In Business This Week: HEADLINER: JACK SMITH
HANDS ACROSS THE BORDER
A day after reporting huge third-quarter earnings, General Motors Chairman John Smith personally intervened to resolve the biggest threat to GM's fourth quarter: the two-week-old strike by Canadian workers. In an Oct. 16 Toronto meeting with Canadian Auto Workers President Basil "Buzz" Hargrove, both men seem to have given ground to produce what Hargrove calls a "framework" for a settlement. Serious bargaining is set to resume on Oct. 18, in hopes of reaching a deal by Oct. 21.
The strike was sparked by GM's refusal to accept outsourcing restrictions contained in the CAW's agreement with Chrysler Canada. GM now appears willing to accept this pattern, but only at Canadian assembly plants. In return, says Hargrove, Smith told him the CAW has to "find a way to recognize GM's legitimate" competitiveness problems at its component plants. Smith indicated that he was "prepared to continue the strike" if they could not hammer out an acceptable deal, Hargrove says. But Hargrove feels confident "we've broken the logjam."EDITED BY KEITH H. HAMMONDSReturn to top
AIR FRANCE MAKES AMERICAN FRIENDS
IT WAS LATE TO THE PARTY, but ailing Air France finally has clinched tentative deals with Continental Airlines and Delta Air Lines to create global airline alliances. If finalized, the agreements would allow the carriers to coordinate schedules and marketing efforts. Continental and Delta say they also want to "codeshare" with Air France, a practice that allows airlines to link flights in reservations systems. But such ties would need government approval--and that could be slow in coming, since the U.S. and France have no bilateral aviation agreement. Continental CEO Gordon Bethune says he has no intention of asking for antitrust immunity, as American Airlines and British Airways are seeking in their alliance.EDITED BY KEITH H. HAMMONDSReturn to top
A WILD WEST UTILITIES SHOOT-OUT?
IN 1988, SCECORP TRIED TO quash a merger between San Diego Gas & Electric and Tucson Electric by making a hostile run for the San Diego utility--only to be warned off by regulators. On Oct. 15, San Diego G&E, since renamed Enova, agreed to a $2.8 billion stock-swap merger with natural-gas distributor Pacific Enterprises. The deal would create a utility with 5.9 million customers, more than SCE, parent of Los Angeles-based Southern California Edison. Will SCE try a new bid? No way, it says. Instead, Edison says it has cut rates and can better compete in the soon deregulated market.EDITED BY KEITH H. HAMMONDSReturn to top
SEARLE MAY GET A SHOT IN THE ARM
DRUGMAKER SEARLE, LONG considered comatose on Wall Street, is showing signs of life. Monsanto's pharmaceutical unit said on Oct. 15 that celecoxib, its new arthritis drug, had reduced pain and swelling without ulcer side effects in initial human tests. The results could save Searle, for months rumored to be on Monsanto CEO Robert Shapiro's selling block. Celecoxib, tested in 623 arthritis patients, could inspire a new class of drugs that analysts estimate would be worth billions of dollars.EDITED BY KEITH H. HAMMONDSReturn to top