Arizona Republic from Phoenix, Arizona • Page 30

ALL EDITIONS The Arizona Republic Sunday, May 10,1981 uture-cir Armour a subsidiary of the Greyhound Corp. since 1970, has not been put on the auction block. But i charting a course for the Phoenix- based meat company has been diffi- i from CI i i ii ii --1 I Rented fresh-meat business so it WeVe r'eaJly gone fuU circle." the jt year, Armour lost $5.7 milUon could focus on consumer brand-name spokesman said. Now, we re back on revenueg $2 5 biUion. goods, including processed meats, a where we started as.

a supplier of fa Spokesman said. It sold its oil and, fresh meat historically profitable processed- gas properties and used some of the jn February, General Host Corp. fc hot $1,1 bilhon in proceeds to help fund of Stamford, Corm announced plans me ham Swu-t's employee pension program. to divest itself of the ftesh-meat Qew mentt fresh-meat division was portion of its Cudahy Food La. ion Punched an ambi- incorporated as a free-standing com- subsidiary.

tious program that involved promot- Eany, Swift Independent Packing Co. Host, which Cudahy in rtg prmium brand-name ast month, it went public. Esmark 1971, is negotiating the sale of its at the expense of private- retained 40 percent ownership to f0Ur Cudahy slaughterhouses to Cu- DUBineBtf Celling in bulk to ehsure a supply of meat for its Swift, dahy President Timothy Day of firmg that use their own brand processea-meai cuvisiuu. rnoenix. names.

Kathleen Reeves Republtc Though some meatpackers are packing it in, industry observers predict no shortages for cohsumers. "As long as there are people eating (meat), there have got to be people supplying (it)," one retailer says. Frustrated Armour insiders say the rug was pulled out from under them before the plan had a chance to succeed. Greyhound's explanation is that Armour was losing too much money too fast A decade ago, meatpacking companies were "the darlings of Wall Street," said Maurice McGill, a partner in Touche Ross Co. and director of meatpacking-industry serviced for the accounting firm.

"Now, it's the fashion to get out of the business," McGill said. "The conglomerates that bought the meat companies suddenly woke up." There are three reasons a publicly held company might want to get out of the meat business, he said. First, the return on equity is low. Second, earnings are not steady and controllable. Finally, the business requires, a lot of attention from top management "The meat business is mercurial, volatile, unstable," said Roger Spencer, an analyst for Paine Webber Mitchell Hutchins.

"That doesn't sit well with stockholders, who want earnings to be stable." Of course, there are exceptions. Last week, General Foods Corp. shelled out $465. million for the privilege of merging with a leading processed-meat firm, Oscar Mayer Co. Oscar Mayer, which had earnings of $20 million on sales of $1.8 billion last year, is regarded as a plum because of its profit record, its history of packaging innovations and its name.

Another exception, and a name that elicits awe, fear and envy in many quarters, is Iowa Beef Processors Inc. IBP, founded in 1961 in Dakota City, broke traditions left and right and has emerged as- the No. 1 beef supplier in the nation. The company built modern, automated slaughterhouses close to the source of cattle. It paid for them out of earnings.

IBP specialized in beef alone and began selling it in boxed form, a boon to wholesalers. Although some of its plants have unions, IBP pays considerably less than the $17-per-hour industry standard paid by companies that have master contracts with the United Food Commercial Workers, AFL-CIO. In 1980, IBP reported profits of $53 million on revenues of $4.6 ytZmm 1. i. 1.114 mam, 1' 1 Wjr I -1 i If I -aMiirfMifnrfiDiwiiiiMiMiwiiiMMwiimiTtfnii-r- dv UMaMWIIMMMUHBHilMHRMiMHMifrt packers can gain some competitive edge.

Lewie Anderson, international vice president of the union, said companies can try those things. "But we're reasonably certain they won't get away with it," he said. The average hourly pay rate for the 185,000 members of United Food and Commercial Workers is $10. Add fringe benefits and pension-fund liabilities and some companies end up paying about $17 per hour. "There are multiple forces in play here that could result in plant closings, contracts or no said.

"We think it is irresponsible for any- packer to say labor rates are the reason." He said competition from companies like IBP and the need for gigantic capital investments for new "superplants" are hurting 'the packing industry. In addition, conglomerates that acquired meat companies 10 years ago "have bled the packing subsidiaries dry." Not all the old-line packers are losing money. In its prospectus, Swift Independent Packing Co. reported 1980 earnings of $19.9 million on revenues of $2.08 billion. The fresh-meat division had been profitable in the two years before as well.

Even with ideal conditions, however, the business is wildy erratic. Wilson's profits bounced from $17 million in 1976 to $1 million in 1977. billion. It slaughtered 18 percent of all commercial beef in the United States. Respect for IBP's success comes even from unions.

"IBP did the intelligent thing," said Dennis Davison, secretary-treasurer of the meatpackers' union local 488 in Phoenix. "They created as-, sensibly lines that are very fast, very labor intensive and very profitable. They are running the old-line packers out of business." IBP system has been copied widely. But selling beef in boxes, is not going to save companies that operate antiquated plants with expensive labor, said a former. Cudahy executive' who asked not to be identified.

"It's too late for Cudahy, Armour to turn it around," the executive said. "During the 1980s, the companies with master labor contracts are going to go out of business." The contracts are one reason the conglomerates are dumping their meat subsidiaries, said Spencer and another analyst, Tim Sullivan of Amhold S. Bleichroeder. McGill said old-line companies have been stuck with the union because "the union knows they won't take a strike." But by closing plants and paying off union workers or spinning off costly divisions into new companies-that can hire inexpensive labor, the Republic With fringes, average pay for members of the United wages from eating up earnings by building automated Food and Commercial Workers union is about $17 plants that operate on an assembly-line basis and by per hour. Some packers- have managed to keep dealing only in boxed meats to increase productivity.

Shoplifting True Aloe Vera Gene Wood Presents a WORD PROCESSING SEMINAR WORKSHOP for the ARIZONA AUTHORS ASSN. and the WOMEN IN COMMUNICATIONS AND GUESTS SEKIIUAR LEARH TO EARU An opportunity for anyone, 18 yrt or older with or without experience, to achieve FINANCIAL INDEPENDENCE, by inverting few pleownt houn eocS wwk. We ore lootino, for eomeit men and women from all walks of life to inform friendi and ocquomtancM about ortofwning, He-enriching True Aloe Vera. If you'd like to LEARN how you can eaiijy EARN from an almost limrnoj amount of extra income, depding on your own detirei and interfering with your present employment or fam to mis exerting FREE SEMINAR. Bring your spouse, friendi 4 felfcw employees.

NO COST. NO OBLIGATION TO BUY ANYTHING. PLEASE ACCEPT OUR INVITATION TO COME TO OUR SEMINAR AND BE AMAZED AT YOUR OWN UNTAPPED POTENTIAL THIS WED. NITE OUAUTY INN WEST. AT THOMAS BLACK CANYON FWY.

PLENTY Of FREE PARKING AVAILABLE. REGISTER FOR DRAWING FOR PERTEC COMPUTER APPLE PERTEC COMPUTERS WILL BE SHOWN May 16-9 A.M. dollars, and the consumers are feeling the pinch." Shoplifters are increasing in numbers and are taking more, Priest said. "The dollar amount on the average theft has increased from $6.30 to $7.30," he said. Priest was the only representative who would estimate the cost of the thefts.

He said losses amount to 1.5 percent of Baahas' gross sales. Last year, 14,024 people were arrested for shoplifting in the A. J. 'Bayless stores, said President Roger S. Hagel.

"What we catch is peanuts compared to what is out there," Hagel said. Neb Keeton, owner and president of Neb's Market, said all supermarkets face the theft problem, but larger markets are able to "withstand the losses better." Sgt' James Toth, a community-relations officer with the Phoenix Police Department, said shoplifting has increased 10 percent in the Valley so far this year. "This year we had 2,285 cases in January and February, totaling Last year we had 2,201 totaling $48,986," Toth said. Tom Hickey, Smitty's president and chief executive officer, said supermarkets are hit often because of the exposed products and the steady traffic in the stores. "I think everyone is concerned with theft because the innocent end up paying for it," he said.

Continued from Cl "I'd probably lock up the store if I knew." Mike Steinke, manager of SQS Warehouse Foods, said national figures indicate a market's weekly average of sales is the amount it will lose in one year. "Economic conditions are forcing people to change their ways and try to get away with things," Steinke said. Two to three shoplifters are caught each week, he said. Groceries can't slashed from budgets the way Hawaiian vacations or new cars can, says Karen Cooke, regional security manager for Low Cost, Food Giant and El Rancho markets. About 150 shoplifters are prosecuted each month by the 41 Low Cost stores in the state, she said.

"I believe the amount of theft in Arizona surpasses many other areas," Mb. Cooke said. The supermarket managers said shoplifting and internal theft are serious problems. "There is no prejudice when it comes to stealing everyone is doing it," said Mike Priest, director of security at Bashes'. "It's hard to stretch those budget COMPUTER HART COMPUTER BUSINESS SYSTEMS 2837 N.

CENTRAL 274-8631 Cad Nancy William for mrvaHon For Additional Information Call Bill Craig 958-7276 True Aloe Yen $10 Reg. Fee $5 each additional person HUi so you won't have to look any further. Our models are open daily 1 1 AM to 5 PM at 2626 Arizona Biltmore Circle, off 24th Street or Lincoln Drive. 957-8088. BILTMORE SQUARE Town Homes In the Biltmore Tradition.

take advantage of many services and facilities of the five star Arizona Biltmore Hotel. If you desire housekeeping service dry cleaning pick-up and delivery landscaping service privileges of the magnificent Biltmore Swim and Tennis Club even catering for private parties. We've put a lot into Biltmore Square With all we overlook we've overlooked nothing. We've constructed your home at Biltmore Square like homes were built years ago. 'With thought.

Consideration. Craftmanship. With incredible views of the city lights and surrounding mountains. And besides the craftmanship and location, living at Biltmore Square allows you to mw YEAH! mm flLY THIN THE-0 In 1980 the Phoenix Convention and Visitors Bureau helped produce BILLIONS of dollars to the local economy through the promotion of conventions and tourism. Find out how "your" company can profit by becoming a member of our rapidly growing organization! Call us at 957-0070 for inf orrnation on joining our winning team! Melinda Tamara Membership Managers "ABE THE 4 1 '4 1 1 Hi? WE Some of the Benefits Include; Increased Community Exposure Listing of upcoming conventions and meetings National exposure in Bureau publications Sales byORuss Lyon Realty, 9579830.

flaws1 -wi Developed by Rosttand Arizona owner of the Arizona Biltmore Hotel. 1 In the Sun.