Show I STANDARD-EXAMINE- R SUNDAY NOVEMBER 5 1995 BUSINESS EDITOR: 625-12- 44 EE EE K l Y W 3ow Jones industrials Don’t wait on Congress to make capital gains plans By DEBORAH LOHSE VANESSA O'CONNELL and The Wall Street Journal on your marks to position yourself to take of any capital-gain- s tax breaks that come out of the big budget debate now going on in Washington With all the conflicting Your Money signals from Congress and the White House many investors may be understandably puzzled about what they should be doing now After all there’s the House budget and tax-cbill and there’s the Senate version And then there’s PersuraJ financs President Clinton who has vowed to veto the Republican legislation But once the political posturing quiets Investors ut down some significant legislative changes seem likely As Gillian Spooner a partner with KPMG Peat Marwick in Washington puts it the big question will be: “What happens to the tax package when they put Humpty Dumpty back together again?” While clearly nothing is definite veteran Washington watchers do expect to see new laws that could lower the taxes of many investors Foremost among these is likely to be a deduction for half of any capital gains on stocks and most other assets held more than a year Thus someone in the 396 percent income tax bracket would pay just 198 percent on capital gains instead of the current top rate of 28 percent Someone in the 28 percent bracket would pay just 14 percent on gains That’s a nice perk especially for anyone with shares of US stocks or stock mutual funds most of which have had a nice run-u- p over the previous year Even better current proposals would make the tax break retroactive the House version to last Jan 1 and the Senate version to Oct 13 However should lawmakers stretch any post-vet- o haggling well into December it is possible that the effective date will be moved forward to the day when the bill finally " becomes law What should you do while Washington sweats out the details? Here are a few options: Wait until it’s a done deal To play it safe investors should postpone the sale of any highly appreciated assets or investments held for longer than a year until after the bill becomes law If you’re worried about your shares’ price dropping in the meantime think of it this way: Taxpayers in the highest brackets can afford to lose 10 percent of their gain and still be better off waiting until the deduction is a done deal ' likely capital-gai- n Brennan a financial planner G William says in Washington People in lower income-ta- x brackets could afford to lose even more he adds because their new capital-gain- s rates will effectively be even lower “As an accountant who is naturally conservative I don’t think people should count on the deduction being retroactive” says Thomas Ochsenschlager a partner with Grant Thornton LLP in W'ashington Indeed in the case of stocks and stock mutual funds you should probably be prepared to wait even longer Why? Enactment of a capital-gain- s tax cut could trigger sales by many investors and lead to a downturn in the market Eventually though some or all of the damage is likely to be offset as bargain-huntebid prices back up Lock in gains There are strategies to ensure that your gains would qualify for the lower capital-gain- s rate even if Congress doesn’t apply it retroactively The most popular is to “sell short against the box” To do this you arrange through a broker to sell borrowed securities (a short See GAINS on 2F rs 8382 at 482557 ' 'he week's stocks - Pages 4-- 5F BRIEF Cases Record Dow Industrials reach last week all-ti- high 2F Olympic pins Hobby soars as Atlanta Games near Powerful magnetic attraction NATIONAL Law to cut USU Ogden firm making material that lasts longer for specific needs - They hold notes doors dry run computer disk drives and let cars cruise Ones being made in Utah can even save millions of dollars They are magnets Not the mill horseshoe variety But ones with fancy names like permanent rare-eart- h magnets They are part of a growing billion-do- ll ar international industiy And the Ogden company Nova Color Inc and Utah State University are teaming up to nab a share They are making magnets that will last a lifetime Named for the rare-eart- h elements that make up their structure they are smaller and more powerful It means products they go into products like computer disk drives cars’ cruise controls dryers and motors will last longer That saves money “Just about everything you can think of uses magnets some where here or there” said CY Pan director of USU’s new Center of Magnetism in Information T " Technology The center makes the magnets by adding a few things like iron to rare-eart- h elements that look like coffee grinds It then processes it at high temperatures using technology developed at USU and the Chinese Academy of Sciences Because the magnets are made to withstand higher temperatures they will work better in products that generate a lot of heat like motors Pan said The magnets can be molded to any size even smaller than a dime without compromising strength he said “They have 20 times the power of standard magnets their size” A single tiny magnet can lift a wrench off a table for example That means products that utilize them can be made smaller without compromising quality Pan said The problem USU encountered was finding ways to keep the magnets from corroding once inside a product he said There they are exposed to things like oxygen and OGDEN run-of-t- A car dealers' association suggested the law - which aims to curb thefts by drying up the market for stolen units - and a nationwide insurance organization likes the idea But a trade group representing repair shops questions whether it will do much good It would require repair shops to certify on their invoices that any replacement airbag installed was purchased new from an authorized dealer and also to provide that dealer's name and state tax identification number To discourage the practice of repacking an airbag to make it appear as if it is an undeployed unit able to function in an accident the law also would allow insurance companies to confiscate or mark deployed airbags forever” The coating three years in the making should be ready for use by summer Woods said The company has filed for a patent “We’ll share the fruits of our labor" he said of the USU partnership Magnetism already is a bilhon-dollindustry and growing 20 percent a year he said Rare-eart- h magnets are only one of several kinds of ongoing research the magnetism center is doing It’s work pushes the boundaries of what magnetism can do and shows companies like Nova Color that science has real applications Pan said It also provides educational opportunities for scientists in high school and college “That is my motivation” he said It is part of the Utah Centers of Excellence Fiogram which provides funding to help Utah’s research universities commercialize their technology Other work the magnetism center will focus on is magneto-resistiv- e technology It increases the amount of information that can be stored on magnetic strips on banking cards and computer disks It will mean a single computer disk will have the storage capacity of 10000 of today’s disks and fingerprints could be the identity code for bank cards Pan said The magnetic strips also will last longer which will save money For example banks spend millions each year replacing cards he said Pan is working on getting similar partnerships like the one with Nova Color for that project -- ' ar Car payment limit: $328 DETROIT - Ford Motor Co joined the other major automakers in reporting that its US sales declined in October from levels of a year ago Ford's report Friday completed an overall industry picture that showed sales of cars and light trucks down 54 percent for the month The Big Three domestic companies as a group were down 32 percent Japanese and Korean nameplates were off 129 percent from October 1994 The softer market is likely to produce good news for consumers by bringing pressure on the companies to lay on new rebates and lease deals Chrysler Corp announced a new incentive program for most of its 1996 cars on Thursday promising rebates ranging from $500 for Dodge and Plymouth Neon to $2500 on Chrysler LHS Analysts who track the industry expect the other manufacturers to follow suit Consumer surveys suggest that the “price threshold" the point at which the average car shopper decides not to become a car buyer has dropped $4 in the past year to $328 a month leader ‘organizing’ growth O Sweeney wants to reverse weakening power of unions By FRANK SWOBODA The Washington Post WASHINGTON - In his speech accepting the AFDCIO presidency last week John Sweeney had a blunt message for the nation’s employers: Organized labor is now prepared to do whatever it takes to win new members mass demonstrations “We will use as well as sophisticated corporate campaigns to make worker rights the civil rights issue of the 1990s” conSweeney told cheering delegates at the AFL-CIvention in New York City “We’re going to do whatever it takes work as hard as it takes and stick with it as long as it takes to help American workers win the right to speak for themselves in strong unions” Tough talk from a labor movement that has seen its membership dwindle and its political power in Washington erode under the first Republican Conin 1955 It gress since the founding of the AFL-CIwas the rhetoric of a new leadership frustrated by the O O MANY ISSUES: Question and answers from new 2F union leader fearful and of its becoming predecessors impotence of irrelevant To underscore his point Sweeney concluded the convention by leading a march from the convention hotel to New York City’s garment district to protest what unions see as a resurgence of sweatshop labor Standing in front of an Eighth Avenue building that houses several small garment shops Sweeney railed against sweatshops and employers who exploit low-waworkers The question now - expressed in the language of the younger generation Sweeney hopes to attract is whether labor having “talked the talk” can now “walk the walk” The first real test will come next summer when Sweeney and his supporters have called for a “Union Summer” of corporate and political organizing The AFL-CIplans to send 1000 organizers into selected communities next summer to help unions organize new workplaces and mount political campaigns for labor’s friends and against its enemies This “Union Summer” will be the first major public test of Motivated Morton leader: a look at Morton International’s new office building at the comer Street and Pennsylvania Avenue It's empty No one knows when - or will use it It’s a monument to the old way of business at Morton Automotive Safety Products Just a few years ago Morton was a specialty manufacturer of airbag components It demanded and received high prices from automakers Morton’s biggest problem was figuring out how to grow fast enough Those days are gone and airbag making is business now a cutthroat commodity-lik- e Automakers demand lower and lower prices improved product performance impecable e delivery A missed quajky and ge - O Re-engineer- ing Take on-tim- ALBANY NY- - What apparently would be the nation's first law aimed at reducing automobile airbag thefts will be introduced in the New York state Senate and Assembly in a couple of weeks al he New AFL-CI- airbag thefts moisture which reduces their lifespan Enter Nova Color The company manufactures aluminum products It permanently embeds color into metal using an electro-chemicprocess It also has developed technology to make the aluminum withstand corrosion and last longer It used similar technology to develop a coating for the rare-eart- h magnets so they can withstand corrosion Nova Color Chairman Jack Woods and Pan said the coated magnets will last “virtually By LORI BONA HUNT Standard-Examinstaff shipment of airbags can shut down a car assembly line Fred Musone has headed Morton's airbag business since the first of the year Musone loves the challenges - and he loves motivating people at Morton to meet them At a breakfast and tour for business leaders Friday Musone boasted that Motion 6F the new leadership Sweeney ran on a platform calling for the AFL-CIto spend at least a third of its $60 million annual budget on organizing When seed money from the federation is combined with the money already being spent by individual unions on organizing the total could reach $250 million a year according to some union leaders Sweeney also has called for “a special Southern organizing program” to help reverse the decline in union membership O The organizing effort comes at a time when millions of workers have lost their jobs to downsizing and technological change It also offers labor a chance to gain new members among the disaffected in society who normally wouldn’t consider joining a union But many in labor even some among Sweeney’s supporters worry that the fiery rhetoric from the past will continue to turn these people off The obstacles to winning new members are evident in a large nationwide survey of employees both n conducted last year for a special union and White House commission on labor law reform While a majority of the employees surveyed said they would like some form of independent representation in the d said they wanted a union workplace only See SWEENEY on 2F non-unio- one-thir- Circuit City bias lawsuit We’re going to do whatever it takes work as hard as it takes and stick with it as long as it takes to help American workers win the right to speak for themselves in strong unions’ John Sweoney necessary to stay ahead of competitors will continue to grow in Utah and will maintain or expand its market-leadin- g position in the industry Musone is happy to challenge critics who feel Morton is vulnerable to the better technology of smaller companies like OEA “This is a $15 billion business on its way to $2 billion” Musone said “We will not give our customers up” Musone this year has shaken up Morton which has five plants in Weber and Box Elder counties and is the state's largest manufacturing employer with some 5000 employees Musone insists he is not a cost-cuttInstead he's reengineered the company to be more efficient - the result were layoffs of some administrate people er and the choice to mothball the new building financial results are The short-terairbag sales were up impressive Third-quart19 percent from a year ago to $303 million and its profit of $509 million was up 22 percent In the long run Musone pledges Morton is now better prepared to compete in its standard infiator and module businesses as well as in the new market for bags that Musone says has exploded in just the past six weeks There are also good opportunities in integrated steering wheel airbag manufacturing new airbags and systems for cars and other forms of transportation m er side-impa- knee-protecti- ct WASHINGTON - Circuit City Stores Inc plans to fight two lawsuits alleging intentional discrimination policies that keep black employees out of management jobs and requires store managers to “watch the mix" of blacks and whites hired The national electronics and appliance retailer released a statement last week in response to the two lawsuits filed Tuesday in the US District Court in suburban Greenbelt Md by the Washington Lawyers' Committee for Civil Rights and Urban Affairs The suits allege that current and former black employees of the Richmond company were deliberately passed over for promotions They also contend that store managers were told to “watch the mix" of employees and make sure there were no more blacks working in the stores than the number of black patrons who shop there said Joseph Sellers director of employment litigation for the committee The company denied the allegations saying in a written statement that "it is Circuit City's policy to base all hiring trans' and promotion decisions on Va-bas- ability and performance" - Standard-Examine- r St f and wire servic ' |