ONES TO WATCH IN ’95 : <i> From Tinseltown to Tokyo, The Times’ Business News staff has found the people, companies and trends that will help shape the world of business and economics in the year ahead. : </i>
LAND HO!
Isaac Tigrett, co-founder of the Hard Rock Cafe and developer of the House of Blues, has his eye on future upscale blues joints around the country and as far afield as Paris. He is also reputed to be entertaining plans for themed entertainment real estate projects--similar to CityWalk in Universal City--in Las Vegas and elsewhere. . . . Koll Real Estate Group is pressing ahead with plans for a 3,300-home development in the environmentally sensitive Bolsa Chica wetlands. Expect opposition from environmental and Native American groups. . . . Merv Griffin, the one-man entertainment conglomerate, recently got the go-ahead to subdivide a 157-acre mountaintop above Benedict Canyon into six enormous home sites. . . . Raffi Cohen, the flamboyant developer, has yet to pull a rabbit out of his hat in the 20-year struggle to develop a prime piece of public land in Downtown Los Angeles, across from City Hall. If Cohen can’t get the project back on track, he’ll lose his development rights.
KEEP ON TRUCKIN’
A milestone in the race to build an advanced transportation industry in California will be reached this spring when Special Vehicle Manufacturing Corp. in Downey rolls out the first composite-material electric school bus, the biggest innovation in 40 years in this transportation niche. The low-cost composite techniques, similar to those used in advanced aircraft and race cars, could help California compete with Georgia, king of the steel school bus chassis. A Blue-Bird electric bus prototype passed Antelope Valley testing with flying colors. . . . Truck sales will continue at a record pace as Americans trade in passenger cars for pickups, minivans and sport utility vehicles. Chrysler will update its industry-leading minivan, and Honda has jumped in--belatedly--with the Odyssey, a four-door, Accord-based minivan. . . . Even with U.S. auto sales booming, General Motors is finding it tough to make money at home. Still, CEO John Smith says GM’s turnaround is on track and promises that results will show up on the bottom line in 1995. Labor relations are likely to be come more strident as the United Auto Workers union crowns tough-talking Steve Yokich as its new president. GM is most vulnerable. A major priority for Yokich is settling a bitter 3-year-old dispute at Caterpillar.
BANK ON IT
The North American Development Bank will open its doors in San Antonio next month. Set up under the North American Free Trade Agreement, the NADBank has $750 million available to finance environmental improvements along the 2,000-mile U.S.-Mexico border. Among those expected to apply for loans are Imperial Valley officials looking to treat sewage from the New River, which is polluted on the Mexicali side of the border but empties into the Salton Sea on the U.S. side. The deputy manager is Victor Miramontes, formerly a vice president with Wells Fargo Bank in San Antonio. . . . Paul Hazen, who takes over from Carl E. Reichardt as Wells Fargo chairman, displayed steel and savvy in negotiating Wells’ 1986 takeover of Crocker National Bank and slashing 5,000 employees in the process. He has been quiet about plans for the state’s third-largest banking company.
HOLLYWOOD DREAMIN’
Look for some high-profile hirings and announcements from Jeffrey Katzenberg, David Geffen and Steven Spielberg as the King’s Ransom Trio tries to overcome Hollywood skepticism about plans to open a new studio. The entertainment titans have dubbed themselves the Dream Team but the proposed studio has yet to be blessed with a moniker. . . . Viacom needs more than “Forrest Gump” to make its $10-billion Paramount acquisition pay off. It will be up to Viacom Entertainment unit Chairman Jonathan Dolgen to contain costs and generate entertainment profits. . . . Sony must prove that it can recover from a miserable year in Hollywood. A lot of eyes will be on former CBS Entertainment chief Jeff Sagansky in his still vague but growing role at Sony. . . . Walt Disney Co. must continue to turn around its theme park business, though company profit will soar regardless after “The Lion King” comes out on videocassette in the spring. . . . Metro-Goldwyn-Mayer’s current regime, led by Frank Mancuso, will finally release a full slate of its own films, giving it a chance to prove it can rebuild the venerable studio.
SHOP TILL THEY DROP
Inveterate shoppers eagerly await the arrival of nirvana--a.k.a. Bloomingdale’s--on the California scene. Federated Department Stores Chairman Allen Questrom and his troops will presumably be choosing two Southland sites for East Coast mainstay Bloomie’s by spring, with openings likely before year-end. . . . Questrom will also put his imprint on Bullock’s and other stores of R.H. Macy & Co., which merged with Federated in late December after a painful period in bankruptcy. It’s a homecoming of sorts for Questrom, who headed Bullock’s in its heyday. . . . Meanwhile, David Dworkin, Broadway Stores’ chief exec, will be aiming to gather sales momentum at the chain, also getting back on its feet after an episode in Bankruptcy Court. With store renovations complete, the retailer will push its Taste of California housewares line and introduce new casual clothing lines. . . . Yucaipa Cos. Chairman Ron Burkle rocked the Southern California supermarket industry with a deal to merge his Food 4 Less chain with 121-year-old Ralphs Grocery. Now comes the hard part: He must negotiate the regulatory process and consolidate operations. Good news for shoppers: Burkle promises to escalate the grocery price war. . . . Down the aisle, look for giant Tri-Valley Growers, a fruit and vegetable processing cooperative based in San Francisco, to be bought or merged with another company. Over-leveraged and undercapitalized, the co-op faces stiff competition in the tough new world of global agriculture. Shoppers know one of its best-known subsidiaries, S&W; Fine Foods.
CRUISING THE INFOBAHN
Early next year, Congress will take another stab at opening up the burgeoning telecommunications industry to more competition, and two new faces will guide the effort: Sen. Larry Pressler (R-S.D.) and Rep. Thomas J. Bliley Jr. (R-Va.). Billions of dollars and potentially 1 million jobs will ride on their reform effort. . . . In California, the scramble is on as MCI, AT&T; and others try to win local long-distance customers from Pacific Bell and GTE, with competition opening up in that market on New Year’s Day. The California Public Utilities Commission has vowed to end monopolies in all phone markets by 1997. . . . Cellular phone magnate Craig McCaw is on the prowl for licenses to offer personal communications services, the new generation of wireless technology. A federal auction of 99 broad-band PCS licenses is expected to generate more than $4 billion. . . . The launching of the new United Paramount and WB networks will test whether viewers really want a fifth and a sixth network, let alone 500 channels.
IN THE CHIPS
Keep an eye on Lawrence Ellison of Oracle, a database company that wants to be a key cog in the info revolution by making possible such applications as video on demand. Also John Moussouris, who promises that his MicroUnity Systems Engineering will ship super-fast chips that can perform multimedia tasks that now require several microprocessors. . . . No matter how late its arrival, Microsoft Corp.’s Windows 95 operating system is likely to make the personal computer trade’s biggest splash next year. The real war for the hearts of computer users is fought at the operating system level, and the battle comes down to these questions: Who is the best marketer and who has the biggest installed base? Windows 95 beats offerings from Apple Computer and IBM by default, despite their superior ease of use. . . . Microsoft CEO Bill Gates will be the hot individual to watch; besides Windows 95, he’s rolling out Microsoft Network, the company’s entry in the sizzling on-line arena. A potential stumbling block: Will the Justice Department clear Microsoft’s pending merger with Intuit, the king in personal-finance software, or bow to concerns of bankers and other financial service companies? . . . Apple is likely to license its Macintosh operating system to Motorola, a partner in the company’s PowerPC venture. If Motorola starts making Power Macintosh clones the platform will get a needed boost, but 1995 is also expected to be the year Intel’s Pentium microprocessor outsells the popular 486 chip--especially since Intel promised to replace flawed chips.
INFORMATION, PLEASE
Electronic commerce could come of age as security and convenience improve. Helping to foment change will be Netscape Communications of Mountain View, Calif., which is licensing navigation software that makes the Internet comprehensible to average mortals. . . . The integration of PCs and TVs will continue apace with cable modems that transfer data as much as 1,000 times faster than conventional modems. Interactive television trials will proceed in markets from Castro Valley, Calif., to Orlando, Fla. . . . Can agent Michael Ovitz drum up business for the Baby Bells with which he is allied? Stay tuned. . . . Multimedia will reach critical mass as the number of U.S. homes with computer systems that play shiny CD-ROMs more than doubles, to 10 million. . . . Video games will increasingly go on line. But Sega Enterprises, Sony Computer Entertainment and NEC Home Electronics, all based in Japan, are among the game makers hoping to escape a sluggish market for their machines with new high-powered, 32-bit devices. In the wings is a 64-bit system that Nintendo hopes to release next fall. . . . Little Grafix Zone in Irvine opened the recording industry’s eyes and ears to interactivity this year with a CD-ROM based on the work of Prince; coming soon is a multimedia Bob Dylan in “Highway 61 Interactive.” The times, they are a-changin’.
HOW ARE WE DOING?
Orange County’s bankruptcy casts a wide shadow over California, but its effects on the state economy will be subtle and modestly negative at worst. The crisis will clip a percentage point--about $800 million--off the county’s economic growth. Freeway renovations won’t advance and an $82-million police information network will stay on ice. . . . With small companies as the workhorses pulling California out of the ditch, the state’s recovery is likely to pick up steam even as the nationwide upturn begins to show signs of fatigue. The number of payroll jobs should register somewhat healthier gains than the paltry increase of 6,000 over the last 12 months, despite continued problems in aerospace and the planned closures of military bases. California consumers won’t spend with the gleeful abandon of pre-recession times, but the forecast is for a continued upswing as incomes revive and job growth holds up. . . . Look for a high-profile role for real estate expert Dan Garcia, Warner Bros. executive and head of the Community Redevelopment Agency, as Los Angeles Mayor Richard Riordan pushes City Hall streamlining and economic development. Plans include reforming the permit process and folding the CRA into a super-agency for economic development. . . . The bipartisan federal commission that has already closed 22 of California’s 66 military installations is going to take another whack at the state’s remaining bases in March. Additional cuts could be deep. In San Diego County alone, local officials are fearful that the Marine Corps Recruit Depot, the North Island Naval Air Station and one or more of the four U.S. Navy research laboratories could be axed.
ON THE (REGULATORY) WATERFRONT
The PUC will settle on a precedent-setting plan for a deregulated electric utility industry, with final adoption expected in September. The state’s investor-owned utilities will face tough competition from independent power producers and rival utilities. Utility stocks are unlikely to appeal to widows and orphans any time soon. . . . With Republican Charles Quackenbush replacing John Garamendi as insurance commissioner, the industry is expecting much more sympathetic treatment in Sacramento. But Quackenbush has vowed to deliver all remaining rebates owed to policyholders under Proposition 103, the 1988 rate-cutting initiative. . . . Joseph A. Dear, head of the U.S. Occupational Safety and Health Administration, will be on the hot seat. A preliminary proposal designed to protect workers from carpal tunnel syndrome and other repetitive stress injuries is due out, and both labor and management groups are ready to pounce on anything they don’t like about it. . . . As the fastest-growing sector of the environmental services industry, pollution prevention will be the buzzword for companies trying to comply with the law and also reduce overhead costs. Revamping manufacturing processes to make them cleaner is often cheaper than installing scrubbers and other machinery at the other end of the pipe. Big winners already in Southern California: Arco, Anheuser-Busch and Northrop. . . . California workers’ compensation insurance rates will be deregulated in ’95. When employers renew their policies, they’ll find there is no longer a state-mandated minimum charge for their coverage. Critics say that some small firms will find themselves paying more.
AND WATCH FOR...
Gary Groves, a former emergency room physician, has been at the forefront of change in California’s rapidly evolving health care industry. In 1981, he founded one of the nation’s first publicly held companies that manage group medical practices, Pacific Physician Services. The Redlands company has grown quickly and now provides medical services for more than 280,000 people, mostly in California. Aiming to put a tighter rein on costs, Pacific Physicians recently acquired a hospital in Montclair, where it can funnel patients and keep closer tabs on expenses. And Groves has snatched up medical practices in Nevada and North Carolina, two states with paltry HMO enrollment. . . . In Los Angeles, the pulse of the advertising business is measured with a speedometer. The new Venice agency Houston Effler Helm Stingley says its first order of business is to land an automotive account. Co-founder John Stingley handled creative work on the Infiniti at Chiat/Day.
Contributing to this story were Times staff writers James Bates, Nancy Rivera Brooks, James Flanigan, Denise Gellene, Amy Harmon, Patrick Lee, Thomas Mulligan, David R. Olmos, Michael Parrish, Jonathan Peterson, Stuart Silverstein and George White in Los Angeles; Chris Kraul in San Diego; Leslie Helm in Seattle; David Holley in Tokyo; Juanita Darling in Mexico City; Donald Nauss in Detroit; and Jube Shiver Jr. in Washington.
