Detroit Free Press from Detroit, Michigan • Page 27

Business briefing: Dow-Jones Industrials 2179.42 21.38 Prevailing prime rate 7.50 Fixed-rate mortgage (30 yr 20 dn.) 9.00 Six-month Treasury Bill rate 5.43 Donoghue Money Fund Avg.7-Day Yld. 5.34 Auto focus: Is the sexiest car a Ferrari? A Maserati? A Porsche? Upper-income people who were surveyed have their own ideas. See Page 8C. Tuesday, Feb. 3, 1987 AUTO FOCUS NYSE MUTUAL FUNDS 8C 9C 11C '-DFTROIT FREE PRESS 4C Call with business news: 222-8765 Analysts bearish on GM for '87 tEie Ll tieEier percent in 1978 to an estimated 41 percent last year.

Healy projected a further decline for GM sales in 1987, to as low as 36.5 percent. GM has said it expects sales of its new Chevrolet Corsica and Beretta subcompacts to add two percentage points to GM's market share. The introduction of its new GM10 midsize cars at the beginning of the 1988 model year also will stimulate sales, GM executives say. BUT ANALYSTS predicted the new GM models will draw sales away from the automaker's older car lines instead of their competitors. "What GM has to do is get some good product out there," said Wendy Beale of Smith Barney, Harris Upham Co.

"It's a more fragmented market, and the fighting is going to be much more vicious over the next couple of years. I think it will be extremely difficult for (GM) to improve their total market share in 1987, and I'm looking for down earnings as well." Gary Glaser of New York-based First Boston Corp. noted GM's plans to cut costs by reducing capital spending and paring its white- and blue-collar work forces. He said GM could earn the same amount of money in 1987 as in 1986 while making eight to 10 percent fewer cars and trucks. "I essentially agree with the flavor of Smith's comments that the worst is over," he said.

"I do see better financial performance and product competitiveness in '87. But I am assuming that GM loses some retail market share, perhaps down to 37 percent. Obviously, the actual level of market share will be a key to whether GM earnings improve." Chrysler Corp. also is scheduled to release" fourth-quarter and annual earnings figures Thursday, and analysts said they expect the No. 3 U.S.

automaker to post good, if not record-breaking, profits. Ford and American Motors Corp. are expected to disclose their 1986 earnings later this month. doesn't, other people will anyway. The new GM cars don't represent a breakthrough, nor are they significantly better than their predecessors." GM is to release earnings figures Thursday for the last three months of 1986 and for the year.

The analysts said they expect Ford Motor Co. to post higher earnings than GM for the year something that has not happened since 1924. SMITH LAST week told members of the New York-based Council of Institutional Investors public and union pension funds that hold large blocks of GM stock that he expects GM to improve its sales and profit performance this year, according to investors who attended the private meeting. GM spokesman Clifford Merriott declined to comment Monday on whether the investors accurately conveyed Smith's remarks. GM's share of the U.S.

car market, including import sales, has dropped from about 48 By DAVID KUSHMA Free Press Aulomollve Writer Auto industry analysts on Monday dismissed General Motors Corp. Chairman Roger Smith's reported pledges to GM institutional investors of higher earnings and U.S. car market share for the automaker in 1987. Several analysts said they expected lower sales and earnings for the top U.S. automaker, while others said GM could improve in one of the areas only at the expense of the other.

"In a sense, they are contradictory goals," said David Healy of New York-based Drexel Burnham Lambert Inc. "The only way GM can increase its share of market this year is to become more price competitive. That means lower earnings. GM is going to have to run as fast as it can just to stay in place." Said Ronald Glantz of Montgomery Securities in San Francisco: "GM is between a rock and a hard place. If it gives (buyer) incentives, so will everybody else.

If it plans consolidation Faced with mounting losses, Herpolsheimer's, a western Michigan department store, will close its Battle Creek and Jackson stores and will merge its two Grand Rapids stores with Block's department stores of The move will take place April 1. Herpolsheimer's, which employs 700 people, will have only one store in Muskegon. The employes in the Grand Rapids stores will become Block's employes, but the name change for the two stores has not been decided. Block's, which operates 10 stores in Indiana and Ohio, as well as Herpolsheimer's, were divisions of Allied Corp. and were put up for sale in January by tampeau Corp.

after that company purchased Allied $3.6 billion. Herpolsheimer's has been a Michigan retailer for 1 7 years, but has been losing money in recent years. In 1985, the retailer had sales of $22.8 million, but lost $2 million. Beverly Hall Lawrence Ward's stores in Detroit area to be renovated in Michigan U.S. plant for Hyundai? By JOHN SPELICH and ANN M.

JOB Free Press Aulomollve Writers LAS VEGAS South Korea's automaker Hyundai may build an assembly plant in the United States, the executive vice-president and chief operating officer of Hyundai Motor Montgomery Ward's overhaul Montgomery Ward plans renovations in metro Detroit in the next two years. Total stores In Metro Detroit Dearborn: Michigan Ave. at Schaefer Southgate: Trenton Eureka Livonia: Plymouth Middlebelt Pontiac: Telegraph Elizabeth Lake Clinton Township: Gratiot Fifteen Mile Warren: Twelve Mile Dequindre Southfield: Telegraph Twelve Mile America said. When asked in an interview if his company is considering such a move, Max Jamiesson responded: "Of course it is. Of course, what more can I say?" "We have no plans to build one (a plant, at this point).

But on the other hand, would we? We already have one Metro Detroit Market Share for General Merchandise Retailers 4 Meijer, Montgomery Ward 12.6 11.5 (in Canada) so the answer is yes. Jamiesson spoke while attending the National Automobile Dealers Association convention here. It marked the first time thp tnn II nffiril nf Hyun JC Penney Kmart' 22.6 29.9 GINNY SEYFERTH, president of Franco, Seyferth Associates Inc. in Grand Rapids, announced that she has bought all outstanding stock from Chairman Anthony Franco and secretary Melissa Franco. The firm is now Seyferth Associates Inc.

In buying the stock, Seyferth said she was exercising an option granted by the Francos "when we co-founded the company in 1984." JOHN PSAROUTHAKIS, founder and president of J.P. Industries of Ann Arbor, has won the Massachusetts Institute of Technology's Corporate Leadership Award. J.P. Industries makes parts for the automotive industry. FIRST INDEPENDENCE a Detroit bank, said its net income before taxes increased in 1986 to $951,131, up from $934,345 the previous year.

The company's assets were up 1 1.23 percent to $78,780,196 in 1986, compared to $70,827,650 the previous year. PATRICK PETROLEUM CO. of Jackson will buy Bayou Resources Inc. of Houston for $8.8 million in a transaction that would more than double the Michigan company's petroleum holdings, Patrick Petroleum said. Bayou's stockholders will receive $6 per share of common stock, in addition to preferred stock and options, Patrick Petroleum said.

DIRECTORS OF DIAMOND Crystal Salt Co. of St. Clair have declared a quarterly cash dividend of 20 cents per share on its $1.25 par value common stock, payable Feb. 27, to shareholders of record Feb. 13.

GENERAL MOTORS CORP. declared a $1.25 first-quarter dividend on its main class of common stock, an amount unchanged since 1984 despite a sharp decline in profits in the third quarter. GM increased dividends on two subsidiary classes of shares. The board declared a dividend of 1 3 cents per share on Class common stock and 18 cents per share on Class common stock. BOAKE A.

SELLS, president of Dayton Hudson also will become chief operating officer on March 1. Sells joined Dayton Hudson as vice-chairman in June 1 983. In July 1 984, he was elected president and named to the board of directors. BLOOMFIELD SAVINGS and Loan reported a year-end reduction in assets in 1986 to $616 million, compared with $673 million the previous year. The company also said it had a quarterly loss of $9.5 million, or $4.28 a share, for the period that ended Dec.

31, compared to an $8.2 million loss for the same period in 1985. Sears dai had commented about the possibili- Jarntesson ty of a U.S. plant. No Korean automaker has a U.S. plant now, but an auto analyst had said last month he expected to hear word soon that Hyundai might establish a plant here.

Hyundai started selling its small Excel cars in the United States in February 1986. Its sales of 168,882 set a record for an importer's first-year sales in the U.S. market, even though it was not a full 12-month tally. The Excel starts at $4,995. The company has said it expects to sell 250,000 Excels in the United States in 1987, which would make Hyundai the No.

4 importer of cars to this country. Jamiesson noted that the Excel, which was introduced in Canada before coming to the United States, became the No. 1 selling import in Canada in just 18 months. "When they became the No. 1 import in 18 months (in Canada), that's what helped make the decision," he said.

"Are we going to become the No. 1 import in 18 months (in 23.4 By BEVERLY HALL LAWRENCE Free Press Business Writer Montgomery Ward Co. will renovate its Pontiac Mall store this year as a part of a "major reinvestment in the Detroit market, involving opening new stores and revamping existing ones" over the next two years, said Bernard Brennan, president and chief executive officer. Brennan said Ward's seven metro stores are included in a three-year renovation program involving all 295 stores in the chain which is aimed at shifting the sixth-largest merchandise retailer from a mass merchandiser to a specialty store operator. What that means, Brennan said, is that Ward's will stop selling certain categories of slow-moving merchandise and limit its products to just seven different groups of merchandise.

"The Pontiac store will be our best example in Detroit of our new specialty concept," Brennan said. LARGER STORES, like those in metro Detroit, that measure up to 100,000 square feet, will sell greater assortments in the seven groups: fashion apparel, home furnishings, soft goods (like towels), appliances, electronics, lawn and garden, and toys and sporting goods. Gone are hardware and plumbing, home improvement items and some recreational items. "Customers won't miss any of the Items, because they weren't buying those items from us anyway," Brennan said. "Chain-wide, we cut about five percent from our merchandise categories, which represented about $100 million a year in sales for us no small change," Brennan said.

"But we've now created areas that we'll specialize in, so when customers think of certain items, they'll think Montgomery Ward," he said. "We need to put the excitement and fun back in our stores." ALSO HELPING in the move toward specialization, Brennan said, smaller stores those around 30,000 square feet may sell only home furnishings, home electronics and automotive merchandise, for example. Such new, smaller specialty stores which feature only one or two merchandise groups may be built in metro Detroit, but he declined to comment further on expansion because "we're just in the planning stages." Costs for converting to Montgomery Ward's new specialty store concept has averaged around $15 per square foot, Brennan said. At that rate, at least $18 million could be spent refurbishing Ward's Detroit stores which total about 1.22 SOURCEM 986 Scarborough Reports based on 8,872,800 total shopping trips to only the stores listed above during a three-month period in 1986 by metro Detroiters. DOMINIC TRUPIANODetroit Free Press million square feet, though not all is used for selling merchandise.

Brennan said the specialization program, which began last year with six test stores across the country, was implemented because Ward's can no longer be all things to all shoppers. Also, pressure from competitors to specialize in certain merchandise categories was growing. He said, for example, Highland Superstores specializes in electronics and appliances and competes effectively against Ward's electronics and appliance department, which will receive more money and space for merchandise, he said. Montgomery Ward operates in Dearborn, Southgate, Livonia, Pontiac, Clinton Township, Warren and Southfield. The retailer operates two stores in Grand Rapids and one each in Jackson, Kalamazoo and Lansing.

the United States)? No. We haven't got enough production" to take that large a share of the U.S. market. Jamiesson said it was difficult to compare the United States and Canada in deciding whether to build a U.S. plant.

While he didn't elaborate on the issues Hyundai is considering as part of its study of a U.S. plant, he noted that the weakening of the U.S. dollar has not had as widespread an effect on Korean currency as it has on the Japanese yen. The yen is tied to the U.S. dollar, while the Korean currency is not.

Japanese automakers have been increasingly planning U.S. plants, in part because the yen-dollar changes are cutting into profits from Japanese-built vehicles. Jamiesson also said Hyundai will not sell cars in the Detroit area until 1988. Hyundai is currently lining up dealers in Chicago to begin selling cars there later this year, he added. Hyundais currently are sold along the East and West Coasts and in the South.

etcetera State chamber has familiar wish list for legislation DEERE CO. restarted assembly lines and 75 percent of its United Auto Workers employes returned to work in Moline, 111., a day after the union ratified a new contract ending its longest labor dispute with the leading farm-equipment maker. THE TREASURY DEPARTMENT sold $6.8 billion Blanchard administration to consider enacting "substantial and permanent" property tax relief for businesses and individuals. by lowering the state income tax rate to 4.4 percent from 4.6 percent. The state chamber has about 8,000 members, 36 percent of whom are manufacturers.

THE TOPICS of most concern include: Product liability: The chamber is looking for liability laws offering more protection for firms from product lawsuits. Liability is the No. 1 interest of 500 chamber members surveyed at random. in three-month bills at an average discount rate of 5.58 percent, up from 5.44 percent last week. Another $6.8 billion was sold in six-month bills at an average discount rate of 5.59 percent, up from 5.43 percent last week.

By LUTHER JACKSON Free Press Business Writer State Chamber of Commerce officials, seeking to further lower what they say is the high cost of doing business in Michigan, will go to the state capitol this year with a familiar shopping list. At two news conferences and a briefing Monday, chamber officials said they would continue trying to lower workers' compensation and unemployment insurance costs and seeking product liability legislation for manufacturers. The chamber's 1987-88 legislative priorities also call for the state to return to taxpayers an anticipated windfall of $150 million to $170 million expected as a result of federal tax reform. Gov. Blanchard has proposed that the money be returned Economy's efficiency drops THE STOCK MARKET reached another record with the Dow Jones average of 30 industrials up 262.09 points in January closing another 21.38 at Workers' compensation: The chamber will continue to try to lower workers' compensation costs by pushing for a more restrictive definition of disability.

Property tax: The chamber will ask the Legislature and the 2,179.42. Volume on the New York Stock Exchange reached 177.36 million shares, up from 163.36 million Friday. Compiled by CHRISTOPHER COOK Productivity falls 1.7 in 4th quarter Productivity in the last three months of 1986 fell 1.7, pulling growth for all of 1986 down to 0.7. Construction spending drops 0.5 in December Unemployment compensation: The organization wants Michigan to join most states in implementing a "waiting week" in which jobless people would not receive benefits for the first week they are unemployed. Advance notice of plant closings: Noting that "responsible employers already address these concerns voluntarily," the chamber said "a more positive approach for state government would be to minimize the number of business closings by continuing to assign a high priority to various economic development proposals to make Michigan more competitive with other states for iobs." 1986 was best year for Standard Federal Standard Federal Bank, Michigan's second-largest sav-ings and loan institution, said Monday that 1986 was "the most successful year in our history" with profits hitting $1 1 5.6 million, up from a previous record of $74.4 million set in 1985.

But in the last three months of 1986, earnings slipped to $17.2 million from $18.5 million in the fourth quarter of 1985, Troy-based Standard Federal said in a statement. Ronald Palmer, the company's general counsel, stressed that income from operations (excluding gains from the sale of assets) rose strongly to $9.2 million in the recent quarter from $3.4 million in the fourth quarter of 1985. Such-operating figures reflect the company's prospects better than the earnings, he argued. Standard Federal has assets of $7.6 billion and 84 offices in Michigan and Indiana. It converted late last year from a customer-owned mutual association to a stockholder-owned company aiid raised about $235 million by selling stock to the Public- John Saunders Seasonally adjusted billions of dollars -Quarterly change in percent -p? i PRELIMINARY 4TH QUARTER DOWN 1.7 5 4 3 2 1 0 -1 -2 -3 WASHINGTON (AP) The efficiency of the Amen-can economy in producing goods and services fell sharply the last three months of 1986, which limited the annual productivity gain to less than one percent for the second consecutive year.

Non-farm business productivity dropped at an annual rate of 1.7 percent the fourth quarter, offsetting earlier increased efficiencies, to produce a productivity gain for the year of 0.7 percent, the Labor Department said Monday. That is slightly better than the 0.5 percent increase in 1985, when a fourth-quarter downturn also offset earlier improvements. But it is still below the 1.8 percent and 3.3 percent increases of 1984 and 1983, when the U.S. economy was coming out of a recession. Manufacturers continued to show the greatest results in attempting to improve their competitiveness, with slightly higher productivity in October, November and December.

But the increase was a small fraction of the gains they have been making since 1980, the Bureau of Labor Statistics said. The preliminary data for the fourth quarter showed manufacturing productivity gains falling to a Seasonally adjusted annual rate of 0.2 percent, compared with a 3.6 percent improvement over the summer. 384 382 380 378 376 374 372 370 368 DECEMBER SPENDING I 3 $376.0 billion nnr -4 366 1st 2nd 3rd 4th 1st 2nd 4th 1st 2nd 3rd 4th Feb Mar Apr May Jun Jul Aug Sop Oct Nov Dec 19B4 1989 1966 SOURCE: U.S. Department o( Commerce isao SOURCE: U.S. Department o) Commerce.