Detroit Free Press from Detroit, Michigan • Page 25

business auto money DETROIT FREE PRESSTUESDAY. FEBRUARY 20, 1979 3C Carrot and stick bring U.S. auto firms to Mexico The GM plant, which are sustained in the U.S. supplying the in-bond industry. His viewpoint finds support In academic clr cles.

Dr. Dilmus James, an economics professor at the University of Texas at El Paso, said that were It not for the Mexican in-bond assembly plants, many American manufacturers would be forced to use even cheaper labor and predominantly foreign materials in East Asia, Central America or the Caribbean. ACCORDING TO GM, wage levels are by no means the only factor. A spokesman in Detroit contended that a 1977 decree by the Mexican government, not low wages, was responsible for GM's setting up its wholly owned subsidiary, Conductores Componentes Electricos de Juarez. The decree required General Motors de Mexico to reduce the number of imported U.S.

parts used in making vehicles in Mexico or increase GM's exports from Mexico, he said. "We had to establish a plant in Mexico to generate Mexican imports," the GM spokesman said. But the UAW remains dubious. "Rest assured," said Pancho Medrano, a UAW staff worker in Dallas, "that General Motors is not doing it for anything but the low wages." with 33,530 of the 80,000 total. Most of the Juarez workers are women.

The first tenant in the Bermudez Park was an RCA subsidiary, which currently employs 5,800 in assembling television chassis. The RCA plant ranks as the largest in-bond plant in Mexico, Mitchell said. General Electric and Westinghouse now also have plants in Juarez. The Juarez area offers good transportation, proximity to the U.S. and a relatively central location from which to supply U.S.

markets, Mitchell said. American managers of In-bond plants are able to commute across the Rio Grande from El Paso, which also serves as a source of Industrial supplies. At a recent White House conference, another supporter, Ray Salazar, mayor of El Paso, advocated U.S. backing for the In-bond industry and for other Mexican economic development as a way to reduce the influx of illegal aliens into the U.S. In addition, the maquiladoras spent an estimated 30 percent of their earnings in El Paso, be said.

Whether the system amounts to export of U.S. jobs to Mexican plants is a sensitive question. According to Mitchell, for every job that U.S. labor loses to the Mexican in-bond industry, three New York Timet Service JUAREZ, Mexico Drawn by a carrot, pushed by a stick, two American automakers, General Motors Corp. and Chrysler quietly are creating more jobs for unskilled and semiskilled workers of this Rio Grande city across the Texas border.

The jobs are at assembly plants that enjoy special exemptions from normal customs duties and the carrot attracting American automakers, as well as electronics concerns, is relatively low Mexican wages. For the automakers, the stick is a Mexican requirement that foreign auto manufacturers either use fewer imported parts in the cars they assemble and sell in Mexico, or else increase their exports from Mexico. So GM and Chrysler, which already have Mexican subsidiaries making vehicles for Mexican showrooms, are building up their so-called "in-bond" factories In Juarez. GM IS EXPANDING the work force at a plant It opened last fall for assembling talllight wiring harnesses, the plant manager said. Chrysler plans to complete construction of a new plant in Juarez by spring, a company spokesman said.

Already, such well-known American corporations as RCA, General Electric, Westinghouse and United Technologies have planted their flags in Juarez. Under a bonding arrangement, the in-bond plants are permitted to import unassembled components from the U.S. without paying the usual Mexican import duties. The plants employ inexpensive Mexican labor to assemble the components, which then are exported to the U.S. Under U.S.

tariff regulations, only the "value added" in Mexico is subject to U.S. import duties. In-bond industrial plants, or "maquiladoras," as the Mexicans call them, have been permitted along Mexico's northern border since 1966. In 1972, the Mexican government expanded the program to allow them throughout the rest of the nation, except in heavily Industrialized cities such as Mexico City, Monterrey and Guadalajara. The hope is to create jobs in areas of severe underemployment or outright unemployment THE IN-BOND INDUSTRY nevertheless Is dominated by Juarez, a city of about 650,000 people, where 100 of the 440 in-bond plants currently operating in Mexico are situated.

According to William L. Mitchell, marketing director for the Antonio J. Bermudez Industrial Park in Juarez, the Juarez plants employ an even larger proportion of Mexico's in-bond workers, began production last September, employs about 180 in production, plus another 50 on its administrative and professional staff, said plant manager Jack Williams. Within about two years, Williams expects to have 800 trained employes assembling talllight wiring harnesses. El Paso officials say they saw, during a recent tour of the GM plant, a blueprint of a proposed building nearby labeled Fisher Body, a GM division.

The plant was said to be for upholstery work, but a GM spokesman later declined to comment when questioned about the prospect. Although Chrysler has been advertising for engineers and supervisors in Juarez newspapers, a Chrysler official would only say that their in-bond plant would assemble automotive components. For several years, the Essex Group, a subsidiary of United Technologies, has operated two Juarez in-bond plants that produce the front electrical harnesses for nine types of autos and light trucks, according to general manager David Delgado. He supervises a total of 716 employes at the -two plants, but declined to identify which automakers purchased the Essex products. tate health Qlkhe Just sign here and here, and here and By ROBERT MINDUN New house News Serves NEW YORK What do President Carter, Lowell Thomas Joe Louis, Mary Pickford and officials of America's largest corporations have in common? They all have had to sign hundreds of thousands of letter and documents and all of them have come to a small firm of specialists here that is geared for high-volume signing of everything from personalized letters or cards to billion-dollar bond issues.

The firm Is called Signature Co. simple, but to the point. It is a short walk from Wall Street in the heart of the world's financial capital. When Carter was governor of Georgia, he made the trek here for the signing of an issue of Georgia state bonds. HEADS OF STATE from Argentina to Japan and celebrities of film, sport and theater all have used the "Signagraph" machine, an apparatus that permits signing up to 30 documents simultaneously each signature "handwritten" and therefore completely legal.

Signagraph is the Invention of William I. Woodward, who came up with the idea in 1906. His first machine enabled a person to sign six documents at once. Demand in the financial community led to formation of Signature Co. two years later and to improvement of his costs slowing? By ALEX TAYLOR Free Press Business Writer The president of the Michigan Hospital Association asserted Monday that hospital cost increases in the state are under control and consumers may soon see the result in slower and smaller increases in insurance premiums.

The statement was questioned by the UAW, which monitors health care costs. An official said figures cited by the hospital association "appear to contradict the UAW experience." Patric Ludwig, president of the Michigan Hospital Association, which represents all the state's 240 hospitals, said hospital cost increases in Michigan in 1977 (the latest year for which statistics are available) and in Detroit in 1978 were each about two percent below the national average. He said lessening of the rate of increase may have a comparable effect on health Insurance costs. "I expect future Blue Cross and Blue Shield increases will not be what they were in the past," Ludwig said. A SPOKESMAN for Michigan Blue Cross-Blue Shield agreed that increases in health insurance premiums will be less than in the recent past.

He said he could not project amounts of future increases, however. But Melvin Glasser, director of the UAW's Social Security Department, challenged the hospital association's findings. "If in fact these reductions in costs have taken place," he documents with a face value of $1 billion, according to John Bergen, vice-president and another long-time employee. When a reporter visited the ninth-floor company with a view of New York Harbor and the Statue of Liberty, he found officials there for a more modest signing. Officials of the Greenville County (S.C.) Recreation Commission were there to sign $1.75 million in capital development bonds, 350 of them, issued in $5,000 denomination, 20-year bonds at 5.369 percent interest.

Dr. Sarah Fletcher, unpaid chairman of the commission, said proudly: "We have a AA bond rating." New York City's leading signer, City Clerk David Dinkins, admits he's signed so many documents that "my name is just a scrawl." The Big Apple's bond ratings fell off the board four years ago during a fiscal crisis. It got back in the public money market last month with a modest for New York sale of $25 million in short-term notes, payable on June 30 at eight percent interest. The sale required Dinkins to sign 8,300 notes and took something under an hour and a half, Dinkins said. Company officials were reluctant to discuss the charge for their service.

But Dinkins didn't hesitate: "It cost the city five cents a signature ($415) and it was a bargain." Signature Co. has branch offices in Chicago and Ottawa and competitors in Chicago and San Francisco. said, "we are at a loss to un- derstand why the Chrysler family premium for 1979 had invention. The Signagraph uses 30 interconnected pens operated In unison by the writer using an ordinary old-fashioned fountain pen grip without a point. Documents are placed in special binders and arranged on racks so they can be fed into the machine.

The writer grips the pen holder and automatically produces up to 30 legal signatures authentic, original and personal. The average person, going full speed and doing nothing else, can sign his name about 600 times per hour, according to Nat Kipp, president, treasurer and 47-year employe of Signature Co. With the Signagraph, the same person can sign between 7,000 and 8,000 documents an hour. Some people have done as many as 20,000. THE FIRM NOW averages a million signatures a month on Markets closed Monday Because of the national holiday Monday, all domestic stock and commodities markets were closed.

a 21 percent increase over 1978, since obviously hospital costs are the largest segment of that premium." In explaining the "dramatic drop" in hospital cost increases, Ludwig cited efforts by Michigan hospitals to voluntarily control costs. He noted a reduction of 905 excess beds during the past year, formation of cost containment committees in hospitals and a new "prospective reimbursement system," which is supposed to set limits on how much each individual hospital will allow costs to rise each year. THE UAW'S Glasser called the hospital bed reduction "only a minor beginning in dealing with a major problem." He asserted the state has more than 1 0,000 surplus beds which cost consumers be Businessmen and reporters survey their relationship has record 78 profits Gas firm's profit slide hurt parent American Natural Resources parent company of Michigan Consolidated Gas Monday reported net earnings for the year ended Dec. 31 of $129.3 million, or $5.90 a share, up slightly over earnings of $127.4 million, or $5.84 a share, in 1977. The earnings were down slightly from the $129.5 million estimate for the year earlier offered by the company.

American Natural said the earnings would have been "considerably higher" but for a 50 percent earnings slide by Michigan Consolidated. The company said Michigan Consolidated, embroiled in a dispute with the Michigan Public Service Commission over a rate increase, earned $17.3 million last year, down from $35.5 nillion the year earlier. American Natural said Michigan Consoldiated's decline was offset by profit gains in its other subsidiaries. The PSC staff has recommended an Interim increase of $43.6 million annually for Michigan Consolidated. AMERICAN NATURAL RESOURCES CO.

Three months Dec. 31 1978 1977 Net income $22,429,000 $32,027,000 A share $1.02 $1.46 Sales $547,804,000 $490,411,000 Year Dec. 31 Net Income $129,258,000 A share $5.90 $5.84 Sales $1,963,178,000 $1,693,366,000 Federal-Mogul Corp. of National Detroit Corp. makes offer for Benton Harbor bank National Detroit Corp.

and Farmers and Merchants National Bank of Benton Harbor announced an agreement in principle under which Farmers and Merchants Bank will become affiliated with National Detroit. The agreement calls for Farmers and Merchants shareholders who tender fewer than 250 shares to receive cash payment of $40 per share for common stock. Those who tender 250 or more shares will get $40 per share in installment notes bearing nine percent interest per year. Principal payments on the notes will come in years six through 10 after the transaction is completed. The offer is contingent on National Detroit receiving at least 80 percent of Farmers and Merchants' total of 250,000 outstanding common stock shares.

Farmers and Merchants, established in 1933, has eight banking offices in Berrien County with total deposits of approximately $108 million as of Dec. 31, 1978. National Detroit Corp. is the holding company parent of National Bank of Detroit, Michigan's largest, and a number of other banks in the state. Headlines SEN.

WILLIAM PROXMIRE, wants lower minimum deposits on six-month money market certificates at banks and savings and loans. Proxmire wants federal regulators, who initiated the popular savings program June 1, to cut the minimum deposit from $10,000 to $1,000. Proxmire, chairman of the Senate Banking, Housing and Urban Affairs Committee, also wants to raise interest rate ceilings on other forms of saving by one-quarter of one percent every six months, in effect making the ceilings meaningless. THE U.S. MAY FACE a dilemma during a future oil crunch it could be forced to ship American fuel abroad when supplies at home are tightest.

The International Energy Agreement binds the U.S. and 18 other nations to share oil in a crisis under a trigger that puts the agreement into effect if a member of the group has an oil supply shortage of seven percent or more. MEANWHILE, VENEZUELA'S Mines and Energy minister called Monday for an urgent meeting of the Organization of Petroleum Exporting Countries to "solve the chaos in oil prices" caused by the revolution in Iran. Such a meeting is expected to occur March 26. The authoritative Middle East Economic Survey predicted the special meeting will not set new prices although many oil ministers have proposed a price hike beyond the 14.5 percent increase for 1979 which OPEC agreed upon in December.

THE DOLLAR lost ground marginally against other major world currencies Monday. In early trading, the dollar was at 1 .851 1 marks in Frankfurt, down from 1 .8535 Friday, and at 1.6693 Swiss francs in Zurich, down from 1.6715. THE JUSTICE DEPARTMENT has decided not to prosecute former Lockheed Corp. president A. Carl Kotchian in connection with its investigation of more than $30 million in foreign payoffs made by the firm.

A Justice Department official refused to explain reasons for the decision. Kotchian resigned as Lockheed president three years ago. THE JUSTICE DEPARTMENT ALSO said It will challenge In court a proposed acquisition of Pinnacle Books Inc. of Los Angeles, a wholly-owned subsidiary of Michigan General by Harlequin Enterprises Ltd. of Toronto.

The department's anti-trust division said it will file a civil suit in the case, which involves two publishers of mass-market paperback books. HOME SAVINGS, a Los Angeles savings and loan association, was the country's largest thrift institution in 1978 for the 24th consecutive year, with record assets of $10.6 billion. Other associations in the top 15 included First Federal of Detroit ($2.9 billion) and Standard Federal of Troy ($2.5 billion). A FEDERAL COURT has rejected efforts by Mead Corp. to make Occidental Petroleum Corp.

pay lawyers' fees and litigation costs rising out of Occidental's recent tender offer for Mead. DESPITE INFLATION and other economic woes, Italy has topped the list as the world's largest importer of champagne for the third year in a row. Italy imported more than eight million bottles, or an average of one bottle for every seven Inhabitants. Inflation won't slow, he says Barring radical changes in its political-social structure, the U.S. will endure moderate to severe inflation through the 1980s, according to Thomas G.

Gies, chairman of the finance department at the Univerity of Michigan Graduate School of Business Administration. "The rate of increase will probably vary from year to year, as It has over the past three decades, but the average annual Inflation rate Is likely to be around nine to 10 percent, with highs well into double digits and lows of six to seven percent," Gies said. His prediction may sound like a prophecy of doom, Gies admitted, but he concluded that industries which recognize changes in employment and pricing concepts will survive. "We are committed to provision of sufficient job opportunities that we have continuous full employment," Gies noted. "However attractive that concept is, we should realize that it necessarily means provision of more jobs than there are job seekers at certain times and that stability in the job market is achieved at the cost of instability In the wage rate and in prices." Southfield, Monday reported record sales and earnings for the fourth quarter and the year and estimated that its 1979 first-quarter earnings would increase by "at least" tween $30,000 and $50,000 per bed per year.

"We cannot afford to wait indefinitely for the hospitals voluntarily to in 30 percent. Earnings for the year stitute this needed containment measure," he said. The hospital association's Primarily blamed by 41 percent of executives was government, Media were blamed by 24 percent of the businessmen. Among media representatlvees, only nine percent primarily blamed media and 23 percent blamed government. THE FINDINGS are part of a survey on the relationship between business and media.

The survey, which was done on an informal basis, was conducted by the New York-based marketing research firm of Yankelovich, Skelly and White, Inc. It was prepared in connecton with a recent weekend seminar in Lake Bluff, on relations between business and news organizations. The seminar was sponsored by the Ford Foundation and the Chicago Tribune. The business group included top executive officers, public relations officials, financial officers and corporate attorneys. The media group included editors, reporters, news firm executives and columnists.

By LEONARD WIENER Chicago Tribune Two out of three business executives in a recent sampling of corporate officials believe the news media are too powerful. Nine out of 10, moreover, believe the media have done either "some" or "a great deal" to create anti-business sentiment among the public. Representatives of news media, on the other hand, overwhelmingly (94 percent) reject the view that their organizations are too powerful, but many admit to playing a role in creating anti-business sentiment Media representatives agreed about 2-to-l that news organizations had "some" or "a great deal" to do with anti-business sentiment. When asked about the institution primarily reponsible for anti-business sentiment, however, news media representatives picked business Itself 68 percent of the time. Only 35 percent of businessmen said business itself was to blame.

ended last Dec. 31 were $35.5 million on sales of $568.6 million, compared with $27.8 million on $488.6 million sales the year earlier. findings were supported by Dr. Louis Zako, a Dearborn Heights family physician and chairman of the governing board of the Michigan State Fully diluted 1978 earn Medical Society. ings were $5.45 a share, compared with $4.29 in 1977.

There's no question that Fourth-auarter 1978 net the voluntary efforts on behalf of the hospitals and the famines were $8.95 million on sales of $147.5 million, medical profession to contain medical costs have begun to work," he said. compared with $6 million earnings on $120.5 million sales in the comparable period in 1977. Fully diluted final-quarter AFL-CIO endorses wage insurance earnings were $1.37 a share, compared with 91 cents in the period the year earlier. Company Chairman BEFORE THE meeting even got under way, labor leaders were warning they will refuse to Thomas Russell estimated that sales in the current support Carter for re election unless he shifts quarter will surpass $150 million and primary earnings will be more than $1.50 a share. That compares with 1978 first-quarter sales of $127 million and primary earnings $jh of $1.15 a share.

direction on domestic policy. "Based on what I've heard there Is a dramatic change (in policy) I can see that Carter's in real trouble," William Mc-Clennan, president of the International Association of Firefighters, said Sunday. Russell said the year's record sales came from strong across-the-board performances from all the company's major markets. THE UNUSUAL estrangement between a Democratic president and the AFL-CIO also has been aggravated by a personality clash between Carter and the labor group's 84-year-old president, George Meany. "No Democratic president has ever been elected without labor's support," said one miffed union official, who asked not to be identified.

Another AFL-CIO official, who also asked not to be identified, said that if the president faces a conservative Republican in the 1980 election, "The AFL-CIO may endorse Carter but sit on its hands and not work for him." The AFL-CIO opposes Carter's voluntary wage-price guidelines because it says the program will succeed In holding down workers' pay but not prices for food, housing, energy and other necessities. Instead, the federation wants mandatory controls on prices, profits, wages and other forms of income, such as dividends. AFL-CIO leaders also are upset over Carter's proposal to cut funds for some social programs in his 1980 budget and they say they fear he will allow unemployment to climb In order to fight inflation. By OWEN ULLMANN AP Labor Writer MIAMI BEACH, Fla. The AFL-CIO Monday gave partial support to President Carter's anti-inflation program with a limited endorsement of a tax credit to go to workers who meet wage guidelines.

It was the first time the federation, which remains strongly opposed to most of Carter's economic policies, endorsed any of the anti-inflation program unveiled last fall. Carter's "real wage Insurance" plan would provide a tax credit of up to $600 for workers who comply with the voluntary seven percent limit on annual wage increases. "Real wage Insurance Is a tool to enforce wage controls, not an incentive to encourage the voluntary compliance," the AFL-CIO's executive council said as it opened its annual winter meeting here. "But the fact remains that some workers would receive some protection against continuing inflation by this tax rebate proposal," the council said in a statement. Its position was a reversal from testimony before Congress earlier this year when the council essentially rejected the proposal.

Federal Mogul makes a va "I'm sure that the firefighters of this na riety of precision parts for the transportation, farm equipment, construction and aerospace industries. tion will not support him for re-election." FEDERAL MOGUL CO. Three months Dec 31 1978 1977 McClennan, who sits George Meany on the council, said at a news conference. The 13.5 million-member federation backed Carter for president in 1976 but has grown increasingly unhappy with his performance, most recently over the voluntary wage-price guidelines in his anti-inflation program. Net Income $8,951,000 15,950,000 A share $140 96 cents Sales (147,459,000 $120,506,000 Year Dec.

ji Net Income 435,506,000 $27,809,000 A share $5.66 $4.53 Sales $568,606,000 $488,647,000.