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Food courts boom in malls
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PAGE 4
Seat belts save lives - and money PAGE 7
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HMO debate is far from over PAGE 3
WEEK OF JULY 8 - 14, 1985 VOLUME 1
NO. 23
Highland, Fretter stores invade Chicago
TRW shifts work, plans to layoff 150 BY JANE WHITE CRAIN'S DETROIT BUSINESS
TRW Inc. will layoff 150 salaried and hourly employees at its Sterling Heights plant during the next six months because the company is moving one operation to its plant in St. Catharines, Ontario. The decision was made because of Canada's favorable "exchange rate, utility rate and cost of steel," according to plant manager Larry Kipp. The work being moved is the forging of centerlinks, a component in the conventional steering mechanism, according to communications specialist Mary Reilly McCall. The demand is drying up as auto customers switch to frontwheel-drive compact cars, which use rack and pinion steering. The Sterling Heights plant on Van Dyke also produces rack and pinion steering components. McCall said a breakdown of affected hourly and salaried employees wasn't available. The president of the union representing the hourly workers said there were no plans to block the move. "We have a meeting (with management) scheduled on the 16th, but there's nothing you can do," said Virgil Prater, president of United Auto Workers Local 247. Prater said the plant currently has 749 workers, of whom about 575 are hourly employees. Sales for the Cleveland, Ohiobased manufacturer were $6 billion in 1984. Besides steering components, valves and engine parts for the auto industry, TRW makes electronic components used in space systems and oil and gas drilling equipment. COB
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BY KEVIN DWYER CRAIN NEWS SERVICE
DWIGHT CENDROWSKI
As executives like Ex-Cell-O Corp. Vice President David Reichard can attest, international trade by small and medium-sized Detroitarea companies is growing. A special report begins on Page 12~
With splashy advertising campaigns, two Detroit retailers are leaping into the Chicago electronics and home appliance market. Fretter Appliance Co. and Highland Superstores Inc. will compete head-to-head with an entrenched Chicago veteran, Polk Bros., long Chicago's No.1 purveyor of discount, high-volume electronics wares. The sassy Detroit retailing giants have expanded into major markets in four states over the past eight years. "I think it will be quite a shootout over the next 12 months ," mused Shelly Miller, president of United Audio Centers Inc., a small Chicago-based specialty chain. "There will be victims, no doubt about it." Fretter has opened seven stores
in Chicago since early 1984 and plans to add five more outlets by year's end. Highland plans a bigger splash. Backed by $103 .6 million it raised in a successful public stock offering two months ago, Highland will make its Chicago debut July 21 at the corner of 81st and Cicero. It will build 15 stores in the Chicago area by the end of 1986. "They're coming in with their guns loaded," said David Bossy, president of Mid-America Real Estate Corp., which is handling property acquisition in Chicago for Highland. Indeed, Highland will invest $7 million to $10 million in advertising in the next year to begin its thrust into Chicago, beginning with a few teaser television spots later this month. And Bossy promised, "They'll do more advertising than anyone else." See STORES, PAGE 26
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Humana seeks state license for HMO BY STEVE RAPHAEL CRAIN'S DETROIT BUSINESS
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Hospital giant Humana Inc. plans to enter the competitive market for health maintenance organizations (HMOs) in Michigan. The Louisville , Ky.-based corporation is awaiting approval for a license to operate an HMO from both the Michigan Insurance Bureau and Michigan Department of Public Health. The bureaus received Humana's application in early May. Nancy Baerwaldt, commissioner
of insurance , said approval could take from three to six months . Twenty HMOs operate in Michigan, and four or five more await licensing approval , said Nancy Koert, chief of the HMO division of the Michigan Department of Public Health. Humana is the nation's second largest forprofit hospital company. Its hospital division has 87 hospitals in 22 states, plus hospitals in England, Mexico and Switzerland. Last year, it posted income of $193 million on revenues of $2.6 billion. The hospital thrust itself into the national
limelight last November when it inserted an artificial heart into William Schroeder. With its financial resources, Humana could quickly become a major HMO in the state. Humana spokeswoman Brenda Bryant said the company has expanded rapidly beyond just owning hospitals. It is developing Humana Care Plus, a package of alternative health care plans including HMOs and preferred provider organizations. "We wouldn't be coming into Michigan if we See HUMANA, PAGE 25
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Standard Federal rebounds slowly BY CHARLES CHILD CRAIN'S DETROIT BUSINESS
Standard Federal Bank, still bouncing back from the thrift industry's doldrums of the early 1980s, obtained a substantial boost of capital last week by selling $450 million worth of preferred stock. The Troy-based savings and loan, Michigan's second largest, hopes the infusion of funds will help clear financial headaches still lingering from the banking industry's deregulation and the high interest rates of the early 1980s. Its peer institutions in the state - No. 1 First Federal of Michigan and No.3 Great Lakes Federal Savings and Loan Association - have rebounded faster than Standard Federal from the dark days of 1981-82. Standard Federal posted profits of $27.3 million in 1984, but
only because it sold 12 of its branches in the Detroit area to Bloomfield Savings & Loan Association, based in Birmingham. The sale of branches netted Standard Federal $36.3 million. So without the one-time boost from the sale, the thrift would have lost $9 million in 1984. Standard Federal ended 1984 with total assets of $5 billion. By comparison, First Federal of Michigan, with assets of $9.5 billion at year-end, had profits in 1984 of $30.1 million, although $18.6 million of that total was generated by one-timeonly items. Great Lakes, based in Ann Arbor, had a net income of $9.2 million in 1984 on total assets of$2.1 billion. Helped partly by falling interest rates, Standard Federal has apparently turned the corner in 1985. In the first quarter, it See STANDARD, PAGE 26
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JOHN SOBCZAK
The burgeoning pay phone market has some pitfalls, say suppliers like Karl Weiss, president of Karlin Electronics Corp. Story, Page 3~