Detroit Free Press from Detroit, Michigan • Page 21

This morning's business briefing; I Thursday, July 22, 1982 OPTIONS 5 Dow-Jones Industrials 832.19,-1.24 Prevailing prime rate 16V? New fixed-rate mortgages (20 down) 17V2 Highest 26-week certificate rate 12.70 Donoghue's Money Fund7-Day Average 13.30 Inflation rate (national) Inflation rate (Detroit) Michigan unemployment rate National unemployment rate All-savers certificates 6.7 3.9 14.4 9.5 9.99 ENTERTAINMENT 6-7 FEATURE PAGE 9 Call Butlnest News at 222-5392 DETROIT FREE PRESS jMhl t8Sr GNP grows, but rebound is uncertain wV- Pi tWrrk Steel dumping costs Mitsui $11 million The U.S. arm of Mitsui Japan's No. 2 trading company, pleaded guilty to steel dumping Wednesday and agreed to pay more than $11 million the largest penalty in the history of the U.S. Customs Service. Mitsui (U.S.A.) pleaded guilty to all 21 counts and agreed to pay the $11 million in civil penalties by Sept.

30. It also agreed to pay $210,000 in fines $10,000 for each count. In return for the guilty pleas, the government agreed to drop further investigations against Mitsui (U.S.A.) and its parent company. It also agreed not to use the company's guilty plea during the trials of the two former employes and one current employe named in the indictment. The indictment accused Mitsui (U.S.A.) and the others of making fraudulent statements to the U.S.

Customs Service from January 1978 to June 1981 in an effort to conceal the true price of steel being imported to the United States. Imported steel sold below a "trigger price," geared to what the government considers fair market value, is subject to a 100 percent levy under the Anti-dumping Act of .1921. The government claimed the defendants paid about $1.3 million in kickbacks and adjustments to unnamed U.S. customers, allegedly the difference between the phony prices listed to Customs, and the cheaper price actually paid. Free Press photo bv IRA ROSENBERG The team that saved Rotary Manifold from folding: From front to back, Larry Schehr, Kanneth Vitale, Peter Frame.

Doug Stover, Bob Diedrich, Ron Filauro, Perry Wrinkle, Al Meissner and Bill Fudge. The good guys win Employes buy printing firm and save 55 jobs up in retail sales in April and May was followed by a slump in June, and sales reports for early July are not encouraging. Industrial production, housing starts and employment also fell in June, arousing concerns that the long-awaited recovery may be further delayed. Last winter, the administration predicted the economy would revive in the spring. Later that hope was put off until this summer.

And now, officials say the recovery may not come until fall. Murray Weidenbaum, chairman of the president's Council of Economic Advisers, tried to be optimistic. "Clearly we've bottomed out of the recession," he told the Senate Banking Committee. "The economy is beginning to turn up." Jerry Jasinowski, chief economist for the National Association of Manufacturers, said the GNP figures were "a pleasant surprise. Frankly, I had only expected a modest increase.

This is clear evidence that the recession is ending." But Lawrence Chimerine of Chase Econometrics, a leading private forecaster, was more skeptical. "Temporarily we've reached bottom," he said, "but whether the recession really has ended depends on the future Hopefully, we'll start moving up, but that certainly isn't guaranteed." By ROBERT S. BOYD Free Press Washington Bureau Chief WASHINGTON The nation's economy started to grow in the April-June quarter after a sharp six-month decline, the government reported Wednesday, but administration officials refused to say the recession is over. "We are in a transition stage between recession and recovery," said White House spokesman Larry Speakes. And Commerce Secretary Malcolm Baldrige cautioned, "Despite signs of a pickup in certain sectors of the economy, the second quarter ended with some disquieting statistics." The gross national product, the broadest measure of economic growth, rose by 1,7 percent in the three-month period, after adjustment for inflation, according to a preliminary estimate by the Commerce Department.

THE GNP FELL by 5.3 percent in the last quarter of 1981 and by 5.1 percent in the first three months of this year, fulfilling the classic definition of a recession. Normally an upturn in the GNP signals the end of a recession, but Commerce officials said it may be two or three months before it is clear a recovery has begun. "We don't have the information to make a judgment that the recession is over," said Commerce Undersecretary Robert Dederick. "It's in Michigan MANUFACTURERS NATIONAL BANK and Comerica parent firm of Detroit Bank Trust, cut their prime lending rates to 16 percent, joining most other U.S. banks in the first trimming of the key rate in four months.

FLORISTS' TRANSWORLD Delivery Association, of Southfield, says the proposal by its competitor, Florafax International Inc. of Tulsa, to take over FTD in "a $50 million package" is unrealistic and not in the interest of the 20,000 flower dealers who belong to the association. FTD President Richard E. Daudelin also said the Florafax proposal raises serious anti-trust questions. He said FTD had a volume of $450 million last year.

etcetera Chairman Hyman Safran. Safran was doubtful about the idea. He said it was easy to talk, but that he wanted to see several hundred thousand dollars of "earnest money" in an escrow account, Schehr said. But a few days later, 1 0 of the 1 5 investors pulled out. The remaining investors decided to go after the Detroit plant alone.

While working to rebuild the investor group, Schehr was able to arrange financing from Michigan National Bank and a $500,000 Small Business Administration loan. The plant closed as scheduled in Apnl, but the investors believed it could be reopened in late May. Then, just a week before the deal was to be completed, two more investors backed out. The last-minute pullout forced a delay in reopening. But on June 21, Schehr and nine other employes and one outside investor turned over a check to Safran for several million dollars.

Schehr won't disclose the purchase price. The plant reopened at 7 a.m. on June 22 with two crews at work. To survive, the company has drastically cut overhead. The original 150 employes have been pared to 55 and the unions have agreed to a three-year contract with lower wages and fewer benefits.

But business is picking up, and Rotary plans to add 15 to 45 employes by the end of the year. Vitale said he believes the company will make the $7.5 million in sales it needs to break even this year. "The philosophy was that this thing was worth more dead than alive. That just wasn't true," he said. "It was kind of like the old American dream." By ROBERT H.

BORK JR. Free Press Business Writer At first they were told it was impossible and at times they felt like giving up. But in the past six months, the more Laurence Schehr and Bill Vitale struggled to buy the Detroit printing company where they'd worked as salesmen for 28 years, the more they believed what they were doing was important. "Don't the good guys ever win?" Schehr admits he once said in frustration. Now as president and executive vice-president, respectively, and partial owners of Rotary Multiforms Schehr and Vitale can cay, yes, good guys can win.

And so can the 55 employes who still have jobs. Rotary Multiform, on Detroit's near east side, is alive today because six months ago the two men and a group of other employes decided to mortgage their houses and buy the business. It was then called Rotary Manifold Forms a division of Safran Printing Co. Stecher-Traung-Schmidt, Safran's parent company, announced in January it would close Rotary in April, blaming the poor economy and high operating costs. THE COMPANY prints business forms, including bills for Detroit Edison and Michigan Consolidated Gas Co.

and state lottery tickets. The employes wanted to buy the Detroit plant and another more modern facility in Lancaster, N.Y. In February, Schehr went to Florida to make an offer to STS NISSAN MOTOR CO. Ltd. is recalling more than 18,000 1982 front-wheel-dnve Stanzas because of brake pedal adjustment problems that federal safety officials say could cause slower braking in emergency stops.

A spokesman said owners of the front-wheel-drive, mid-sized Stanza can go to any Datsun dealership for free inspection and adjustment of the brake pedal. Nissan said no accidents or injuries have resulted from the problem. KNIGHT-RIDDER NEWSPAPERS Inc. earned $27.9 too soon to say. One problem is that the rise in GNP was mainly due to swelling inventories of unsold automobiles and other goods.

Sales to customers decreased by 0.6 percent over the three months. FURTHERMORE, a pick- million (85 cents a share) in the second quarter, versus $26.6 million (82 cents) a year ago. Operating revenues rose 7.1 percent, but the recession pulled full-run advertising linage 26,000 Camaros, Firebirds recalled down 6.9 percent. Robert F. Singleton, senior vice-president of finance, credited recent moves, including a hiring freeze, for the earnings improvement.

Knight-Ridder owns the Free Press. THE CHAIRMAN OF the House Committee on Small Business introduced a bill designed to end politically moti vated hiring and personnel practices in the federal Small Business Administration. Rep. Parren J. Mitchell, ml--.

said the federal agency is generally regarded as a "political dumping ground." FEDERAL RESERVE Board Chairman Paul Volcker said Inside scoop on G24 coupe Look for this car or something close to it in Chrysler dealerships in about 1 5 months. AutoWeek shot these photos of the pre-production prototype of the G24 sports coupe, designed to compete in the high-performance market. The front-wheel-drive car will have a turbocharged four-cylinder engine with electronic fuel injection and five-speed transmission. 11 the recently failed Penn Square bank borrowed almost $26 million from the Fed in the two days before it closed the From UPI General Motors Corp. is recalling 26,000 of its hot-selling 1982 Camaro Z28 and Pontiac Firebird and Trans Am models because of reports of fuel spills caused by pressure in the gas tanks.

Involved are models with the high-performance, 5.0-liter V8 fuel-injected engines. The Free Press reported three weeks ago that some drivers had reported they got a face full of gaso first time in a year Penn Square had borrowed from the central bank. Volcker said the Fed "certainly will be repaid for our loans We have a secured, preferred position." FOUR CONSUMER GROUPS sued to block a change in federal regulations that would let hot dogs and similar meats contain finely ground bits of bone without it being listed on 4n the label. Rodney Leonard of the Community Nutrition Institute said the change, which would let bone be listed as line when they removed gas caps to check on a whistling calcium, "would cause meat products to be both misbranded and adulterated, a violation of the Federal Meat Inspection Law." CANADA HAS AGREED in principle to join the Europe Automation may cost 200,000 auto jobs sound. GM said it will replace a vent valve and a pressure valve in the fuel system in light of 17 reports of fuel spills caused by excess pressure in the gas tanks.

Pres With the federal government lacking an employment policy, a mismatch is developing the need for jobs by dislocated blue-collar sure in many of the cars may cause the gas caps to fly off By CHARLIE GREEN Free Press Washinoton Staff WASHINGTON Automation will eliminate 200,000 auto production jobs by 1985 and reduce the steel work force by two or three percent through 1990, according to a new Congressional Budget Office report. In addition, industrial robots could eliminate up to seven million jobs over the next 18 years throughout the manufacturing sector, the study an consortium producing the A-320 Airbus. Industry Minister Herb Gray said a final decision depends on whether government negotiatiors are able to win guarantees of significant industrial benefits to Canada. The decision could involve an initial investment of $500 million and create between 1,000 and 2,000 new jobs, Gray said. The Airbus is intended to replace the 1960s generation of DC-9 and Boeing 727 and 737 aircraft as they are retired.

PROCTER GAMBLE Co. says the number of people calling to ask if the company is linked to Satan has declined since it began suing those it believes fueled the story. Rumor-related calls have dropped from 15,000 to 200 to 300 per day since the lawsuit campaign began June 24. The company filed four new suits this week against people for circulating the rumor that trademark, featuring the "man in the moon" and a cluster of 13 stars, is a satanic symbol. return to their old jobs when the recession ends, because their jobs won't be there, the report says.

The budget office said the dislocated workers, concentrated in blue-collar jobs in the industrial Midwest and Northeast, will likely face longer-than-usual periods of unemployment and difficult adjustment problems in this decade as the economy shifts away from traditional manufacturing. THE ISSUE of dislocated workers is of particular importance in such hard-hit states as Michigan, Ohio and Indiana. Labor Department statistics show that, between 1977 and 1980, Michigan lost 121,000 net manufacturing jobs, Ohio 77,000 and Indiana 55,000. The nation as a whole gained 670,000 manufacturing jobs during that period, the Labor Department said. workers and the supply of jobs in growth industries, the budget office said.

It said Congress could take several steps, including authorizing job training and relocation aid, to ease the problem, but added that the programs would cost $1 billion or more in 1983. The report said no federal programs are currently geared toward helping dislocated workers. A few programs, such as the Employment Service, Unemployment Insurance, and the Comprehensive Employment and Training Act, offer aid to the unemployed, but are not well suited to the needs of dislocated workers, the Congressional Budget Office said. said. The report singles out the auto and steel industries as the ones in which the number of jobs will probably continue to shrink in the 1980s.

Overall, as many as 2.1 million of the 10.4 million people now out of work will not be able to on the move Doiv Chemical posts profit despite falling sales and gasoline to spill out. "IT HAS BEEN determined that if the fuel filler cap is removed on these cars when the tank is more than three-quarters full, particularly if there is pressure in the tank as evidenced by a whistling sound from the fuel vent system, gasoline may be forced out of the filler neck," a GM statement said. GM said owners of the cars which represent about 12 percent of the total 1982 Camaro and Firebird production will get letters asking them to take their cars to dealers for the free repairs. Until the repair is made, GM cautioned, owners should loosen the fuel filler cap slightly to release any pressure before it is removed, especially if the tank is more than three-quarters full or a whistling noise is heard. GM said there have been no reports of injuries or fires because of the fuel system problem.

Financial reports from three major Michigan companies for the April-June quarter reflect the continuing effects of a crippled economy. At Midland-based Dow Chemical sales Robert Herdoiza, left, has been named executive vice-president of the international banking group at Manufacturers National Bank of Detroit. Herdoiza began his career at Manufacturers In the International banking department In 1963 and was named assistant cashier the same year. In 1969. he was appointed officer In charge of the International banking department.

He became senior vice-president in 1974. Herdoiza also serves as director of the Atlantic International Bank Ltd. in London and of Atlantic Capital Ltd. In Hong Kong, both overseas affiliates of Manufacturers National Bank. slipped 11 percent from the year-ago quarter, to $2.73 billion.

However, Dow made a net profit of $197 million 1 .02 per share), up from 1 89 million 1 a share), thanks in part to cost-cutting measures. "The continued depression of worldwide chemical markets and the total impact of adverse foreign currency exchange are the primary causes of the decline," Upjohn Chairman R.T. Parfet Jr. said in the statement. At Cross Trecker Corp.

in Bloomfield Hills, earnings rose to $11 million (89 cents a share) from $10.8 million a year ago. Operating revenues for the machine tool firm were $107 million in the quarter, compared to $112 million a year ago. President Russell Hedden said orders surged to $42 million, up from $25 million in the January-March quarter, but added, "We still believe that a real upturn cannot be expected until mid-1983. Until then, quarter-to-quarter changes in orders won't mean that much." when interest rates subside enough to stimulate the housing and auto industries." AT UPJOHN the Kalamazoo-based pharmaceuticals firm, second-quarter earnings slid 14.4 percent from a year ago to $38.4 million ($1.28 a share). U.S.

sales for the quarter were $295.7 million, a 7.5 percent decline from a year ago, and foreign sales were $180.1 million, down 7.2 percent from last year, the company said. Bargaining chip Pension costs a target in Chryslcr-lJ AW talks. Page I A. Cigaret tax hike doomed? Page 2B. The second-quarter profit also included 62 cents a share from the dissolution of Asahi-Dow a joint venture; and 1 1 cents a share from the he is a member of the Economic Club of Detroit and the Detroit Committee on Foreign Relations, as wed as director of the Bankers Association for Foreign Trade In Washington, D.C.

David Fry, PhD, to president of Northwood Institute in Midland. Ktvln Snell to vice-president, forward planning and development at Career Works In Detroit. sale of some stock. "We expect significant gains as soon as de mand picks up and our operating rates improve," said Robert Keil, executive vice-president and Compiled by KATHY WARBELOW and BARBARA VOOLF chief financial officer. "This will happen only.