LOCK'EM OUT--BUT NOT AT EVERY GATE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP96R01136R002605320042-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: August 26, 2010
• Sequence Number: 42
• Publication Date: June 14, 1980
• Content Type: OPEN SOURCE

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WORLD BUSINESS
biggest American companies with a very
fast, glossy, satellite-based service which
will handle voice and data traffic as well
as fascimile and full-colour teleconferenc-
ing. SBS's headaches are, first, too few
customers (about nine so far) for a ser-
vice with a subscription of $108,000 per
month. Second, technical problems with
the space shuttle, which was meant to
launch the satellites.
SBS is working hard to tackle these
problems. One reason for the high cost of
the service is that each user would have a
satellite communications dish costing
around $250,000. Cheaper alternatives
are now being considered-eg, micro-
wave links to shared satellite earth sta-
tions. A joint venture between Aetna and
Macom-the microwave specialist that
acted as consultant to Xerox on X-ten-is
believed to be exploring this.
SBS intends to keep its original satel-
lite launch programme despite the prob-
lems with the space. shuttle. It will use
rockets instead to launch its first satellite
this autumn, and another next spring.
Then SBS will have to get to grips with its
marketing problems. The company feels
it will reach breakeven in 1983 on sales of
$150m-200m.
SBS this week announced plans to use
its satellites and a network of 20 satellite
earth stations to start a nationwide, cut-
rate telephone service aimed at both
large and small users, in 1982. The new
telephone service will undercut AT&T by
10-30% on direct-dialled long-distance
calls.
West Germany
Lock'em out-but
not at every gate
limited to not more than 25% of the
union membership in a wage negotiating
area, the lock-out should involve only a
similar proportion of workers.
These are not simply theoretical con-
siderations. Lock-outs are common in
West Germany's less-than-common in-
dustrial confrontations. In the big dis-
putes of 1963, 1971, 1976 and 1978, more
workers were locked out than were on
strike. In 1978 the printing union, IG
Druck, called out 2,200 workers in five
newspaper plants after talks ?had broken
down over the introduction of new tech-
nology. The employers' response was to
lock out 32,000 workers in 500 firms
throughout the country. Under the
court's new ruling, that was certainly
overdoing it.
IG Druck, brought to the verge of
financial ruin by the lock-out, teamed up
with the engineering union, IG Metall, to
attempt to get the court to abolish the
lock-out once and for all. 10 Metall
complained that a strike of 85,000 of its
members in south-west Germany in 1978
was answered by a lock-out of 145,000
workers. Its case was rejected-so em-
ployers now know how far they can go.
Russian sanctions
Bite worse than
the bark
Western sanctions could bite harder on
Russia than on Iran because America
depends less on its allies to make them
bite. Other countries-with big excep-
tions like Argentina-have promised not
to sell Russia goods American companies
have been forbidden to export. That is
not worth much; big new credit lines for
the Soviet Union are being arranged in
Europe. But the United States is squeez-
ing where the Soviet economy is weakest:
high technology and food. So sanctions
may eventually sting Russia's hard-
pressed planners a lot more than now
Before trade restrictions were an-
nounced by President Carter in January,
the American commerce department ex-
pected American exports to Russia in
1980 to reach $4.8 billion, $3.9 billion of
that in agricultural exports. That forecast
has been cut to only $1.5 billion, includ-
ing $1.1 billion-worth of agricultural pro-
ducts. Exports of high-technology goods,
originally estimated at $200m, are expect-
ed to fall to $50m.
The biggest contract to get the chop
was Occidental's $20 billion agreement to
supply fertiliser in exchange for Russian
ammonia (but the Russians will keep
their side of the bargain). Other losers
are Armco, which had a $100m deal for
an electric steel mill near Moscow. Nip-
pon Steel missed business' worth $250m
on that contract. Alcoa was negotiating
to sell technology for an aluminium
smelter in Siberia, worth $100m, and now
frozen. IBM and Control Data have lost a
number of contracts, including one to
supply spare computer parts for the
Kama River truck plant, where Ingersoll
Rand also lost a $9m order for an assem-
bly line. NBC is the biggest casualty of
the Olympic boycott. It had expected to
earn $165m from televising the games,
after paying $87m for (and insuring) the
television rights. IBM had already sup-
plied computers for the Olympics, but the
supply of software is blocked.
America has been selective in its ban
on energy-related exports, halting trade
only where American technology is very
difficult to replace: drill bits, submersible
pumps, pipeline compressors, and seis-
mic data processing. Dresser Industries
has been refused permission to supply oil
equipment (mainly high-speed drill bits)
worth $144m. Armco, however, got an
export licence to supply a jack-up drilling
rig worth $5m to Japan's Mitsui Modec
for oil exploration off the Russian island
of Sakhalin. McDermott and Brown and
Root were allowed to compete for a
$118m oil rig construction deal, but it was
won by a French consortium.
BONN
The West German trade unions' struggle
to deprive employers of their most potent
weapon-the lock-out-lost another le-
gal battle this week, but the unions came
away with a few of the spoils. The federal
labour court in Kassel ruled on Tuesday
that employers may in principle impose a
lock-out to counter a strike-a confirma-
tion of two previous decisions in. 1955 and
1971. But this time the court has felt it
necessary to make the weapon a bit less
potent.
A lock-out may not be imposed before
a strike actually takes place, nor must it
be directed solely against trade union
members. It must be confined to the
wage negotiating area in which the dis-
pute arises. And the extent of the lock-
out must bear a reasonable relationship
to the extent of the strike. The court
ruled, for instance, that if a strike is
Keeping Russia's oil hopes out of the graveyard
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The electronic office is
temporarily on hold
The office of the future is having to tackle
a few all-too-common problems of the
present: delayed technology, managerial
over-optimism, regulatory undergrowth.
The problems of America's planned "of-
fice telecommunications networks" are
the latest example. The systems will
eventually permit high-speed communi-
cation between different types of widely-
dispersed equipment (eg, facsimile mach-
ines, copiers and word processors), all
talking a Babel of different electronic
languages. Some of the networks are
intended to transmit speech and pictures
(both stills and video) as well.
Three rival services. claimed, until late
1979, that they would all be working by
1981, before most people had even heard
of them. Would-be transcontinental
doodlers should not cash in their postage
stamps: it is now clear that the most
important networks will not only miss
their start-up deadlines, but also differ
greatly from their original blueprints.
Most problem-struck is AT&T's Ad-
vanced Communications Service
(ACS)-the service originally aimed at
the broadest possible range of users,
small companies as well as large. By
introducing minicomputers at the connec-
tion points of its existing digital, inter-city
networks, AT&T hoped to allow 450
different types of terminals to communi-
cate with one another. Late last year, it
admitted that ACS had run into severe
software problems. The programmes to
make the necessary speed and code con-
versions had proved more complex then
postponed indefinitely-until AT&T gets
its software sorted out.
Early this year came a new uncertainty.
Because a 1956 justice department con-
unregulated markets such as data pro-
cessing, the telephone company used the
data processing and telecommunications
to make ACS look as much like commu-
nications and as little like data-handling
as possible. Even so, the decree has
hampered Ma Bell's ability to exploit the
full range of commercial opportunities.
All this appeared to change in April,
when the Federal Communications Com-
mission (FCC) issued a ruling that
seemed to let AT&T off the hook. If the
FCC ruling stood up in the courts, AT&T
would be free to restructure ACS and use
it to get into the most lucrative data
processing businesses, eg, home or office
viewdata information retrieval systems,
econometric modelling, etc. Unfortu-
nately, in the absence of legislation by
congress, the legality of the FCC's ruling
is open to question.
AT&T would like to redesign ACS. to
take advantage of new opportunities in
data processing, but it is not sure that it
can. If the necessary legislation is passed,
AT&T may be allowed to get into data
processing-but perhaps on condition
that it does not actually indulge in it for a
number of years. Anyway, it will still
have to solve its software problems, how-
ever long that takes. And perhaps tech-
nological change since AT&T's original
application may lead it to redesign the
now believe it could be 1984 before
AT&T is able to offer ACS to the wide
although a very specialised service de-
signed for a limited number of large users
could be offered in two years' time.
Almost equally uncertain is the future
of Xerox's X-ten, a nationwide message
system based on satellite and microwave
links (the latter on the ground)-which
was also intended to permit teleconfer-
encing, document processing and distri-
bution. Xerox saw this network as a key
element in its attempt to dominate office-
of-the-future technology. But, as a docu-
ment recently circulated inside the com-
pany puts it:
The technical and related economic prob-
lems now look much more difficult than we
be go or no, go or black or white. We may
decide to go ahead with the original con-
cept, or modify it, or get into a network of a
different sort.
Many other companies' experts thought
from the start that the X-ten scheme
might prove too ambitious for Xerox.
After acquiring Western Union Interna-
tional a few months ago, Xerox handed
the project over to its new subsidiary.
The project was shifted from California
so unpopular with the 120-man develop-
ment team that most of it resigned.
In despair, Xerox is now plugging Eth-
ernet-a local communications system
vidual buildings. Ethernet systems might
later be connected to each other by a
ate over cable television systems in cities
(like New York) where these are highly
developed.
The network that now looks likely to
succeed soonest is run by Satellite Busi-
ness Systems, jointly owned by IBM,
Comsat General and Aetna Life Insur-.
ance. It has some bugs too. SBS, is the
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WORLD BUSINESS
Russia's mattering more and more
Pies show exports to Russia for 1979* by commodity. Charts underneath
show average monthly exports to - and imports from ......? Russia
President Carter has also tried to widen
the list of goods exported to Russia which
must first be cleared by Cocom, the Nato
group (plus France and Japan) which
watches sensitive exports to communist
countries. In March, America sent Co-
com a long, secret list of proposals for
tightening trade restrictions on, eg, data
processing technology and knowhow re-
lated to oil and gas development.
America's allies-especially West Ger-
many-would not be happy to put energy
technology on a new Cocom list, so it will
take several months to work out a com-
mon policy. West Germany has just
signed a 25-year trade agreement with
Russia which includes co-operation on
energy exploration.
European governments have been re-
luctant to cut off credit to the Soviet
Union. The French have agreed to open a
new cheap credit line-originally estimat-
ed at $1 billion-and terms are being
negotiated with the Soviet foreign trade
bank. The Bank of Italy confirms that a
new $1 billion facility has been agreed
between Russia and Italy, although the
foreign ministry in Rome denies it, point-
ing out that Montedison's $1.5 billion
chemical collaboration agreement with
Russia has been delayed for lack of
official credit. Japan's Export-Import
Bank, however, has held up new coal and
Russia's exports to developed
countries,1978
Raw materials 12.8%
(incl, gold and diamonds)
Other
manufactures 9.5% -
Machinery &
transport eqpmt. 5.6%=
Chemicals 2-2%
Other 4.4%
France
Food. drink &
tobacco
timber projects planned in Siberia, worth
$850m, by refusing to talk about the
necessary $500m in soft loans.
America's embargo on sales of 17m
tonnes of grain which Russia wanted this
year in addition to the 8m tonnes it will
get under long-term contract also seems
full of holes. Contracts for 14m tonnes
were scrapped, and the EEC, Canada
and Australia said they would not help
the Russians out. But Argentina, the
second largest exporter of feed grains in
the world, has sold them a large amount,
and Switzerland's grain market has been
an important channel for shipments to
Russia. The supply of maize and wheat to
eastern Europe has increased sharply,
some of it on the way to Russia. One
grain expert in Chicago reckons that
Russia has been able to buy all it wants.
Next year, the Americans say, the
grain embargo should bite harder. Russia
is expected to need around 28m tonnes of
grain imports in the July, 1980-June, 1981
crop year. One analyst suggests that the
Russians would like to buy 10m tonnes of
that from the United States, on top of the
maximum 8m tonnes they will get anyway
under their long-term grain pact with
America. Russian traders have already
started arranging grain contracts for
1980-81. But Muscovites will probably
have to queue even longer for their meat.
French publishing
Irksome freedom
The lifting of price controls in France has
been welcomed by virtually all branches
of industry with one notable exception:
the book business. It wants a tighter, not
a looser, price regime.
The old system under which French
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United States
Machineryt other mfcts
\ I ,Chemicals
book publishers sent their wares to the
shops with a recommended retail price,
within margins set by the government,
began cracking when the up-market dis-
count chain FNAC started selling books
below the recommended level in the mid-
1970s. Department stores with aggressive
pricing policies also moved into book-
selling, previously the domain of 3,000
specialised bookshops and legions of
newsagents.
Price controls at the publishing end of
the business were lifted in 1978. Last July
the economics minister, Mr Rene Mon-
cry, told publishers they, must abandon
recommended prices too. Individual
bookshops had to be allowed to sell at
any price they chose.
At first retailers liked the idea. But
since the switch, total book sales have
lagged behind inflation. Only department
stores, with their strong marketing em-
phasis on best-sellers, have profited dra-
matically from price freedom. Many indi-
vidual bookshops have fared badly, and
book publishers fear they will close
down. In a recent poll of the retail trade,
four out of five ordinary bookshops
plumped for a return to an organised
price system. The bulk of the big stores,
which still have a minority share of the
market, like things as they are.
France's 400 publishers, led by
Hachette, Gallimard, Presse de la Cite
and other large houses, now predict a
nasty squeeze. They fear it will be in-
creasingly tough to move what they call
"difficult" books, eg, first works by au-
thors, scientific or scholarly books. And
they will not be able to use plump mar-
gins on best sellers to subsidise more
worthy, less popular books.
Alas for the publishers: there are no
,signs that Mr Monory's literary interests
have begun to outweigh his concern
about building a free-trading economy.
W Germany
Machineryt Other
manufactures
Other
Food,drink `Chemicals
& tobacco
Deficit
Surplus
$m
500
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WORLD BUSINESS
Video discs
The plot thickens
General Electric's agreement to go into
the video-disc market with Japan Victor
Company (JVC), Thorn EMI and Matsu-
shita has shortened the odds that JVC's
technology will dominate this emerging
market. General Electric is number three
in sales of colour televisions in the United
States, and its participation will give the
consortium some much-needed market-
ing muscle.
The four partners will set up three joint
ventures in America to prepare their
offensive in late 1981: one (General Elec-
tric, Matsushita and JVC) will make disc
players, and the other two (all four com-
panies) will produce discs and pro-
grammes. Marketing of the discs and disc
players will be managed by the individual
companies.
Even with General Electric on board,
however, the new group still lacks the
selling power behind RCA's rival video-
disc player, which, according to the
American trade newsletter, Television
Digest, will be backed by a retail network
holding 43% of the American colour
television market (one half -through
RCA, the other through its licensee Ze-
nith). The companies in the JVC consor-
tium can muster only 15% of that market.
And Philips, which is backing a third
video-disc technology with Japan's Pio-
neer Electronics Corporation, has a still
lower 7% share through its Magnavox
subsidiary.
Many analysts say that Matsushita only
got its powerful grip on the American
video-cassette player market through its
retailing arrangement with RCA. Will
RCA's sales network now tip the video-
disc scales too? If the market takes off
fast, RCA could build up an unbeatable
early lead. Its system is a lot cheaper than
the Philips/Pioneer disc player (under
$500, versus $750) and may well cost less
than the JVC technology, which has yet
to be priced. More important, RCA has
so far been more aggressive than its two
competitors in signing up feature films,
music shows and other programmes for
its discs.
But the expected entry of JVC's disc
player could well keep sales in America
in 1981 around the lower end of the
forecast range of 50,000-350,000. Faced
with incompatible systems, consumers
may not buy for fear of making the wrong
choice. Most film and television produc-
tion companies will not tie themselves to
one system until they see which sells best.
The choice of programmes will probably
prove the key to customer preference, so
the video-disc companies will have to
scramble to build up a lead in pro-
grammes, as well as conducting a more
orthodox battle to win disc player sales
on price and technology.
Once a three-way fight starts in ear-
nest, RCA's chances will look less good.
Choosier consumers might plump for
JVC's higher technology. Pioneer and
Philips would have a better chance too,
provided they can cut the cost of their
even more technologically advanced laser
Shipping
Trustbusters take
to sea again
America's antitrust men are fishing again
in the troubled waters of international
shipping. On June 6th, the justice depart-
ment demanded documents from the
American offices of seven shipping lines
(six of them foreign-owned) which con-
trol almost all the container trade be-
tween America and Australia and New
Zealand. Two weeks earlier, similar de-
mands had been sent to the six shipping
conferences to which the lines belong.
Shippers fear that the investigation
could turn out to be as big as the justice
department's North Atlantic probe,
which began in just the same way in the
mid-1970s and is still dragging expensive-
ly through the courts. Foreign govern-
ments are furious that their protests in
the first investigation failed to forestall
the second. Most countries allow shippers
to operate as cartels, provided they obey
certain rules, in order to assure stable
prices and reliable service-or so govern-
ments say. The United States does the
same, although with different rules. But
foreign governments hate the way Ameri-
cans have intervened unilaterally to pun-
ish behaviour which is legal elsewhere.
Feelings are running high over the new
investigation because the justice depart-
ment is taking on the regulatory agencies
of foreign governments, and not just
commercial shipping lines. Trade on Aus-
tralian and New Zealand routes is closely
regulated by Australia's meat and live-
stock corporation and New Zealand's
wool board which select what kinds of
ships can carry these products.
Australia is demanding consultation
and asking that the charges (group boy-
cotts, reciprocal dealing, predatory pric-
ing from 1972 onwards) be made more
specific. New Zealand is expected to
follow suit. Britain, informed on May
28th that the justice department was to
ask for documents from two British com-
panies (Acta, owned by a consortium
including Cunard, and Bank and Savill,
owned by Andrew Weir and Furness,
Withy), demanded consultation too, and
pointed out that Britain's new Protection
of Trading Interests Act, as yet unused,
directs British courts not to enforce some
American antitrust judgments. West
Germany (on behalf of the Columbus
Line) and Sweden (for Rederi AB Trans-
atlantic and Atlanttraffik Express Ser-
vice) are also angry.
The Australasian shipping route is im-
portant. Although only about 1.5m
tonnes of cargo are shipped by containers
on the route-compared with almost five
times that much on the North Atlantic,
according to America's Federal Maritime
Administration--the run is long and lu-
crative. Britain, for example, although it
only carries other nations' trade on the
route, earns four times as much on it
(about #56m in 1979) as from direct trade
between Europe and North America, on
Britain's trade department's estimates.
Nobody is quite sure what sparked off
the trustbusters' investigation, but deci-
sions by Australian and New Zealand
agencies about who carries what have
been controversial. An Australian bulk
Key indicators: Commodity prices
Wool roundup
World wool production in the 1979-80
season, just ending, was an estimated
2.7 billion kilos, the highest for eight years.
New Zealand output was a record 353m
kilos. In the first eight months of the season
Russia ousted Britain as New Zealand's
biggest customer-taking 40% more wool
than in the same period of 1978-79. The
outlook for next season is less promising:
orders are falling.
1975=100
Dollar Index
% change
June
June on
the
3
10 month
year
All items
210.0*
207.6* -2.8
+14.1
Food
230.9
228.0* -3.5
+20.4
Industrial
All
173.5*
171.7* -1.2
+1.1
Fibres
168.8*
166.6* -0.8
+13.6
Metals
168.0
163.9 -1.8
+1.5
Sterling index
All items
202.5*
197.7* -5.0
+2.3
Food
222.7
217.1* -5.7
-8.0
Industrial
All
167.3*
163.5* -3.4
-9.4
Fibres
162.8*
158.7*.-3.1
+1.9
Metals
162.0
156.1 -4.0
-9.0
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