The Spokesman-Review from Spokane, Washington • 17

1 1 DIGEST From staff and wire reports HoMSBimg unp most a yem: 8.9 Housing Starts Seasonally adjusted annual rate, millions of units 1.9 1.8 1.7 New York Times WASHINGTON Builders broke ground for new homes at an annual rate of 1,494,000 in February, an 8.9 percent increase that followed two straight declines, the Commerce Department reported Wednesday. The rebound, which was somewhat stronger than many analysts had expected, prompted industry officials to predict a solid spring building season that would help extend the business expansion, now in its sixth year. Its beginning to be a safer bet that the after-shocks of the stock market decline and the inventory buildup are really dissipating, said James W. Christian, chief economist for the U.S. League of Savings Institutions.

Wednesdays figures also showed that permits for future housing starts climbed 11.5 percent last month and that the strength in both starts and permits was geographically broad. Interest rates are down, and singlefamily builders are still bullish about the next six months, said Dale Stuard, president of the National Association of Home Builders. The market is being led by trade-up buyers who are selling their existing homes at a good profit and moving up into larger, more expensive housing. Stuard said the dollar value of singlefamily homes this year could exceed the 1987 total despite a projected decline of nearly 7 percent in the number of units, to 1,068,000. Lyle E.

Gramley, a former member of the Federal Reserve Board and now chief economist for the Mortgage Bankers Association, said Wednesdays housing and output data were further reasons for pessimists to rethink the hypothesis' of impending recession. He said housing was helped by the fall in interest rates to about 10 percent from nearly 12 percent in mid-October, by strong job growth and by rebounding confidence. The longer you go after a crash without a downturn, commented Martin A. Regalia of the National Council of Savings Institutions, the less it weighs on peoples minds. Although apartment and condominium construction also rebounded in February, analysts said this sector would remain sluggish or worse for various reasons, including high vacancy rates in the South.

Stuard called the outlook bleak, mentioning a continued negative effect of the 1986 tax legislation, cutbacks in Federal housing assistance and the lagging incomes of renters. The demand for low-cost rental housing is still rising in many markets, but builders cant get units in the ground at rents people can afford, Stuard said. Februarys 8.9 percent rise in total starts, the most in more than a year, followed a 15.8 percent plunge in December and a 1.9 percent drop in January. Although the figures are adjusted for seasonal variations, economists said unusually harsh January weather depressed the result. The Commerce Department Wednesday revised the January starts rate to 1.372.000, down slightly from the 1.377.000 it had initially estimated.

Single-family homes climbed to a rate of 1.095.000 from 1,002,000, while two-to-four-unit dwellings rose to 55,000, from 51.000, and dwellings of five or more units rose to 344,000, from 319,000. Starts rose 2.7 percent in the Northeast, 13.8 percent in the Midwest and 25.6 percent in the South but declined 8.9 percent in the West. Permits ran at a rate of 1,402,000 998.000 for single-family houses, 75,000 in two-to-four-unit dwellings and 329.000 in larger buildings. The South also did best in permits, with a 30.4 percent jump. The Midwest and West had modest increases, and the Northeast had a 4.1 percent decline.

1.6 TT 1.4 $236,000 judgment filed against KSKN A (236,000 judgment in a lawsuit against defunct Spokane television station KSKN has been filed in Superior Court, nearly three years after the stations owners filed for bankruptcy. CPT Holdings Inc. filed the judgment in state court last week after a U.S. District Court judge ruled in favor of CPT late last year in its suit for collection of debt owed by the station. The Superior Court filing allows CPT to take advantage of collection procedures available through state courts, said Christopher Reive, an attorney for CPT.

CPT provided movies and television programs that Broadcast Vision Television the first owner of KSKN, channel 22, did not pay for, according to the ruling. The ruling in federal court awarded $208,500 to CPT, plus interest at 1.5 percent a month since Dec. 8, 1984, and attorneys fees and costs of more than $28,000, according to court documents. Lee Schulman, the founder of KSKN, is the only person still liable for Broadcast Vision debts, said CPT attorney Chris Kitchel. Arnold Mills, the other person in the partnership that operated the station, was dismissed from the suit before the judgment was entered, Kitchel said.

KSKN had a brief and rocky history in Spokane. The station went on the air behind schedule in late 1983. The owners filed for Chapter 11 bankruptcy protection less than two years later. KSKN was bought by new investors in September 1986 and appeared to be increasing its revenues when the stations manager, credited with turning the station around, died of a heart attack. After another bankruptcy filing in March 1987, the station shut down in June.

1.3 HHHHHHHBHH BUj MAMJ JASOND JF 1987 1988 Feb. 87 Jan. 88 Feb. 88 Tir 1.37 1.49 Factory output rises 0.2 Source: U.S. Dept, of Commerce Local winery works in deal with Soviets Industrial Production Associated Press WASHINGTON U.S.

industrial production edged up 0.2 percent in February as reductions in output at auto factories and coal mines offset gains in other areas, the government reported Wednesday. The Federal Reserve said that the February advance, which followed a 0.3-percent January gain, was the poorest showing since output actually declined by 0.2 percent in September. But private economists said the gains, even at a much slower pace, represented good news for the economy, especially given fears that production would have to be cut back sharply in the early part of 1988 in order to work off high levels of unsold goods. There is nothing here that signals anything dangerous for the economy, said Maury Harris, chief economist at PaineWebber. We are slowing down, but we are not slowing all that much.

Industrial output had surged ahead with monthly increases of 1.1 percent in October and 0.5 percent in both Novem ber and December. However, much of that production went into inventories of unsold goods as consumer spending fell during the final three months of the year. Economists had worried that factories would cut back production so much in the early part of 1988 that it could topple the country into a recession. But recent business statistics, including the continued advances in production, rising consumer spending and strong gains in employment, have eased those fears. The industrial production figures depict an economy that is growing less rapidly but really looks pretty healthy," said Jerry Jasinowski, chief economist of the National Association of Manufacturers.

U.S. manufacturers have enjoyed a significant rebound in output over the past year as the weaker dollar has boosted export sales. The February increase included a 0.2-percent rise in production at manufacturing plants, identical to the gain in January. Supplier sues Spokane firm A Spokane seafood wholesaler is being sued by a supplier for $271,000 and the supplier is asking the court to put the company into receivership, according to documents filed in Spokane County Superior Court. Queen Fisheries Inc.

of Seattle, which does business as East Point Seafood filed suit Monday against Hickory Hills N1515 Argonne. Hickory Hills owes East Point for seafood shipped since August, according to the court filing. Theres a business dispute over the amount of the billing, quality of product, and poundage of product, said Robert Dompier, attorney for Hickory Hills. In the suit, East Point also claims that Hickory Hills is insolvent or in imminent danger of becoming insolvent and should be put into receivership. If the court approves, a receiver would be appointed to run or help run Hickory Hills in order to pay off the companys bills, said Philip S.

Brooke III, attorney for East Point. MAMJJASOND JF 1987 1988 Jan. '88 Feb. 88 127.1 134JH 134.4 Source: Federal Reserve Board Sterling forms mortgage division Aluminum plant cuts deal (AP) The Columbia Falls Aluminum Co. has signed a new contract with a subsidiary of Shell Oil Co.

that will guarantee that the alumina refining plant will be operating at capacity through 1995. The plant has been refining alumina, or aluminum oxide ore, for two companies, Hydro Aluminum of Norway, which required 60 percent of the plants capacity, and Broken Hill Proprietary of Australia, which utilized the remaining 40 percent, said Jerome Broussard, president and general manager of CFAC. Last fall, Hydro Aluminum extended its contract through 1995. However, Broussard said, Broken Hill has sold its share in what was its only source of alumina, so it will not renew its contract with CFAC when it expires in July 1989. Broussard said Shell Mining a Shell Oil subsidiary, will now share production with Hydro Aluminum until July 1989 when the Broken Hill contract expires.

By Sean Jamieson Staff writer Spokanes Arbor Crest Winery has signed a preliminary agreement to import wines from the Soviet Union, owner Dave Mielke said Wednesday. Arbor Crest will import Tsinandali wine produced in Georgia, the main Soviet wine-producing region, in the southern part of the country, Mielke said. The specifics of the deal with Arbor Crest have not been worked out, Mielke said. What weve got is an agreement to agree with a producer in Georgia, he said. For American consumers, Georgia might be better known as a region producing extremely old people who eat yogurt a fact featured in a television advertising campaign a few years ago.

Yet the Soviet Union is the worlds third-largest wine producer, after France and Italy, according to statistics from the Wine Institute in San Francisco. The Soviets produced 899 million gallons of wine in 1985, compared to 1.8 billion and 1.7 billion for France and Italy respectively. But in 1986 only 20,000 of the 109 million gallons of wine imported into the United States were made in the Soviet Union, according to figures from the Institute. Arbor Crest plans to import Tsinandali red and white wines initially and later champagne. Mielke declined to discuss the quantity he would import or sales projections, but did say the wine would be available in 44 states through Arbor Crests sales representatives.

Arbor Crest produces more than 70,000 gallons of wine a year. Arbor Crest became interested in importing Soviet wine when Spokane took steps to establish a sister-city relationship with Makhachkala, a city on the Caspian Sea near the Soviet wine country, Mielke said. Among issues Mielke said would have to be worked out in a final contract: The Soviet Union sells wine in 700-milliliter bottles, but the United States requires wine to be imported in 750-milliliter bottles. Apparently there is also a jurisdictional dispute between the government of the Georgian republic and central Soviet authorities over who can negotiate the contract. There are no major problems, just dozens of minor ones, Mielke said.

Arbor Crest Marketing Director Joe Algeo signed the agreement in the Soviet Union in, February and will return there in May to work out details. Although Soviet wine production falls behind only France and Italy, the executive director of the Washington Wine Institute had reservations about the Soviets luck with grapes. Its not comparable to other well-known wine regions of the world, said Simon Siegl. Sterling to become more competitive, he said. Action will employ 20 at offices in Spokane, Bellevue, and Lake Oswego, Ore.

The new president is Thomas Sackmann, who was chief operating officer with Moore. Toms breadth of experience and leadership in mortgage banking was key to our decision to have Tom head up Action Mortgage, Gilkey said. Sackmann said he plans to increase Action FHA and VA lending, where volume is important to providing efficient service. Only about 10 percent of Sterling residential lending was FHA and VA, he said, compared with the 50 percent he hopes Action will do. That mix also better reflects the mortgage mix in the Spokane market, he said.

Actions Spokane office, with 11 em-ployeees, will be in the downtown Sterling office at N120 Wall. The Lake Oswego office opened March 7, Sackmann said, and an existing Sterling loan-origination office at Bellevue will become an Action branch. He said plans call for opening three more branches by June 1989. Gilkey and Sackmann will serve as Action directors along with Sterling President William Zuppe and Ned Barnes, corporate secretary and general counsel. Sterling, state chartered in 1 983, has 15 branches in Washington and assets of $300 million.

By Bert Caldwell Staff wrtter Sterling Savings Association has Wednesday announced the formation of a new mortgage-lending subsidiary to be headed by a former executive vice president of Moore Financial Services in Boise. Sterling Chairman Harold Gilkey said Action Mortgage Co. will allow the Sterling Savings to extend its lending activities to out-of-state markets. The expansion, by also increasing loan volume, also will make it possible for Spokane-Dased U.S. sets a two-week deadline for Japan than $60 billion of construction work in Japan.

Japanese companies did more than $3 billion of construction work in the United States in 1987, while American companies did little or no work in Japan. Verity told the Cabinet that a new framework for negotiations had been presented in a position paper he received from Noduo Matsunaga, Japans ambassador to the United States, according to several American officials. The paper said in part that Japan was trying to provide the widest possible opportunities to U.S. companies, said the officials, who asked not to be named. New York Times WASHINGTON The Reagan administration Wednesday set a two-week deadline for Japan to resolve the conflict over opening its construction market to American companies, a White House official reported.

If Japan fails to offer a satisfactory solution to the dispute, the official said, it will face American retaliation. The Cabinet-level Trade Policy Council authorized Commerce Secretary C. William Verity Jr. to resume negotiations that the United States broke off last week. The Japanese will send a negotiating team to Washington this weekend, the White House official said.

The council, under the chairmanship More sanctions threatened -B8 of Treasury Secretary James A. Baker IH, met to discuss a unanimous recommendation it received from the Trade Policy Review Group, a sub-Cabinet group, that the president initiate action against Japan. The review group proposed that Reagan order sanctions similar to those imposed on Japan last year in a dispute over computer chips. Those sanctions included millions of dollars in tariffs against certain Japanese exports, including power tools and laptop computers. Washington is seeking rights for American companies to bid on more Liberal arts majors get credit BERKELEY, Calif.

Citibank said it will abandon a policy that denied credit cards to some liberal arts majors after students at the University of California-Berkeley demanded the banks representatives be barred from campus. Bill McGuire, a spokesman for Citibank in New York, said on Wednesday the bank was retreating from the policy and that it would be discontinued by the end of June. He admitted the company had received complaints from several universities around the country, but he would not name them. Although McGuire said in a telephone interview using the major was a good indicator of future earning potential and of students ability to pay debt, he would not describe how the policy was applied. McGuire said other factors would be used to judge students credit worthiness, but he would not specify what they are.

A spokesman for the United States Comptroller of the Currency in Kansas City, said Tuesday that the Equal Credit Opportunity Act does not prohibit using a students academic major in a credit application system. Sears to acquire Western Auto CHICAGO In another big step into specialty retailing, Sears, Roebuck Co. said Wednesday that it had agreed to buy the Western Auto Supply a retailer and wholesaler based in Kansas City, in a deal that values the company at $402 million. Sears, the nations largest retailer, said it would pay $19 a share in cash for the 52.3 percent of Western Autos 13 million shares outstanding that are owned by the companys management and by the Wesray Capital the investment company headed by former Treasury Secretary William E. Simon.

Sears said it would buy the remaining outstanding shares at the same price if a merger agreement was approved by Western Autos board of directors. Sears also agreed to assume all of Western Autos debt, totaling about $152 million. akeo vsf fever breaks for mow shares are owned by an orphanage. Trendy possibilities. These include Minnetonka which carries Calvin Klein fragrances, because Kleins group may seek to buy this company as it did with Puritan; and Beebas Creations, which imports fashionable womens clothing for stores such as J.C.

Penney Co. and could either go private or be taken over by Penneys. Unique products or services. Poloroid Corp. is the frequent subject of rumors that Fuji Photo might buy it; Black Decker Corp.

would shoot up in price as a target should its own deal to take over American Standard fall through; and Beverly Enterprises would rise on the possibility the Pritzker family will become heavily involved. Most chief executives feel mergers and acquisitions are important; so theyre constantly looking at all alternatives from both a defensive and offensive standpoint, said Willard of Prudential-Bache. The individual investor should carefully look for potential deals in the same way, considering economic logic and economies of scale in potential deals. Willard, whose surprised foreign investors havent yet been more active this year, sees the greatest takeover potential in these industries: communications, retailing, non-defense manufacturing, insurance, transportation and entertainment. Least likely to be taken over are military defense companies and uniquely American service firms, such as brokerages, because foreign buyers simply wont get involved, he It was only a matter of time until corporate America caught the takeover bug again.

Expect the fever to remain high all year, as numerous companies become casualties of this epidemic prompted by low stock prices. Whats different in this go-around is that corporations are buying competitors in their own industries or similar fields. For example, we see department stores seeking Federated Department Stores, tire companies coveting Firestone Tire Rubber Co. and appliance firms lusting after Roper Corp. Meanwhile, once-feared corporate raiders have been more or less neutralized by tax law changes that make it less profitable to buy a company for the sake of simply chopping it up.

"A lot of U.S. corporations had shopping lists of which competitors theyd like to buy, but the prices were much too high until the market collapse, said Robert W. Willard, head of mergers and acquisitions for Prudential-Bache Securities. This year theyve got cash and confidence about the economy, and the prices are right. Assets of many companies are selling at 70 to 80 cents on the dollar in terms of stock price, said Carl A.

Shrager, executive editor of Takeover Target Weekly Forecast, Santa Barbara, Calif. Takeovers now represent the cheapest way to expand a companys market share and compete effectively internationally. "Though the spectacular raids of the past are dead, this year will be an extravaganza for buyers, so long as the Dow Jones industrial average generally remains below 2,100, declared Shrager. Furthermore, stock prices of many industry groups will spike upward whenever a takeover rumor comes up for a member of a group. The trick for the investor is to buy potential targets which have as little downside risk as possible, so the investment wont be hammered if a takeover never comes to pass.

Even in the best of circumstances, buying the stock of potential takeover targets is often a tedious waiting game. Based on his research, Shrager has identified a number of ripe 1988 takeover possibilities: Retailing, which still is hot. For example, Zayre Corp. (around $21 a share, New York Stock Exchange) could go for $35 a share in the event of a buyout. Farm Fresh Inc.

(around $12, over-the-counter), a group of supermarkets, could reach $18 if a deal being considered with the Alex Grass family is actually negotiated. The food industry. Expect three or four major deals here because stock prices are far lower than asset values. Both Pillsbury Co. and General Mills are potential targets that have been subjects of the rumor mill.

Hershey Foods is another possibility, though it would have to be a friendly takeover because most OPEC: No special meeting PARIS The Organization of Petroleum Exporting Countries said Wednesday that it would not hold any extraordinary meetings to deal with the recent fall of oil prices, which has taken the average price to between $13 and $14 a barrel in the last few weeks. Several oil producers outside OPEC, however, continued to meet in London Wednesday in search of a way to prop up oil fcJTi.dli Jfti i.