Detroit Free Press from Detroit, Michigan • Page 55

This morning's business briefing; Dow-Jones Industrials 931.91 6.48 Lowest prime rate (Detroit banks) 1 1 Lowest mortgage rate (20 down) 12 Auto layoffs (indefinite only) 247,250 Wednesday, July 30, 1980' SYLVIA PORTER 2 NEW YORK STOCKS 3,5 MUTUAL FUNDS 4 Inflation rate (national) Inflation rate (Detroit) Michigan unemployment rate National unemployment rate 14.3 19.2 14.1 7.7 DETROIT FREE PRESS FEATURE PAGE BUILDING AN IMAGE IN RED INK enCen: A civic 'loss leader news analysis By STUART ELLIOTT Free Press Marketing Writer With nearly $40 million in recent losses, Renaissance Center is looking like a sort of civic "loss leader" for the Detroit area's corporate elite. A loss leader in a supermarket is an item priced below cost to lure people into the store to purchase other, profit-generating goods. The money 51 blue-chip firms have poured into the $357-million riverfront development may have bought Ren-Cen the same kind of status on a grander scale. RenCen may never earn its keep, but its existence is thought justified because it builds the city's image, symbolizes efforts to revitalize Detroit and may even ease the consciences of executives whose companies long ago left the city for suburban pastures. RENCEN AS LOSS LEADER springs to mind in the wake of the disclosure by the Free Press Tuesday that the project lost $9.1 million in the first three months of this year and $30.3 million during all of last year.

It is the first time such information has been made public. The 51 owners, Renaissance Center Partnership, reacted publicly with little more alarm than if they'd been told there was an overturned trash can in front of RenCen's Detroit Plaza Hotel. "RenCen contributes to the renewed economic life of Detroit and certainly is not a disappointment to us," said a spokesman for General Motors whose Riverfront Development Corp. subsidiary kicked in a $12-million contribution (second only to Ford Motor subsidiaries' $81.6 million). "There's a unanimous feeling it's not a bad investment and we'd do it again, absolutely," said a spokesman for Manufacturers National which invested $800,000.

"We intend to stay invested," said a spokesman for the Automobile Club of Michigan OTHER COMPANIES RESPONDING, after asking to go unidentified, said the losses were not unexpected and, as one put it, "are not being taken too seriously." The phrase "it's for a good cause" was heard frequently from these firms. There seemed to be more concern about the fact that the losses were publicly disclosed than about the losses themselves. The Ford subsidiaries involved, Ford Motor Land Development Corp. and Detroit Downtown Development refused to discuss the matter. Many other companies declined U.S.

trade deficit declines; value of imported cars falls A broadly based increase in exports pushed U.S. sales overseas to a record level in June and cut the nation's trade deficit to $2.28 billion, the Commerce Department reported Tuesday. Merchandise exports rose by 5.2 percent from May, to $18.64 billion, while imports fell by 3.3 percent, to $20.92 billion. The resulting June deficit was $1.68 billion under the May figure. The value of imported cars other than from Canada fell $62 million, to 1 1 3 billion in June.

That decline followed a $125 million increase in the previous month. "The recession has reached the point that they're not even buying foreign cars like they were," said Adren Cooper, a Commerce Department analyst. Oil imports increased by 0.7 percent during the month, to 213.2 million barrels, at a cost of $6.89 billion. That's 7.1 million barrels a day at a daily cost of $230 million. The average price of imported oil actually declined by six cents during June the first drop in more than a year.

Despite the still-high level of imported oil, the figures are improved sharply from a year ago, due at least in part to soaring prices. In the first half of 1979, the United States imported an average of 8.35 million barrels a day; in the first six months this year, the average dropped to 7.3 million barrels. Headlines THE DOLLAR SCORED strong gains against major European currencies for the second consecutive session Tuesday comment, including Burroughs Corp. (a $1 -million contributor), Ex-Cell-0 Corp. Federal-Mogul Corp.

Firestone Tire Rubber Co. ($2 million), B.F. Goodrich Co. ($500,000) and mart Corp. ($2 million).

THERE'S STILL SOME bitterness remaining from the initial fund-raising efforts begun when RenCen was announced by Henry Ford II and other local movers and shakers in 1971. "The strong arm of Ford Motor Co. extends a great distance," was the way one corporate executive replied when questioned as to why his firm participated in the partnership. And key financial questions remain unanswered. How long is RenCen expected to continue losing money? (A reading of the financial statements would indicate that interest payments alone $5.9 million in the first quarter make profitable operation unlikely in the near future).

Are there any prospects for reversing losses at the Plaza (about $372,000 in the first quarter of this year)? Did the partners ever expect to turn a profit on the venture? AS A PRIVATELY HELD partnership, RenCen's owners aren't required to answer these key questions. After contacting 24 of the partner firms Monday and Tuesday, it's clear they don't want to answer. But the overall impression is that RenCen's partners are willing to wait for any tangible results such as income from their investments so long as they perceive significant intangible results. And, in the meantime, they'll enjoy some tax write-offs from their losses. "We view our investment in RenCen primarily as an investment in the city and its people," said Michael Thompson, a spokesman for Standard Oil Co.

(Indiana), whose Amoco Oil Co. subsidiary contributed $1 million. "From that view, the investment must be considered a success." While Standard Oil hopes "for a reasonable return on that investment," Thompson said, "our timetable is flexible and we plan to exercise patience. We remain quite optimistic about the future of Detroit and the project." The momentum created by the Republican National Convention's to Detroit earlier this month "should increase the appeal of (RenCen) and help future business," said the Auto Club's spokesman. "We are optimistic." GM has "every confidence in RenCen's prospects and future," said that company's spokesman.

"It has contributed greatly, we think, to the feeling of revitalization so strong in Detroit today." THESE OPTIMISTIC THOUGHTS about RenCen persist despite some mixed figures on the 33-acre project's occupancy. While about 95 percent of its 2.2 million square feet of office space is occupied, only about 70 percent of its 340,000 square feet of retail space is leased. Space (60,000 square feet) set aside for a specialty department store in the World of Shops area remains vacant. Yet construction is well under way on two more towers, each 21 stories, adjacent to the four 39 story towers and 73-story Detroit Plaza already open. The din of work along Jefferson Avenue is the best symbol of how RenCen realities are being overshadowed by a combination of 'civic pride, hope and some crossed fingers.

on higher U.S. interest rates and improved trade figures. Gold prices rose in Europe but fell by as much as $1 1 a troy ounce in later New York trading. Gold closed at $647.50 a troy ounce in Zurich, Europe's largest bullion market, compared with the previous day's $643.50, Free Press Photo bv MARY SCHROEDER Looking up at the RenCen: The symbol of efforts to revitalize Detroit is losing money. $500 MILLION PROGRAM A new AMC product every six months and at $650.00 an ounce in London against $645.50 on Monday.

In New York, gold fell $10.50 a troy ounce to $637.50 in contracts for current delivery on the Commodity Exchange. Gold was bid at $638 in late trading at the Republic National Bank, down $11 from the previous day's late bid. THE DOW JONES industrial average climbed to a new three-year high Tuesday as the stock market chalked up its second straight gain. The widely recognized average of 30 blue chips, coming off a 7.34 advance on Monday, rose another 6.48 to 931.91. That marked the highest close for the Dow since it stood at 936.48 on May 19, 1977.

New York Stock Exchange volume reached 44.84 million shares, against 35.33 million Monday. NATIONAL DETROIT parent company for National Bank of Detroit, has completed its acquisition of West Michigan Financial Corp. with approval of the $21.3 million deal by West Michigan stockholders on Tuesday. Federal Reserve approval was granted June 17. West Michigan Financial is a Cadillac-based holding company for the Cadillac State Bank and the First National Bank of Evart.

West Michigan had total deposits of $182.6 million as of June 30, with assets of $199.8 million. National Detroit's assets are $10 billion. National Detroit chairman Robert M. Surdam said his company would invest more than $3 million of new equity capital in the Cadillac and Evart banks, spin off three offices of the Cadillac bank into a new bank in Kalkaska, allowing application for a branch in the Traverse City market, and establish a small-business investment company to provide specialized financial assistance to firms in the area. FOUR FOREIGN automakers have announced the recall of a total of 152,287 cars for various defects, the National Highway Traffic Safety Administration reports.

Subaru has recalled 71,000 of its 1980 hardtop hatchback sedans and station wagons because of a windshield wiper problem. BMW has called in 66,000 1977-1979 320i two-door sedans to correct a defect in an accelerator control spring which could keep the throttle from returning to idle. Fiat has recalled 13,000 1970 1-9 models because of potential engine hesitation that can result from gasoline evaporation in the carburetor. Volkswagen has recalled 2,287 1980 Vanagon models because of a potential defect in a heater exhaust pipe. FOOD INDUSTRY SALES in Detroit dropped 1.7 percent in June from June 1979, says the Food Industry Council of the Greater Detroit Chamber of Commerce.

Sales in the metropolitan area dropped .06 percent in the same period. For the first six months of 1980, sales are up 4.3 percent in Detroit and 1.5 percent in the metropolitan area. U.S. AUTOMAKERS plan to make fewer cars in the fall quarter than at any time since 1970. The five major manufacturers tentatively scheduled 1,679,000 cars, 10 percent beiow the depressed fourth quarter of 1979, according to Ward's Automotive Reports.

That would make 1980 production 6.44 million, 23 percent below the 8.42 million cars built in 1979 and the lowest level since 5.52 million were built in 1961. In the 1975 and 1970 recession years, 6.71 million and 6.55 million cars were produced. By TOM KLEENE Free Press Automotive Writer American Motors Corp. Tuesday announced plans to introduce 12 new cars and Jeep vehicles over the next six years in a product program that will cost upwards of $500 million. Leading off the 1981 model year will be the Renault 18i, a family-size, fuel-efficient, New tire rules could hamper recall efforts I.

five-seater sedan imported from AMC's French partner and the previously announced new four-wheel-drive unit built on AMC's subcompact Spirit platform, called the SX4. The Renault 18i is expected to sell for about $7,000. "Our product program over the next few years is the most aggressive in American Motors history," President W. Paul Tippett told the Automotive News World Congress in Dearborn. "Our objective is to introduce a major new product or product line every six months for the next six years." Although Tippett did not elaborate on the new vehicles to be introduced beyond the 1981 model year, he said a whole new family of more fuel-efficient Jeep vehicles will be introduced "down the road." HE LATER TOLD a news conference that the cost of the new product program may run as high as $1 billion.

He seemed confident the automaker will be able to come to terms with its banks, which recently cut off AMC's credit at the $90 million already outstanding instead of the $150 million maximum agreed to in January. "The banks have been traumatized by the Chrysler situation, but we have been working with them for a number of years, and we expect to be able to come to terms with them (by the Nov. 1 deadline)," he said. In the midst of its negotiations with its lenders, the company reported record-shattering quarterly losses of $85 million, which are expected to be followed by similar deficits in the current quarter and a fiscal 1 980 loss as high as $150 million. TIPPETT ALSO projected that by 1983 AMC's passenger cars will achieve an average of 31 miles per gallon, far surpassing the EPA's mandated 26 m.p.g.

for that year. He claimed that it will be "one of the best in the industry." For 1980, the company's average figure is 20.5 m.p.g. General Motors Corp. announced earlier this month that its cars will average 31 m.p.g. for the 1985 model year, when the government standard will be 27.5 m.p.g.

American Motors President W. Paul Tippett Jr. stands with the Renault 18i, which will lead off the 1 98 1 model year for AMC. The company plans to introduce 12 new cars and Jeep vehicles over the next six years. Hoosiers lend hand By DAVID HESS Free Press Washington Staff WASHINGTON House and Senate conferees adopted a new tire registration procedure Tuesday that could hamper tire makers' efforts to notify consumers of safety recalls for defective tires.

Bowing to heavy pressure from tire dealers, the conferees changed existing rules that require dealers to fill out identification forms on new tire sales and return them to the manufacturers. The forms contain the tire identification numbers, the date of the sale and the buyer's name and address. Under the procedure adopted by the conferees, tire buyers will have to fill out the forms and return them to the company. Experience with other products has shown that only a small percentage of consumers take the trouble to fill out such warranty forms and return them. What it means, according to National Highway Traffic Safety Administration chief Joan Claybrook, is that tire manufacturers will have a harder time locating owners of tires recalled for safety defects.

The tire makers generally opposed any change in the registering procedure. Tire dealers have complained that the registration forms take time and cost money, and that consumers ought to shoulder the responsibility for registering their tires. the Indiana General Assembly this year, Chrysler would have to post $2 collateral for every $1 it received from the state. To receive $32 million in state aid, Chrysler was required to put up $64 million in real estate and other property. Part of the security Chrysler gave was its new transaxle plant in Kokomo.

Gov. Otis R. Bowen said he and other state officials had been led to believe it was worth $20 million, but the appraisal listed the value at only $4.5 million. Indianapolis lawyer Lewis C. Bose, representing Chrysler in the negotiations with the state, said the No.

3 automaker was surprised by the low figure. THE BALANCE of the collateral $59.5 million could come from machinery, equipment and other similar items. But the board wanted a larger portion of the state's investment secured by real estate. That prompted Chrysler to rework its proposal, putting up the transmission plant and 17 acres of land on which it is located. INDIANAPOLIS (AP) The State of Indiana gave final approval Tuesday to its $32 million investment in Chrysler Corp.

after the automaker put up its entire Kokomo, transmission plant as security for the deal. The action by the Indiana Board of Public Depositories clears the way for the transfer of $32 million in certificates of deposit to Chrysler when the transaction is closed Thursday at Union Bank Trust Co. in Kokomo. As soon as the final papers are signed, the state will begin drawing 154 percent interest on the Chrysler investment. "Chrysler has made every effort to come up with a program to accommodate the desires of this board," state treasurer Julian L.

Ridlen said. THE BOARD WAS scheduled to give the go-ahead last Friday. But the agreement hit a snag when Chrysler's property was appraised substantially below what had been expected. Under the enabling legislation passed by Building slows, costs rise Industrial construction activity slowed during the second quarter of 1980, but the downturn failed to retard climbing costs, according to Cleveland-based Austin Co. This international design-and-construct company compiles a long-term building cost index dating back to 1926 which equaled 100.

The index rose 29 points during the second quarter of 1980, bringing it to 765, a growth of 92 points since July 1, 1979 and the equivalent of a 13.7 percent rise during the past 12 months. "Inflation continues to dominate the economics of the construction market," said Charles A. Shirk, president and chief executive officer, "and even more sobering is the slowing we see in the demand for new industrial facilities." Materials most responsible for the latest price increases include concrete, brick and concrete block, reinforcing steel, electrical control equipment, heatingventilatingair-conditioning equipment, plumbing fixtures, paint and other finishing materials. dividends Detroit Edison Regular quarterly of 40 cents a share, payable Oct. 1 5 to shareholders of record Sept.

24. Compiled by KATHY WARBELOW.