December 29, 1986

Law-enforcement experts say 1987 will be a watershed year for the city's five Mafia families. The experts, who monitor organized-crime activities, say that for the first time since the families were formed in 1931 the leadership of each will change all at once. The upheaval is the result of a campaign by Federal and local authorities that has led to convictions or indictments of those identified as the heads of each family and many of their top lieutenants. With these figures facing long sentences - in Federal prisons far from their bases in the city - officials say their authority will disintegrate and there is likely to be an extraordinary scramble for power in each group.

Big business in America is overhauling itself and its operations faster than at any time since World War II. Corporations are shucking unrelated product lines, marrying or buying up competitors and rejiggering their finances in hopes of restoring growth and prosperity. These wrenching changes promise higher short-term profits to shareholders, but have loaded many companies with unprecedented levels of debt, raising widespread concern about the companies' ability to weather any recessions that may lie ahead. Billions Change Hands This year, the rush to streamline and to concentrate energies on more narrowly defined lines of business has fueled a record of more than $150 billion in mergers and acquisitions that transferred corporate assets from one set of hands to another. In addition, according to the investment banking firm of Salomon Brothers Inc., in the first 11 months of 1986 some 233 companies bought back, or announced plans to buy back, an estimated $36 billion of their own stock, making themselves less vulnerable to takeovers.

John D. MacDonald, whose mystery novels sold in the millions of copies, died yesterday of complications from heart surgery. Page B15.2 NEWS SUMMARY, PAGE A2.

Last month, T. Y. Chao sold his collection of jade, lovingly assembled over a lifetime, to help pay his shipping company's $850 million in debts. Mr. Chao, whose Wah Kwong Shipping Group is in the middle of a painful restructuring with creditor banks, raised less than $10 million from the jade sale. But if the gesture was more poignant than meaningful, it was a reminder that the industry that created so many fortunes in the past now is erasing them at a dizzying pace. Five Years of Tumbling Rates From the Port of Los Angeles to the docks of Liverpool and the shipyards in South Korea and Japan, the shipping world has been turned upside down by five catastrophic years of tumbling freight rates, rising costs and sinking values of used ships. While the problems are rooted in cyclical overcapacity, many executives now say the downturn is so deep and traumatic that the industry is changing permanently.

The Economy Big business in America is overhauling itself and its operations faster than at any time since World War II. [ Page A1. ] Great transformations have been felt by a number of industries, including retailing [ D4. ] , communications [ D5. ] , airlines [ D4. ] , and computers [ D4. ] . Meanwhile, merger and acquisition specialists expect next year to be filled with as much activity as 1986. [ D4. ] Judicial trends this year may encourage takeover activity next year, as courts seem reluctant to approve certain types of defenses. [ D5. ]