Detroit Free Press from Detroit, Michigan on January 31, 1995 · Page 39
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Detroit Free Press from Detroit, Michigan · Page 39

Detroit, Michigan
Issue Date:
Tuesday, January 31, 1995
Page 39
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Tuesday, January 31, 199c Call Business, 1-313-222-8765 Section E THE DOW Investors awaited the outcome of an interest rate meeting. Page 3E YOUR Mutual fund managers report a good first month of 1995. Page 3E Detroit 4frce tytcss IW 'M""U """'"' ""' "Vp-rjwim 'ji nrOjrTr:irriri jJ3)iyLL ! mm fY DORON Tfy LEVIN This car buyer can play waiting game From the look of that heap rusting in the garage, I'm about due. It's my turn damn it to help prop up the soon-to-be sagging automotive market we're hearing so much about. Three years ago, friends of mine began surfing the wave that swept away two years of industry doldrums. Bruce the chiropractor got his new Saab. Howard the stockbroker, a new Chrysler LHS. Robert the personal injury attorney brought home a new Lexus, followed by a new Jag. They probably paid close to top dollar, and they probably didn't care a fig. When your car dies there's no choice. You replace it. If your car' is . mechanically sound but bedraggled an apt description of my 1989 Taurus with 87,000 miles buying a car requires a stiff dose of confidence in job and income. An optimistic view of the economy helps as well. Thoughts of Mexico and Orange County, not to mention . Independence Township, don't exactly excite me to run down to my local Ford dealer. A $20,000 gulp Dealers and stock traders are moaning that the three-year run of vehicle buying is over. The evidence: Consumer resistance to sticker prices, which now average $20,000; ballooning inventories of some models; and some reporting anomalies that seem to suggest lower retail sales. Alan Greenspan's saber rattling for higher interest rates only adds another element of gloom. Auto companies, of course, don't agree with the bears not publicly at any rate. Pessimism begets pessimism; and they believe there are at least two more years' worth of customers. That's where I come in. We've now reached the stage when shoppers unprepared to pay top dollar or to accept optional electric leather seats are thinking about entering the market. My Taurus cost about $12,000; its value now is only as a car for my daughter to drive to high school. Replacement cost for a new : one is ... $20,000. Words don't begin to describe how much I've enjoyed not having a monthly payment. Love those rebates As some of the buying fervor subsides, automakers are running computers overtime to see if they . make more money by producing fewer vehicles to match supply with demand. The alternative, which has my vote, is to attract guys like me by cutting prices with rebates. Chrysler, for example, is reducing the price of a minivan by as much as $1,000. That's great news for anyone unafraid of being misconstrued as a suburban cliche. I was thinking more , in terms of a Land Cruiser, Explorer, Trooper or some model better attuned to pathetic male fantasies. If history is any guide, discounts should proliferate for those willing to wait and to shop. Lots of vehicles that were on two-year leases and still in good shape will be returned soon, further depressing prices. As supply exceeds demand, automakers will shut plants grudgingly, because they must pay workers either way. Waiting for good deals For the truly patient, the last phase of an automotive buying cycle is the most exciting. Your vehicle now has deteriorated into a rambling wreck. It's also when the automakers aren't making any money, but they're building cars and spending mountains ' in rebates to sell them just so their competitors don't snag all the customers. Prices are in free fall. Those tears rolling down the cheeks of your salespeople are real. ' Economists at the automakers aren't panicking. They're pointing to sales of luxury sport-utilities, for example, as evidence that the market retains great strength. As for me, I'll cave pretty soon. I don't know when, but one of these days I'll read an ad that says "$2,000 off! We'll throw in the CD! Free washes at Jax for a year!" Then I'll act. To contact Doron Levin, E-mail him at or phnpe 1-313-223-439 Plastech wants to build in Detroit by Dan holly Free Press Staff Writer A company from St. Clair Shores presented plans to the Detroit City Council. on Monday to build an auto parts factory that would employ 250. The plant would be built by Plastech Engineered Products Inc, on a vacant 12-acre site on the city's east side, near the Chrysler-Jefferson plant. The plant would open in early 1996, provided it wins city approval for the project, said the company's planning director, Ronnie Lewis. Plastech will hire 30 clerical-managerial workers and 220 production workers to make plastic parts, mostly for auto companies. Detroiters will have a chance at those jobs because Auto parts factory expects to employ 250 on east side Plastech will not bring in outside workers, the company has told city officials. The council, after making favorable comments about the project, agreed Monday to put it on its formal agenda for approval. It still needs approval from various other city agencies. The plant would be built outside the city's new federal Empowerment Zone, so it won't be eligible for federal tax breaks to promote jobs within the zone. But the company plans to apply for city tax breaks, known as abatements, for its personal and property taxes, Lewis said. The city has not yet determined the exact amount of those abatements. The tax breaks would be helpful to Plastech but are not necessary to lure the company to Detroit, company and city officials agreed. "Most companies, when they come into the city, try to take advantage of any financial incentives available," said Keith Strother of the Detroit Economic Growth Corporation. "It's fairly common." Proposed Plastech Engineered Product plant ,r AssemblvJtant i "gjK I I Detroit River Detroit Free Press Plastech has four plants in St. Clair Shores, Grand Rapids, Caro and Grandville. It has no plans to close any of those plants. LEARNING FROM 'LION KING' PAUUNE LUBENSDetroit Free Press Media Station President David Gregory demonstrates the "Lion King Animated Storybook" computer game. Grumbles about CD-ROM painful for Ann Arbor firm By Hiawatha bray Free Press Business Writer These should be high times for Media Station Inc. The Ann Arbor software company produced the "Lion King Animated Storybook" for Walt Disney Co. Huge Christmas sales made the CD-ROM program one of 1994's best-selling computer programs for kids. The "Lion King" software, along with a similar product featuring Winnie the Pooh, helped the firm gross between $1 million and $2 million in the fourth quarter of 1994. But success has been marred by the kind of bad publicity that battered Intel's Pentium computer chip. Hundreds of consumers have said that the "Lion King Storybook" runs badly on their home computers or that it won't run at all. Bitter customers have posted dozens of messages on the America Online computer service, where Disney operates a public bulletin board. See CD-ROM, Page 8E v. fS?A N.C. firm admits to relabeling gloves BY bernie Shellum Free Press Business Writer A North Carolina manufacturer linked to Michael Conniff s Detroit-based glove empire pleaded guilty Monday to a charge that it illegally relabeled gloves imported from China as American-made. Tom Thumb Glove Co. Inc., based in Wilkesboro, entered the misdemeanor plea in U.S. District Court in Charlotte, N.C, and was sentenced to pay a fine of $75,000 and restitution totaling $145,000. In a statement, Conniffs Kaul Glove & Manufacturing Co. said Monday that Conniff "is a stockholder but not active in Tom Thumb." It also said that neither Kaul, a major supplier to the Big Three automakers, nor its affiliates purchased any of the mislabeled gloves from the North Carolina company. Tom Thumb's restitution is expected to be paid to distributors, who undoubtedly have unwittingly supplied relabeled gloves to General Motors Corp., Ford Motor Co. and Chrysler Corp., one of the distributors told the Free Press. The distributor asked that his name not be dis-. closed. U.S. Customs Service agents raided Tom Thumb and a sister company, Golden Needles Knitting Co., in May 1993, seizing thousands of gloves. In an affidavit accompanying its request for a search warrant, Customs agents said they had been informed by a confidential source that Tom Thumb sold the imported gloves for $2 less per dozen than comparable domestic gloves. "The source said Tom Thumb sells the imported gloves as domestic . by removing the labels that say 'Made in China' and repacking the gloves in boxes with 'Crafted, with pride in the USA' printed on the boxes," the agents said. "This allows Tom Thumb to make a large profit from the orders for domestic gloves." The agents also noted that buyers for the Big Three automakers specifically request the more expensive U.S.-made gloves because "they are willing to pay a higher price to support American workers." The charge against Tom Thumb is part of a wide-ranging investigation of imported and prison-made gloves that resulted in an array of federal indictments in December. Among those indicted were close associates of Conniff and a number of companies he owns or is affiliated with in Mississippi and Ohio. In one of Pepsi's commercials during the Super Bowl on Sunday, a boy drinks every drop and winds up inside a bottle. Pepsi's Super Bowl ads get good reviews They drank all sorts of stuff during the Super Bowl and watched all sorts of ads, but they remembered the Pepsi ads best, according to a national survey of viewers by Creative Consultants. Pepsi showed up at least three times during the clash of the California teams on Sunday. And it grabbed top honors for the most-recalled commercials, with half of those polled naming it without prompting. Other memorable, million-dollar ads came from Budweiser, Doritos and to a lesser degree, McDonald's and Nike, according to Creative Marketing Consultants. The South-field-based market research firm contacted 350 people nationwide after the Super Bowl broadcast. Most people surveyed said the' commercials were better than the game. On a scale of one to 10, commercials rated 7.2 while the Super Bowl itself only took a 5.8 rating. Ford Motor Co. was the only automaker to get significant unaided recall. Its ad for the Explorer was named by 10 percent of viewers without prodding and nearly one-third of viewers polled when asked if they remembered a Ford ad. Only 5 percent of viewers polled recalled the Dodge ad and the Honda ad unprompted. They flew out of viewers minds almost as quickly as the ad for Northwest Airlines, which less than one-half of one percent of those surveyed recalled unprompted. . By Vickie Elmer Courtesy of Pepsi Incomes on upswing Personal income rose a healthy 0.8 percent in December to $5.89 trillion. Earnings for 1994 were up 6.1 percent, the biggest gain in four years. Spending, meanwhile, climbed 0.3 percent to $4.75 trillion last month. It rose 5.7 percent last year, compared with 5.8 percent increase in 1993, and was the smallest advance since a 3.8 percent rise in 1991. T-bill rates decline Interest rates on three-month Treasury securities declined to the lowest level in two weeks 5.79 percent, down from 5.80 percent last week. , Japanese vehicle exports sink Japanese car and truck exports plunged to 4.46 million vehicles in 1994 the lowest level in 17 years. Behind the drop: appreciation of the yen and growing production at the overseas plants. FINANCIAL FAI1T TNF Wage rate up in Japan A new Labor Department report says Japan's average hourly pay rose to $19.01 in 1993. It was a new high for Japan and well above the U.S. average for the year: $16.73 an hour. Two decades ago, Japanese pay of $3 an hour was less than half the U.S. average. The average South Korean worker earned only 32 U.S. cents an hour in 1975, and was getting $5.53 in 1993. Many workers in western Europe earned more than those of either Japan or the United States in 1993: $25.71 an hour in western Germany, $22.63 in Switzerland, $21.21 in Belgium and $20.27 in Austria. The figures include benefits paid by employers. Hotels, casinos divided The Promus Cos. is separating its hotels and Harrah's casino businesses, creating the largest stand-alone gaming corporation in North America, with $1.64 billion in assets. The lodgings include Embassy Suites, Hampton Inn and Homewood Suites hotels. And inside... Mayor Dennis Archer will tell local businesses about empowerment zones at a Wednesday meeting, Page 2E. GM subsidiaries Hughes, EDS and GMAC report $2.7 billion in profits for '94. Page 2E. PESO PLUNGES TO NEW LOW Mexico's financial markets took another beating amid fears that President Bill Clinton will fail to persuade a skentical Con- cress to an- i V prove his $40-billion aid plan for Mexico. In one of its worst days since the crisis began six weeks ago, the peso fell 12.1 percent to a new low 6.37 to the dollar. Nervous traders drove stock prices down 3.1 percent to close at their lowest level since Oct. 8, 1993.

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