GM Consolidates in Valley
General Motors Corp. last week said it plans to consolidate its dealer network in the San Fernando Valley by buying about a dozen small operations and combining them into four or five larger dealerships.
GM’s move follows growing competition from superstores like Republic Industries’ AutoNation USA, which sell a huge selection of new and used cars of various makes with haggle-free pricing. Republic owns 22 dealerships in Los Angeles, Orange and San Bernardino counties and plans to build six AutoNation stores in the region.
GM plans to make its dealer network more attractive by closing under-performing stores and opening larger outlets that combine the GMC and Pontiac brands. Chrysler Corp. and Ford Motor Co. are making similar moves; last month, Ford announced that it would consolidate four dealerships in San Diego into a single superstore.
GM has not announced which San Fernando Valley dealerships have been approached, but the Los Angeles Times reported that a dealership in Canoga Park owned by Gary Sterkel and another in Valencia owned by Chip and Scott Young have already been sold to the automaker.
GM has a market share of only 13 percent in the Valley and 20 percent in the Los Angeles basin, compared to a national market share of 31 percent. Japanese cars tend to dominate the Southern California market; four of the top 10 models sold in L.A. County in the 12 months ended May 31 were Toyotas.
GlenFed Gets RedFed
Glendale-based Golden State Bancorp, parent of Glendale Federal Bank, agreed last week to acquire RedFed Bancorp in Redlands in a $158 million stock swap.
Golden State Chairman and Chief Executive Steven Trafton has said the thrift plans to boost its presence in California, and particularly in the Inland Empire. RedFed, parent of Redlands Federal Bank, owns 14 branches in Riverside and San Bernardino counties.
Golden State is rapidly expanding its profile, having signed a deal in November with McDonald’s Corp. to place automated teller machines in the company’s restaurants and other ATM deals in recent months with various sports venues and hotels. The company also agreed to acquire Pasadena-based CenFed Financial Corp. in August in a $210 million stock swap.
Under terms of the RedFed deal, Golden State will exchange $20.75 worth of its common stock for each share of RedFed, whose stock was trading for about $20 last week.
Home Depot Expansion
In what may be the biggest retail expansion in California history, Atlanta-based Home Depot Inc. announced last week that it plans to add 61 new stores in California over the next three years, 33 of them in Southern California.
About $850 million will be spent on the expansion. By the time it is completed, the chain will have 156 stores in the state.
Superstores like Home Depot have decimated mom-and-pop hardware stores, and the chain is now gunning for its big-box competitors. Analysts predict smaller chains like Irvine-based HomeBase Inc. and San Diego-based Dixieline will feel a major pinch as a result of Home Depot’s California attack.
Sales at Home Depot’s California stores have been rising more than 10 percent a year. Some of the busier outlets have even begun operating 24 hours a day.
Home Depot intends to double in size by the year 2000, growing to 1,100 stores nationwide. The expansion is being funded through a $1 billion bond offering and cash flow.
Staples Center Unveiled
As expected, office supply chain Staples Inc. was announced last week as the corporate sponsor of the new downtown L.A. sports arena in a $100 million, 20-year deal.
Staples will get naming, promotional and signage rights to the new arena, which will henceforth be known as Staples Center. Construction on the facility is slated to begin next month and the center is scheduled to open in fall 1999.
Westborough, Mass.-based Staples operates 664 stores in the U.S. and Canada, including more than 80 in Southern California. In addition to buying the naming rights, the company has agreed to form a foundation that will raise $1 million in funds for Inner-City Arts, an art education program for disadvantaged youth in downtown L.A.
The $300 million Staples Center will seat 20,000 fans for basketball and 19,000 for hockey, and will serve as the home of the Kings and the L.A. Lakers. It will contain 160 luxury suites, five concourse levels, two restaurants, private clubs, conference rooms and offices for team staff. It is expected to host more than 230 events a year.
As the L.A. Department of Water & Power braces for a political battle over plans to cut as many as 2,000 employees, a severance package was approved last week for members of one of the agency’s three labor unions.
The L.A. Board of Water and Power Commissioners approved the severance package as part of a two-year contract extension with the International Brotherhood of Electrical Workers, which represents most of the utility’s service and line employees. It is hoped that the package will encourage veteran workers to retire rather than risk being laid off.
But expected to be even harder hit than the IBEW are two unions representing the DWP’s architects and its engineers and managers. The board has given DWP General Manager S. David Freeman the authority to negotiate and approve severance packages with those unions.
The DWP is struggling to pay down its $7.5 billion debt, a critical step if the utility is to compete with private power companies in the coming deregulated electricity market. Freeman’s plan to lay off 2,000 workers must still be approved by the City Council but the council’s decision will be much easier if a large number of workers agrees to early retirement.
IBEW members were voting on the contract extension, and the severance package, last week. Union officials said as many as 500 members could be expected to take early retirement if the package is approved.
Sentinel Publisher Dies
Kenneth Thomas, publisher and chief executive of the Los Angeles Sentinel, died Nov. 28 at the age of 68.
The Sentinel, the largest African American-owned newspaper in the Western U.S., is seen by many as the voice of L.A.’s black community. Thomas took control of the paper in 1983 after agreeing to pay the paper’s considerable debts; founded in 1933 by activist Leon Washington, the paper had been inherited by his wife Ruth upon his death in 1974, and Thomas was Ruth Washington’s attorney.
Rumors of Thomas’ ill health, and possible plans to sell the Sentinel, surfaced last spring but were denied by Thomas. He died of respiratory failure after suffering two aneurisms.
Compiled by Dan Turner