Business Notes

AUTOS On the Road with lacocca

It was a little like an opposing general inspecting enemy lines, as Chrysler Chairman Lee lacocca flew off to Japan last week aboard his company's Gulfstream II. The first objective was Mitsubishi Motors, with which Chrysler has for some time wanted to set up joint production in the U.S. lacocca and Mitsubishi President Toyoo Tate announced that the companies in 1988 will begin making a small car in a plant to be built in the Midwest or South. The project will cost $500 million, turn out 180,000 cars a year, employ 2,500 autoworkers and create as many as 8,800 jobs among U.S. suppliers.

After discussing U.S.-Japan trade problems with Keijiro Murata, Minister of International Trade and Industry, lacocca went to South Korea, where he announced a joint venture with Samsung, a conglomerate that makes everything from ships to electronics. The Samsung-Chrysler operation will produce auto parts and components in Korea for export to the U.S. Both the Japanese and Korean deals underscored Chrysler's policy of not building subcompact cars in the U.S. entirely on its own. The company will now be relegating at least part of the job to foreign companies to keep costs down. ELECTRONICS Sony Complicates the Picture

For American consumers who have not settled on whether to buy a VHS or a Beta videocassette recorder, Sony further complicated the picture last week by introducing a new format. Starting in May, the company's new 8-mm video camera and recorder will show up in many stores in the U.S. Price: $1,695. The system uses videotape about half the width of that in VCRs, which are now in nearly a fifth of American homes, in a unit about the size of an audiotape cassette. It will permit more compact playback and recording systems, with quality that is "as good as the Beta format," says Sony Deputy President Masaaki Morita, brother of the company's chairman, Akio.

Other firms have already introduced 8-mm machines, without much success. Analysts estimate that Kodak's camcorder, first brought out in 1984, has sold only about 10,000 units. The new format is a big gamble for Sony that could take several years to pay off. It may also be a concession that Sony's pioneering Beta format, once considered technically superior to VHS, has no future. VHS now outsells Beta by 4 to 1. REAL ESTATE Xeroxville, U.S.A., in Virginia

All through the 1970s and early '80s, when its heartland copier business was running into stiff competition from Japanese producers like Canon and Ricoh, Xerox (1984 sales: $9 billion) was looking for new lines of business. The company moved into, then out of, computers. It bought Crum & Forster, the big insurance company, which had heavy losses in 1984. Now Xerox is moving toward the land. During the next decade, it will oversee development of a residential and commercial community on 2,267 acres of prime real estate it owns along the Potomac River near Leesburg, in Loudoun County, Va. Total investment by developers: $8 billion to $10 billion. The site is expected to have 20 buildings to be used as headquarters of various corporations, as well as 1,800 homes selling for $150,000 and up.

Loudoun County officials were pleased at the prospect of Xeroxville. About 40 acres of the property have already been used by the firm for its corporate training center, and local relations are scented with magnolias and peach blossoms. Says Frank Raflo, chairman of the county board of supervisors: "If things were any better, I couldn't stand it." STEEL The Biggest Bankruptcy

Wheeling-Pittsburgh is America's seventh largest steelmaker (1984 sales: $1 billion) and also one of its most modern. In the early 1980s, the company went heavily into debt to install a new rail mill and two continuous casters. The effort, coming in the midst of the steel industry's problems, was too little and too late. Losses mounted, reaching about $166 million during the past three years. Last week the company filed for protection from creditors under Chapter 11 of the U.S. bankruptcy law, the largest bust in the industry's history.

Both management and union leaders representing the company's 10,000 employees blamed each other for the company's plight. The union had made fresh contract concessions, but retracted them because it was unhappy with a debt-reorganization plan worked out by the company and its bankers.

Wheeling-Pittsburgh will continue making steel even though it is bankrupt, and the union has indicated that it will not strike. Said United Steelworkers Negotiator Paul Rusen: "We will go to work, be patient and in 18 months be better off." Citing the company's modern plants, John Jacobson of Chase Econometrics said Wheeling-Pittsburgh, if it comes out of bankruptcy "leaner and meaner," could be in a stronger position than its competitors. TELECOMMUNICATIONS David vs. Goliath, Round 2

Washington-based MCI Communications took on giant American Telephone and Telegraph in a courtroom more than a decade ago, charging it with monopoly practices that prevented MCI from competing equally in the domestic long-distance phone market. MCI won that action, along with damages of $600 million that were trebled by federal law to $1.8 billion. But AT&T appealed and won a dismissal of the award. Last week a new trial involving the old adversaries began. Purpose: to set once again the amount of damages AT&T should pay.

MCI now believes that it was hurt even more by Ma Bell. The company today wants $5.8 billion, which would be tripled to a jangling $17.4 billion. Asked at AT&T's annual meeting last week if he felt MCI would get anywhere near the damages it wants, Chairman Charles Brown said firmly, "No." An AT&T lawyer described MCI's demands as "monstrous."

Much has changed since the companies first squared off. AT&T has been broken up into eight smaller pieces in the largest corporate split-up in U.S. history. MCI has grown rapidly. Its sales have spurted from $7 million in the mid-'70s to $2 billion, and it is AT&T's largest long-distance competitor.