The Daily Register du lieu suivant : Red Bank, New Jersey • 15

The Reistt SATURDAY. JANUARY 18, 1986 ousing starts drop 1 percent Week in Review Amuuf in 1 17jf! of i Soorc: U.S. Commerce Dot. GOODBYE SPRINT gte Corp. announced plans to sell its long distance telephone company, Sprint.

Executives of Sprint said GTE has spent $2.8 billion and incurred operating losses of $100 million a quarter, but couldn't realize profits. rZO- 1.8- 1.6- By MARTIN CRUTSINGER Associated Press WASHINGTON Construction of new homes and apartments fell 1 percent last year, the first decline since 1982, but analysts said the housing industry still enjoyed a good year. Housing construction totaled L73 million units in 1985, down slightly from the 1.75 million units started the year before, the Commerce Department said yesterday. The small decline was the first since a 2 percent drop in 1982. In 1983, housing construction surged 60.3 percent as builders recovered from four dismal years in which construction starts had plummeted by 47 percent.

Analysts noted that despite the small drop last year, 1985 marked the third consecutive year that construction has surpassed the sent home buyers out in droves. "It has almost been like springtime in the home loan business. Applications for loans are up sharply," he said. "We are off to a good start in 1986 and housing is the brightest spot on the economic horizon." Michael Sumichrast, chief economist for the National Association of Homebuilders, said when 1985 began he had expected construction would decline by about 5 percent, but he said declining mortgage rates through the year had helped to bolster sales and building activity. For 1986, he predicted construction would fall by about 7 percent with most of that decline coming in multifamily units, where he said a good deal of overbuilding exists.

For the month, housing starts were up 25.7 percent in the Northeast, 13.4 percent in the West and 11.3 percent in the South. "We have just finished the most stable three-year production period in the history of the housing industry," said James Christian, chief economist for the U.S. League of Savings Institutions. "The drop in 1985 was miniscule compared to the booms and busts that have been characteristic of housing in the past." Christian credited the growth in adjustable rate mortgages for this stability. These mortgages are extremely popular during times of rising interest rates since they offer rates below the level of fixed-rate mortgages.

Last year finished on a strong note with a sharp 17.5 percent jump in housing starts in December, the biggest monthly increase in more than two years. Analysts said this big gain reflected sharp declines in mortgage rates at the end of the year and was a good sign construe-' tion should remain strong at least through the first half of 1986. At the White House, presidential spokesman Larry Speakes said the December housing gain was "another sign of a booming economy." "Anyone who doubts that 1986 will be a good year clearly is not abreast of the continuing good economic news," he said. In other optimistic news, the Federal Reserve Board said yesterday that U.S. industries operated at 80.5 percent of capacity in December, a healthy 0.4 percentage point gain over November.

Fixed-rate mortgages dropped to 10.75 percent in early January, the lowest level in almost seven years, according to a survey by the Federal Home Loan Mortgage Corp. Warren Lasko, executive vice president of the Mortgage Bankers Association, said that the dramatic fall in mortgage rates has Oct Economy SUrrinrj? Unexpected jobs surge suggests rebound underway Bucking a county trend: 1 WalPs manufacturers hire while others close up shop nfc23 various maturities 11 5-Year Notes 9.50 Rates start the year by settling back down to familiar levels after brief acceleration. J- Prime Rate 1 8.65 Federal Funds 4 8.20 7ty Aug Sept Oct Nov Dec Jan 1 business buying activity Buyers report slackening 55) 1 expanding economy Wi jfx factory shrinking economy I 5 -J -J business, but mild upturn continues. 50 break even 1 45l Jury Aug Sept Oct Nov Dec I versus previous year eo Sales remain sluggish as automakers phase in new financing incentives. July Aug Sept Oct Nov Dec' V.CilC average hours ABC'S BIG BROTHER To wipe out the use of illegal drugs on the job, Capital CitiesABC Inc.

said it may use drug-sniffing dogs, urine tests and undercover agents with new employees. Also part of the plan are a drug hotline, educational films and medical benefits for employees with a drug dependancy. SURPRISE! The Gramm-Rudman deficit-reduction program, intended to harness the federal government's soaring deficit, is set to take effect March 1, and some government officials are scratching their heads and wondering what it will do to their agencies. The across-the-board 4.3 percent cuts, for example, will take $156 million from a $250 million budget the Internal Revenue Service was seeking from Congress. The money was to be used to clear up last year's computer snafu fiasco at the IRS during the tax return season.

MELTED MONEY Maryland's governor Harry Hughes announced plans to sell three thrifts and to liquidate a fourth. The move will unleash about one-half of the $1.2 billion frozen in 102 Maryland banks since as far back as last May, when a crisis in depositors' confidence led to a run on state banks. STORES IN STORES a crunch in retail sales has led department stores to take a cue from the shops that are getting most of the business these days: the specialty stores. Around the nation the big merchandisers are creating different decors for each department. Some retailers, such as Sears, are setting up free-standing stores for their home-improvement and electronics supplies, reports the Wall Street Journal.

INGRAINED SUPPORT As part of the new five-year farm bill, Agriculture Secretary John Block announced price support cuts for corn and wheat. Though the lower prices may increase export demand, the move will cost the government in another way: federal subsidies for farmers will rise. MICRO-CHIPPER The ailing semiconductor Industry may see better days, says a report by the Semiconductor Industry Association. Shipments and sales are up, it says, and will continue to improve. MOTHERS' RIGHTS Women workers' benefits may change if the U.S.

Supreme Court rules that states may require private employers to grant pregnancy-disability leaves. The issue, which the Supreme Court said this week it will rule on, also includes whether states may require the employers to reinstate the worker after delivery in the same or similar position. IN THE PINK After a five-year court battle, Owens-Corning recently won the right to register pink as the trademark of its insulation, reports the Wall Street Journal. While trademarks are registered everyday, this marks the first time color was permitted as a company's identifier. GIMBELS FOR SALE The Gimbel stores, once one of the most successful department store chains in the nation, is up for sale.

Its sales of $860 million didn't yield up to snuff profits for its parent, B.A.T. Industries, PLC. Analysts say it may prove too difficult to sell the whole 36 stores and B.A.T. may end up selling off parts of the chain at a time. STATIC RECEPTION The Turn er Broadcasting System said this week that it is reorganizing its purchase of MGMUA Entertainment Company.

Rumor has it that Ted Turner's first and second bids for the company were both too optimistic and that underwriter Drexel Burnham Lambert is having trouble coming up with the funds. ON THE AVENUE Daffy Dan's, New Jersey's discount retailer, will make history as the first large merchandiser of considerable size to hit Fifth Avenue, New York City. By late summer or early fall, Daffy will open up at Fifth and 19th Street. PAUL'S POPCORN First there was regular popcorn, then salad dressing and spaghetti" sauce. This week Paul Newman who donates all the proceeds to charity introduced two flavors of microwave popcorn.

INTERESTING MOVE Just as President Reagan led an international effort to weaken the dollar in an effort to reduce the U.S. trade deficit, his administration may also have to try to lower interest rates world-wide to boost the global economy. FERRY INTERESTING Arcorp wants to revive ferry service between New Jersey and New York City, but unlike the sort-of good old days, the boats will carry only passengers, no cars. There's a hitch: a company spokesman says the service will be primarily for people who move into a housing development the company is also planning. Factory hours reach high level as month adds 320,000 jobs thru economy.

By FRANCES LYNAM The Register WALL TOWNSHIP While factory workers for 3M and S.S. White Co. fret about their futures, outside the Standard Keil Co. manufacturing plant on Highway 34 here, there's a sign that points out an irony of economics. In bold black letters, it reads: "Factory Help Wanted." Up the road at Allaire Airport, directly in front of Air Cruisers another sign reads, "Assemblers Wanted." Though neither plant needs more than a handful of workers, the fact that both are seeking employees rather than shunning them is significant.

While the U.S. has lost almost two million manufacturing jobs since 1979, according to the U.S. Bureaus of Labor Statistics, the Monmouth County manufacturing employ-. ment fate decreased just .05 percent from 1980 through 1984. That will likely change this year, when 3M casts off hundreds of workers in Freehold Township and White another 160 in Holmdel.

In Wall, unlike the nationwide slowdown in manufacturing, the industry outlook is stable and growing, says Mayor Richard C. Wenner. Representatives from the four plants here say they've maintained or expanded plant operations over those years. Standard Keil, Air Cruisers, Adam Spence and Buck Engineering all located on or near Highway 34 share characteristics they say help stabilize their business: steady demand, few overseas producers of their products and plants small enough to respond quickly to market changes. Comparing the Wall manufacturers to 3M and White shows the difference in market demand.

Together, 3M and S.S. White are to lay off approximately 550 people by mid-spring. S.S. White a dental equipment manufacturer, suffered from a dwindling market demand as dental hygeine improved over the last 20 years. For 3M, the demand was great but the audio-visual tapes they made were also produced overseas.

Fierce competition with Japanese tapemakers forced them to pare down the 3M plant and relocate to North Dakota, where labor costs and taxes are lower. In contrast, the Wall plants are in specialized markets which overseas manufacturers tend to shy away from, say experts. 1 Adam Spence produces medical tubing; Air Crusers the inflatable emergency exit equipment for airplanes; Buck Engineering, electronic training equipment; and Standard Keil, hardware for the food industry. Carving out a niche in a specialty market, says Buck Plant Manager Jerry Kane, is essential to success in today's struggling manufacturing sector. Buck produces technical equipment that colleges and vocational schools use to train students.

Kane says the constant advertising necessary to maintain awareness of the equipment, plus the relatively low level of demand, discourage large corporations from entering the field. Kane adds that Buck is free from Japanese competition and sees little from European manufacturers. Jong You, research economist for the state Department of Labor explains, how overseas manufacturers target their markets: "Developing nations concentrate on very wide markets, mostly consumer gadgets. As a manufacturing industry grows, it becomes standardized. That's when the overseas competitors can duplicate the product, which they produce at high volume and much cheaper labor costs." rm You identifies the major overseas manufacturing competitors as Japan, South Korea, Taiwan and Hong Kong.

At the Wall Chamber of Commerce, gladice Saunders says part of the reason that these manufacturers haven't had to relocate outside the Northeast is that "the township still offers reasonably priced housing." All of the plants here, too, maintain relatively small staffs. Air Cruisers, makers of inflatable slides, rafts and life preservers for commercial airlines, has the largest staff of the four companies, employing 300 people. Earl Dix, general manager and vice president of. Air Cruiser's parent, Garrett says the number is small enough for the company to make changes in production and train people, without great expense. Henry Bowen, president of Standard Keil, says the factory has expanded over the last several years to its present 225 employees.

He says establishing a reputation with customers helps, but isn't enough to be successful. "If we had higher prices than our competitors, I wouldn't blame customers from wanting to change," he says. Over the past month, he says, they have added eight employees and may expand into other manufacturing areas during the spring. If they do expand, he says, Standard will hire an additional 20 to 40 workers. For each of the manufacturers, Wall is where they plan to stay.

,5 "We've expanded three times in theilS years we've been here and this is where we'll stay," says Bernie Kubler, manufa( turing manager at Adam Spence. -1 "For some, New Jersey can be a difficult business in which to live," he says. "But wet, don't entertain the idea of moving," he says? Expenses aren't so high that they outweigh; the benefits of a good labor pool, he 40 361 overall 35.1 35 July Aug Sept Oct Noy Dec PriCCS monthly change 1.2 m. 7 0 Producer prices post third year of modest gains thanks to food, fuels. July Aug Sept Oct Nov Dec 'Sources: Federal Reserve.

Association of Purchasing Labor Department, Commerce Department. 1 TIGER GRAPHICS IBM earnings disappointing, market has a mixed session group predicts Mortgage bankers rates may rise if? not expected, however, at least not recent advance with a 1 gain to 147. There was some stronger-than-expected economic news in the government's report that housing starts rose 17.5 percent in December to their highest level since last April. The Dow Jones industrial average briefly tumbled to a deficit of more than 10 points about a half hour before the close. Analysts attributed the drop to selling by traders engaged in complex strategies involving blue-chip stocks and options on stock market indexes, some of which were approaching expiration.

After that brief slide, the average recovered more than half of its loss in the session's last few minutes. Energy stocks fell for the second straight day, weighed down by slumping world oil prices. Exxon lost to 52 '4; Mobil V2 to 30 V4; Schlumberger to 34, and Chevron to 36. Federal Express, which reported an increase in the volume of packages and documents it handles, rose 2 to 59. The stock helped the Dow Jones average of 20 transportation stocks climb 4.15 points to 716.64.

Orion Capital dropped IV4 to 29. The company said it expects to show a significant loss from operations, before investment gains, for the last quarter of 1985. By CHET CURRIER AP Business Writer NEW YORK Stock prices closed mixed yesterday after an erratic session marked by disappointment over the latest earnings report from International Business Machines. The Dow Jones average of 30 industrials dropped 4.93 to 1,536.70, reducing its gain for the week to 23.17 points. Volume on the New York Stock Exchange came to 132.13 million shares, against 130.46 million Thursday.

Early in the session IBM reported fourth-quarter earnings of $4.36 a share, against $3.55 in the last three months of 1984. Though that represented a significant improvement, it fell a bit short of some Wall Streeters' expectations. Furthermore, it left the company with a slight decline in profits for the full year. John Akers, the company's president and chief executive, said, "There is an absence of convincing evidence the North American economy is showing sustained improvement, and we are approaching 1986 with caution." IBM shares, which are frequently described as a market "bellwether," dropped 5 to 150 as the most active NYSE issue. Most other major computer issues also lost ground.

But Digital Equipment, which posted better-than-expected quarterly profits earlier in the week, continued its inflation, interest By Jack Snyder Orlando Sentinel NEW YORK Both interest rates and inflation probably will increase this year, though not significantly, and the overall outlook for the housing industry this year is good, financial forecasters said Thursday at the Mortgage Bankers Association of America's annual economic outlook conference. The economists generally agreed that: Interest rates probably will hit a low in the first quarter of this year before starting to rise. Mortgage rates by the end of 1986 probably will be a little more than one percentage point higher than current The cost of living could rise by about 4 percent this year and 5 percent to 6 percent in 1987. A return to double-digit inflation is several years. Mortgage credit will be abundant fh 4 year.

In fact, Lenders will be flush with money and aggressively seeking borrower Money also will be available foY commercial development, but there will be a shift away from office and hotel construction to apartment, retail and industrial space instead. Housing starts will be in the range of 1.77 million to 1.8 million units, a small increase from 1985 activity. J- Key executives from mortgage banking companies and investment houses from around the country attended the conference to evaluate this year's business prospects!.