NEWSPAPER
© Entire contents copyright 1985 by Crain Communications Inc . All rights reserved .
Crain's
Price: 50 cents a copy; $20 a year.
Adcraft Club drops health insurance
•
PAGE 10 ~Strong
dollar hurts robotics firms PAGE 26
•
Union will picket non-union grocers PAGE 3
WEEK OF JUNE 10 - 16, 1985 VOLUME 1 0 NO. 19
Masco stock strategy pays off in price rise BY CHARLES CHILD and KATIE LANE-WILKE CRAIN'S DETROIT B USINESS
DWIGHT CENDROWSKI
U.S. Open general chairman William Prew (left) and tournament director E.M. "Bud" Erikson coordinate volunteers and look to business for financial support.
Businesses tee off at Open with tax-deductible support BY LARRY PALADINO Special to CRAIN'S DETROIT BUSINESS
The best golfers in the world will get all the attention this week during the 85th U.S. Open at the Oakland Hills Country Club in Birmingham. Putting up $1.8 million to support that championship are 150 members of the Golden Tee Club, who paid $12,000 each to support the tournament and in return receive the "royal treatment." That's the kind of support and treatment that could be threatened by President Reagan's tax reform plan. Henry Mollicone, president of the Dollar Corp. of Madison Heights, a maker of automated manufacturing systems, is chairman of Golden Tee activities for the Open. Mollicone's company bought two memberships. A membership entitles a company to a package of tickets, an ad in the program,
parties and other benefits. "From a company standpoint," Mollicone said "there's a significant ticket package. Most people doing business in the area would probably buy the tickets anyway, and a lot of companies would probably be buying ads anyway. This way they get the royal treatment, which is worth something also." Mollicone said President Reagan's tax proposal to eliminate businesses' writeoff for sports ticket purchases would completely change the way the golf tournament is supported. "Any such event would have a world of hurt," he said. "I would guess a lot of our individual tickets are purchased for business entertainment. Everything would go back to the drawing board. We would have to find a new way of doing business." There was plenty of business in support See OPEN, PAGE 29
The price of stock in Masco Industries Inc. of Taylor has soared 40 percent in two weeks, reflecting investor confidence in the company's acquisitions and confirming the strategy that spun off Masco Industries last July. After meetings between management and investors in Detroit and New York City in late May, the company's stock rocketed from $42 to $59 per share. The stock was first offered last summer at $22 per share. "Masco Industries is finally telling its story, and it's a good one," said Dean Gulis, director of research for Roney & Co., a Detroit-based investment banking firm. The investment community has heartily endorsed Masco Industries' acquisitions. Since the firm spun off from Masco Corp. last year, it has bought three companies
SPECIAL REPORT: Mt. Clemens Law firms Dock to downtown omces PAGE 12 Downtown stores seek evening shoppers
PAGE 16 Anton grew in malls, but boosts downtown
PAGE 18
~
that expanded its production of industrial parts for the automobile, defense and other industries. On May 29, Masco Industries announced it planned to purchase a fourth company, Braun Engineering Co., based in Southfield. Braun designs and manufactures precision metal parts for the auto industry. Masco Corp. , a venerable Detroit-area company, spun off Masco Industries last summer partly to satisfy the investment community. The original Masco manufactured a wide range of products, from auto and oil industry parts to consumer products such as plumbing and kitchen fixtures . Sales reached $1.1 billion in 1983. Investors and analysts found it difficult to be expert in all of Masco's fields, however. Masco executives "thought people were avoiding the stock," said Gulis. The spinoff was done to make analysis by See MASCO, PAGE 30
~
Rooftop safety check to slow Prix parties? BY STEVE RAPHAEL CRAIN'S DETROIT BUSINESS
Detroit building inspectors will be out on foot looking for rooftop parties during Detroit Grand Prix IV on the weekend of June 21-23. The city may restrict the number of revelers at rooftop parties, or close the parties if the people there are in "imminent danger," said Bob Dickerson, code and zoning coordinator for the Department of Buildings and Safety Engineering. City inspectors will check rooftops to ensure that they don't violate city building codes. The action has the support of Detroit Renaissance, which promotes the Formula I Grand Prix race. Mayor See ROOFI'OP, PAGE 30
~
Acquisition hones GM's long-range capabilities BY JANE WHITE CRAIN'S DETROIT BUSINESS
General Motors Corp.'s agreement last week to acquire Hughes Aircraft Co. for $5 billion will provide the automaker with an in-house electronics resource - but that doesn't mean more or less business for local suppliers. Hughes will run its own show and continue to pick its own vendors, said GM spokesman Donald Postma. "We will make use of their electronic technology," Postma said, ''but we're retaining Hughes intact with full authority to run their business." The EI Segundo, Calif.-based Hughes, with 1984 revenues of $4.93 billion, is the nation's seventh largest defense contractor. It makes aerospace and defense products that range from guided missiles to laser systems.
Hughes will be wholly owned by GM Hughes Electronics Corp., a new GM subsidiary. GM's ownership of Hughes won't turn auto suppliers into defense contractors, said Mark Oberschulte, a procurement specialist with the Michigan Department of Commerce. "A lot of Michigan auto machine shops don't qualify for aerospace business because the federal government's quality program is more stringent than what they (typically) adhere to," Oberschulte said. "And machining measurements (in aerospace) have to be more precise." Sixty Michigan companies sold $13 million worth of goods and services to Hughes, Oberschulte said. If those numbers increase, it will be because of the quality of the companies not the GM connection. "We took a group of 20 people out to California to meet with Hughes on a trade mission last year," Oberschulte said. One company represented - the engineering consultants
firm, Barfield Manufacturing of Ypsilanti - is optimistic that it will soon be doing business with Hughes. Ted Sullivan of Data Resources Inc. in Lexington, Mass., said Hughes' role is not to replace current GM suppliers but to help GM develop future capabilities, as did the purchase last fall of Dallas-based Electronic Data Systems Corp. "The effect will be long-term, 15-20 years from now," said Sullivan, a senior economist with the economic forecasting firm. Hughes excels in research into electronic components, ones that might be used to help future cars run better - "not just the dashboard stuff," Sullivan said. "Electronics will improve the mechanical operation of the car: gears, transmissions, suspensions. And with electronics you need sensors, fiber optics and computers to regulate everything. Hughes has research and development in all these areas." COB