1991 : PEOPLE TO WATCH : For Some, the New Year Will Be a Time of Testing and Challenge
Nineteen ninety-one can be counted on to be a tough year during which the people in the spotlight largely will be the people on the spot--those out fighting the economic battles in a downturn.
Some of the following bear watching for signs of success and others for fears of failure. Which farmland cliche will apply? Will they be part of the cream that rises to the top? Or the chaff that is separated from the wheat?
ROBERT C. STEMPEL
In the five months Stempel has been chairman of General Motors, the world’s largest company, it has reported a $2-billion third-quarter loss and cut production by nearly 20%. But this seemingly inauspicious start belies what analysts say may be the beginning of a bold plan for GM to regain the ground it lost during the 1980s, bearing a mark that can only be traced to the company’s new chief executive.
A mechanical engineer by training, Stempel, 57, has earned the support of those who believe a “car guy” in the top office will serve the company better than the financiers who occupied the driver’s seat during the last three decades.
To meet his goals--increased market share, bigger profits and 100% capacity by 1996--Stempel will have to combat a slow economy and the Japanese auto makers’ relentless push to get a larger share of the American new-vehicles market.
ALAN GREENSPAN
Some have criticized the 64-year-old economist for being too cautious a Federal Reserve Board chairman, although Greenspan’s supporters have praised him as a prudent man with a deliberate style who doesn’t act until he is certain.
Greenspan presents a sharp contrast to his cigar-chomping predecessor, Paul A. Volcker, who handled the last recession with a kind of drama that Greenspan seems uninterested in creating. Instead, Greenspan-watchers view him as the ultimate technician who delights in crunching numbers.
But so much for appearances. The fate of the economy in 1991 rests to a significant degree with Fed’s influence on interest rates. Greenspan faces a daunting test of brinkmanship--How to revive a flagging economy without refueling inflation.
JOHN E. BRYSON
Bryson--who took the helm at Southern California Edison Co. and its parent, SCE Corp., last October--will oversee the final disposition of the proposed $2.5-billion merger with San Diego Gas & Electric Co. The controversial deal, engineered by Howard P. Allen, his retired predecessor, would create the nation’s largest electrical utility in terms of operating revenue. The California Public Utilities Commission will soon decide whether to approve the merger.
Meanwhile, Bryson, 47, must run Edison, one of Southern California’s largest polluters, under strict new local clean-air guidelines--guidelines that the company under Allen had strenuously opposed before agreeing to a compromise.
AKIO TANII
Tanii, president of Matsushita Electric Industrial Co., faces an unenviable balancing act: He has to prove to Hollywood that he won’t unduly interfere with his newly acquired MCA Inc. while proving to Japan that he isn’t throwing away corporate money on an unsupervised investment in the movies.
The 62-year-old electronics executive is apparently already dealing with his first film flop. “Havana,” which cost MCA’s Universal Pictures at least $60 million to make and market, opened to a disastrous $2.3 million at the U.S. box-office in its first weekend last month. That signals a write-off, right off the bat, and may underscore questions in Japan about Matsushita’s wisdom in entering the film business.
CARLA A. HILLS
The effort to hammer out a new international trade agreement will begin again early this year, and U.S. Trade Representative Hills will be out in front again, pushing for U.S. interests. The last round of talks collapsed in December over disagreements on agricultural policy, among other issues.
But then again, the 56-year-old attorney may not get the opportunity to jump back into the wrestling match that is the GATT (General Agreement on Tariffs and Trade) talks. Hills, former head of the Department of Housing and Urban Development under President Gerald R. Ford, has been mentioned as a likely candidate to fill the Senate seat of Gov.-elect Pete Wilson.
PHILIP M. HAWLEY
Hawley, chairman and chief executive of Los Angeles-based Carter Hawley Hale Stores, weathered a tough 1990 and began the new year having whittled down some of his company’s debts. But a slumping economy will put to the test Hawley’s ability to keep the cash coming.
Carter Hawley Hale sold its Southeastern department store chain, Thalhimers, for $317 million in December to May Department Stores. Even though that cash helps, Carter Hawley, parent of the Broadway-Southern California department stores, still has $1.3 billion in debt, leading some analysts to predict that it eventually will sell at least one of its Northern California chains.
Hawley, lean and athletic at 65, says he hopes to step down as chief executive in 1994 leaving the company “well-positioned.” With the retailing industry in a slump, though, 1991 figures to be a tough year to make big gains.
JOHN F. McDONNELL
Embattled McDonnell Douglas is the nation’s largest defense contractor but is, by many estimates, the financially weakest company in a troubled industry. What’s more, the 52-year-old chief executive of the company that bears his name is facing potential overruns on two military aircraft programs that could exceed $1 billion.
CARL E. REICHARDT
In 1990, the Wells Fargo & Co. chairman confounded many naysayers, who have long predicted troubles because of the bank’s high concentrations of real estate and corporate buyout loans. Instead, the San Francisco bank continued posting strong profits. But with California’s economy softening, the 59-year-old Reichardt faces an especially difficult challenge in 1991.
PETER GUBER / JON PETERS
Jon Peters and Peter Guber, who were named co-chairmen of Columbia Pictures Entertainment Co. when Sony Corp. purchased the studio for $3.4 billion, spent much of 1990 putting their executive team in place. Now they have to prove their worth.
Columbia Pictures was all but moribund when Sony brought in the high-priced duo, but it has stepped up production and committed enormous sums of money to secure the rights to such film projects as “Radio Flyer.” The volcanic Peters, 45, and the cerebral Guber, 51, were best known as the creative team behind “Batman” when Sony hired them.
FERNANDO OAXACA
The last year has been hard on advertising and public relations companies as the slowing economy has forced corporations to cut back spending in those areas.
Even so, Oaxaca’s Los Angeles-based Coronado Communications, one of the nation’s largest Latino-owned media firms, is continuing to forgo the relatively easy beer and tobacco money and is focusing on public service marketing and public relations campaigns primarily aimed at a Latino audience. Oaxaca, who gives his age as “60-plus,” recently landed some big accounts, including part of the campaign to promote the city of Los Angeles’ expanded curbside recycling program.
HOLLIS L. HARRIS / MARTIN R. SHUGRUE
Harris and Shugrue have been charged with picking up the pieces of the shattered airline empire of Frank Lorenzo.
Harris, chief executive of Continental Airlines, has to steer the battered carrier on its second trip through Chapter 11 bankruptcy proceedings. Harris, 59, left a cushy berth at high-flying Delta to take the job.
Shugrue, the 50-year-old trustee of Eastern Airlines, recently managed to persuade that carrier’s bankruptcy judge to free additional cash to keep the airline operating. But if Eastern doesn’t start generating the cash it needs to operate in the first quarter, as Shugrue expects, the judge will have to make a decision about Eastern’s future.
ROBERT E. ALLEN The goal of American Telephone & Telegraph’s chairman for the 1990s is succeeding at what no other American technology company has been able to: creating a company that successfully blends computer and telecommunication technologies. The goal, says Allen, is to get in early on the long-predicted and much-awaited merger of the two technologies, and to become a powerhouse in the new industry before Japanese competitors dominate it.
After years of expensive, but largely unrewarding, attempts to grow a strong computer operation from within, Allen, 55, launched the company’s first hostile takeover with a $6.1-billion offer for NCR Corp., the nation’s fifth-largest computer manufacturer. Allen, who has spent his entire 30-plus-year career at AT&T;, also faces stiff competition in the domestic long-distance business as rivals MCI Corp. and U.S. Sprint continue to nibble at its huge market share.
KATHY TAGGARES
Taggares, 38, is one of those aggressive entrepreneurs who kept California’s economy humming during the 1980s. Now she faces the daunting challenge of continuing to expand her empire in hard times.
Taggares is building a thriving food conglomerate in Glendale-based K. T.’s Kitchens. She started 3 1/2 years ago by buying the Bob’s Big Boy salad dressing factory from Marriott Corp.
Next, she bought a pizza crust company and moved heavily into pizza production. She now manufactures frozen pizza for Wolfgang Puck, as well as private-label brands. Taggares employs about 130 people and expects 1990 sales of $20 million.
But she has her work cut out for her in 1991, in a business highly vulnerable to the vagaries of an economic downturn.
