigrants, came to Coventry from India in 1950 when the scars of World War II were still much in evidence. Coventry had been a target for massive German bombing raids, but in 1950 the city was about to embark on its boom days. Situated in the heart of England it was becoming the center of the automobile industry, and Singh's company. Alfred Herbert, was one of the best-known machine-tool companies in Europe. Shock of Unemployment All that has changed now. Once booming Coventry is indicative of the primary woe affecting Britain-rampant unemployment that is a byproduct of an eroding industrial base. For Coventry, the sharp unemployment comes as a particular shock, because for many years the city had seemed immune to most recessions. It used to be said that Oak Industries Loses Orders, Expects Big Drop in Pay-TV Firm's Picture By KATHRYN HARRIS, Times Staff Oak Industries Inc., which has steered through pay-TV technologies with highly profitable success, reported two blowouts last week and slammed the brakes on its once bullish earnings forecast. . In manufacturing, Oak acknowledged that orders have plummeted for its newest 56-channel decoder box because of cable-TV operators' dissatisfaction with its quality. The San Diego-based company also scrapped an ambitious plan to use a Canadian satellite to deliver pay-TV programming directly to subscribers' homes, acknowledging that portions of the plan were ill-conceived. Citing plummeting orders in the decoder business as a major factor, Oak's management said last week that its 1982 profit might drop as much as 34 from last year's record of $30.4 million. Last summer, the company had projected a 10 increase in profit for the year. Frank Astrologes, the company's chief financial officer, said that $21 million in orders for the 56-channel decoder were canceled last month and that orders for the rest of the year could be two-thirds less than initially forecast. Fabled Growth Rate The company is in good financial shape, with no shortage of cash and with just $17 million or $18 million in short-term debt. The company has about $2.30 million in long-term debt, which Oak won't have to begin paying off until 1988. But analysts don't anticipate that Oak's fabled profit growth rate will return anytime soon. Over the last five years, profits grew at an average rale of 63.5. but that part of 1 1 fi ill mj s .in i ri"iYT i 5 - -..J -jrnin - Wntrr nearly anyone getting off a bus or train in Coventry would have a broom stuck into his hands and be told to get to work. The modern new cathedral, which was erected next to the bombed-out shell of the old structure, was seen in England as a sym Out-of-work Britons marched in Writer Oak's story "is over," says Alan Kassan, a securities analyst with First Manhattan Co., in New York. Some analysts and customers "criticize Oak for trying to move too fast in its eagerness to be first in new technologies. Oak rushed to be the first manufacturer to ship the 56-channel "addressable" decoder, which allows cable-TV operators to turn certain channels on and off to subscribers willing to pay for additional services. But technical problems marred the product's reputation. Two major cable-TV operators Cox Broadcasting Corp. and Storcr Broadcasting Co. both canceled orders in the last three months, Astrologes says, and no new major orders replaced them. Although Astrologes says he's confident that most of the problems have been licked, the damage can't be quickly repaired. 'Buck Stops Somewhere' "The buck stops somewhere. If they had some technical problems which weren't discovered by top officials until a few months ago, you've got to blame them," says Howard Turetsky, a securities analyst with Lehman Bros. Kuhn Loeb Inc. "We first started seeing the signs in July. That's why we started . . . trying to lighten our bell." Astrologes says, alluding to Oak's decision in August lo reduce salaries. In addition, about 650 workers of a total work force of more than 13,000 have been laid off. For critics who ask why the company wailed until October to disclose the big drop in orders for its 56-rhannel decoder, Astrologes ex .I: A M it .:'.! . I o o MP Vwlr ill hi i 4 -faS r bol of Coventry's will and energy. Arthur Waugh, leader of the Coventry City Council, looked back on the prosperous days and said, "We were a boom city then. Now we're a gloom city. "Out of a working population of 192,000 (including outlying areas). London last year during cross-country Profit Gets Fuzzier plains that Oak painstakingly contacted customers to find out why $47 million in orders were placed on hold in August. The next month, $21 million in orders were canceled. On another front. Oak is selling off its last cable-TV system, less than two years after it tried to build up its small business as an operator. "At the time we did that, we thought we could acquire more systems. We came to the realization that was something not done easily," Astrologes says. Oak showed even greater enthusiasm last year for "direct broadcast satellite" technology, which probably won't be tried commercially in the United States until 1986. With the use of powerful satellites, proponents hope to deliver pay-TV programming directly to homes equipped with small, rooftop antennas. Interim Plan Dropped In its eagerness lo be one of the first companies in the satellite-to-home field. Oak announced plans lo start a service in 1984, using a Canadian satellite much less powerful than the U.S.-owned satellites slated for later in the 1980s. Last week. Oak dropped its "interim" plan, citing the cumbersome size and cost of the dish -shaped antennas that would be required. Astrologes says the company learned only in "the past two or three weeks" that it would have lo use an antenna nearly four feet in diameter. "Thai's like a windsail up there. You'd have to have two men to install it," he says. In addition, the $600 cost per subscriber was higher than Oak desired. Please see OAK, Page 4 LI' yp w .Jiff 4 2 1972 '74 80 82 Fret 9 month Auocialtd Ptcm Modern Coventry Cathedral, built beside structure nearly destroyed in World War II, symbolized city's will. Now, Coventry, with 16 unemployment rate, epitomizes Britain's problems. we've got more than 40.000 unemployed. That's over 20. In 1971, we had 192,000 jobs, and now we've got only 153.000." In Coventry proper, unemployment has risen this year to 31.408, or about 16, from 7.229 in 1972. Please see COVENTRY. Page 2 protest against unemployment. Mellon Bank Reduces Prime Ratetol234 PITTSBURGH (UPD-Mellon National Bank, the nation's 15th-largest commercial bank, has trimmed its prime rate to 1234 from 13'. effective Tuesday. "The cut is in line with recent declines in short-term, money-market interest rates, which represent a major element in our cost of funds and in line with the Fed's discount rate cut from 10 to 9.5." said Ron Talley. Mellon's director of economic research. Talley said that, to his knowledge, Mellon is the only major U.S. bank to lower its prime rate below 13. Follows Trend Most major banks across the country trimmed their prime rates last week to 13 from 13'4. The prime is a benchmark used in determining interest charges on other loans, and often follows the movements in the discount rate, which is what the Fed charges banks for funds. "Bank loan demand generally has been fairly sluggish over the past several months," he said. "The weak economy has far and away been the most important factor." Inventory Cuts Businesses arc reducing their inventories and subsequently reducing their need for bank financing. Despite indications the Federal Reserve will case credit in the face of a continuing stagnant economy, Talley said, there remains a "real question about the degree to which business and consumers will respond positively to lower interest rales." 76 '78 6Z JAVA' - m n m t liy lilLI.SlNC. Times Stull Wntrr When President Reagan .signed the Exxrl Trading Company Act of 1982 on Friday in lng Beach, he culled it just the kind of stimulus the economy needs lo return lo prosperity. Hut some leading antitrust experts said the bill is not likely to produce the great benefit that Reagan desires. The bill, which Congress passed last week, is designed lo lxosi exports of American goods and services by allowing competing I'.S firms to form Japanese-style export trading companies, largely exempt from antitrust law. It also is intended to increase export financing by allowing bank holding companies lo own export trading companies, ending a 50-year precedent barring banks from any direct ownership of commercial enterprises. President Reagan citing Commerce Department figures, said the bill will boost I'.S. exports by $11 billion in the next three years. Sen. John Heinz (R-Pa. ). one of the bill's chief sponsors, has called the measure "the most significant job-crealing bill lo pass this Congress." He has cited estimates that it could create between 340.000 and 640.000 jobs in the next three or four years. Won't Be a Panacea But antitrust experts, while still professing general support for the bill, nonetheless said that it will not come close to being a panacea for greater exports and jobs. The bill will help some small and medium-sized firms that until now have not exported products because of a lack of capital or fear of antitrust violations, they say. But many firms have been exporting without concern about antitrust violations and won't see much effect from the bill, they say. In addition, some said, obtaining certification to form joint export ventures will be lime consuming and costly and will require companies to publicly disclose sensitive information. Some also doubted whether Judge Rejects Proposed Fraud Suit Settlement Bv AL DELUGACH. Times Staff A San Francisco federal judge has rejected a proposed consent settlement of an insider trading complaint against two Santa Fe International Corp. divisional officers as "an outrageous disposition of what I call wholesale thievery." In taking the unusual step of refusing to approve the negotiated civil settlement, U.S. District Judge William Orrick criticized the Securities and Exchange Commission for giving "a slap on the wrist" and suggested that the agency "see about getting a little criminal authority." Under the proposed settlement, James H. Randolph Jr. and Charles Blackard agreed to relinquish $116,700 without admitting or denying SEC allegations that the money represented illegal stock profits. As reported last Tuesday, the latest of several SEC suits seeking disgorgement of $8 million profits on Santa Fe stock accused Ran U.S. WouldHalt Occidental Bid to Build Soviet Pipeline From A Times Staff Writer WASHINGTON The Stale Department said that under present circumstances Occidental Petroleum Corp. may nol obtain export licenses to build a proposed 3,000-mile coal-slurry pipeline in the Soviet Union. Although the Ixis Angeles-based company has not yet asked U.S. permission to use American technology for its proposed Russian project. Occidental Chairman Ar-mand Hammer announced in Moscow last week that he will soon seek federal approval to build the Siber-ia-lo-Moscow pipeline. "The slurry pipeline is covered by existing sanctions," a State Department spokesman said Friday, referring to President Reagan's earlier ban on U.S. equipment and technology for a natural-gas pipeline from Siberia lo Western Europe. Occidental had no immediate comment on the Stale Department's position. But Jack King, a Washington-based executive vice president for Occidental, noted that the project "would involve only Russian trunks will ru-h in grMl mjint.r-r - w. finance or own the ixir inning' companies. Others added the measure does not address mure nl ical government rules thai ili-iour age I'.S. exports, such as double taxation of Americans cmplo'. '! abroad, the Foreign Corrupt I'r.i' tices Act I which limits pavment - to foreign sales agents I and export-license regulations And even if the predicted Ikkj-i of $11 billion 1X'S occur, skcpl'es ,ni. that still represents only about V; of total I'.S exports of 2'V billion in 1981. "The bill will make a difference for some companies" not now able lo export, said Joseph K (Inffm. a Washington attorney and chairman of the American liar Assn.'s com miltec on antitrust aspects of inter national trade "But not for the thousands and thousands of compu nies that the government is predict ing." First Proposed Under Carter The bill, first proposed during the Carter Administration and passed by Congress last week with bipartisan support, was inspired by the success of the giant Japanese trading companies such as Mitsubishi International Corp. and Mitsui & Co Ltd. These companies, owned partly by Japanese banks anil manufacturers, provide marketing and financial clout that their member companies alone would not have. I'nder the bill, the Commerce Department subject to Justice Department veto can certify qualifying export trading companies for partial protection from antitrust laws, thereby allowing competing U.S. firms to join forces. To qualify for certification, an export trading company will have to show that its proposed business wouldn't substantially lessen competition or restrain trade in the United States, unreasonably affect U.S. prices, substantially restrain the exports of or unfairly compete against a U.S. competitor, or result Please see EXPORT BILL. Page 3 Writer dolph and Blackard of securities fraud in using non-public information about Kuwait Petroleum Co.'s purchase last October of Alhambra -based Santa Fe, then publicly traded. At the time of the alleged violation, Randolph was vice president and Blackard was manager of planning and analysis at a Dallas subsidiary. Santa Fe Minerals Inc. Black -ard now is vice president of a Santa Fe Minerals subsidiary, Santa Fe Windsor. The consent settlement rejected by Judge Orrick was similar to one accepted by a New York federal judge Sept. 29 in an insider trading complaint against Darius N. Keaton. a director of Santa Fe International. Keaton. a prominent oil industry consultant who was a general chairman of the 1982 U.S. Open golf championship, agreed to disgorge $278,750 of Santa Fe profits without Please see SANTA FE, Page I (liquefied) coal, and the coal would never leave the Soviet Union." The President's ban on American know-how for the natural -gas pipeline was based on Soviet actions contributing lo repression by the military regime in Poland. The Stale Department said the type of project announced by Hammer "would involve equipment and technology common to the oil and gas sector for which export controls were expanded in December. 1981. and June of this year." The department spokesman added: "The Soviets possess vasl coal and lignite reserves located far from their centers of population and industry, and technologies of this type would allow them to t.ike pressure off their strained rail transportation system." Hammer said that Bechtel Croup Inc.. the San Francisco-based engineering and construction firm, and the Italian company KM would be partners with Occidental in the slurry pipeline project.

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