December 26, 1990

Prices of oil, related products and some raw materials have been rising, but manufacturers across a wide spectrum of industries are having great difficulty passing along the higher costs to their customers. Because of the squeeze, profits of manufacturers have been tumbling for most of the year. Many manufacturers have cut back on their plans to modernize and have deferred plans to hire additional employees, and some have begun to lay off workers.

FORGET all the reviews of "The Godfather Part III." Forget the movie lines that started snaking around the block when the ultimate film sequel opened yesterday. And forget the arguments over whether the new epic is as compelling as "The Godfather" or "The Godfather Part II." For millions, there is but one critical question. How was the food? Was the carte du jour in "Godfather III" worth waiting 16 years for?

The Economy An overhaul of the banking system faces political opposition. Although many of the country's prominent banks are losing money and some are threatened with failure, the chances of sweeping changes in banking regulations are considered to have only a 50-50 chance of success. [ Page A1. ] Profits at many big oil companies will surge this quarter with the price of crude oil and natural gas rising sharply while fewer companies are expected to report big write-offs to cover a variety of items for costs like environmental expenses. [ D1. ] Many older Americans will be able to use simpler tax forms since the I.R.S. decided that income from pensions, annuities and individual retirement accounts, as well as Social Security benefits, may be declared on the short 1040A form. [ D1. ] California wine makers are increasingly interested in exports. The domestic market is growing weaker, but countries that historically consume wine but make little of their own, like Britain, Canada and Switzerland, are attractive markets. [ D1. ] Many manufacturers are having difficulties passing along higher costs to their customers. Unable to raise prices, manufacturers in the steel, tire, chemical and machine tool industries, are finding their profits are being squeezed and they are cutting back on plans to modernize and hire additional employees. Economists say the situation is a hallmark of recession. [ D1. ] Bank certificates of deposit and money market account yields have fallen for the 10th consecutive week amid expectations that large banks will soon cut their prime lending rates. [ D10. ] International China is expected to have the second-largest trade surplus with the United States next year. The growing surplus is emerging as an important irritant in relations between the countries, since the Bush Administration and some in Congress say China's trade gains are a result of unfair practices. [ A1. ] Companies Trans World Airlines' chairman complained that the company's attempt to merge with Pan American could be destroyed by Pan Am's efforts to sell the shuttle serving Boston, New York and Washington. Pan Am was reported to be discussing a possible sale of the shuttle to Northwest Airlines. [ D1. ] American Airlines is accusing its pilots of protesting stalled contract talks by staging a sickout during one of the busiest travel times of the year. [ A25. ] Business Technology A small group of companies has profited by taking advantage of tax incentives offered by the Federal Government a decade ago to companies that gather natural gas from coal deposits. An estimated 500 billion cubic feet of natural gas recovered from coal deposits flowed into the pipelines in 1990, about 3 percent of the natural gas consumed in the United States this year. [ D3. ] Today's Columns Skeptics wonder if food shipments to the Soviets make sense. Such emergency shipments are defended as a gesture of political support for President Gorbachev, but they may be used to undermine a healthy movement toward decentralization. Peter Passell: Economic Scene. [ D2. ] Justin Industries is fighting a tender offer to buy the company at a substantial premium. The company, a small conglomerate based in Fort Worth whose biggest interests are in boots and bricks, is emphasizing that the deal is not feasible because it relies on the sale of "junk bonds." Floyd Norris: Market Place. [ D4. ] The Ad Council began its first new public service campaign in six years aimed at preventing drunken driving. The campaign also adopts a new strategy calculated to help people overcome the embarrassment of interceding with friends who have had one drink too many. Kim Foltz: Advertising. [ D10. ]

Despite the grave problems in the industry, an overhaul of the nation's banking laws next year faces such serious political obstacles that the chief proponents of change say their chances of success are no better than even. With many of the country's prominent banks losing money and some threatened with failure, with the Federal deposit insurance fund hanging by a thread, and with companies unable to get the loans they need to prosper, President Bush has promised that his top domestic priority in 1991 will be to restructure a financial system that has been basically unchanged since the Great Depression.

Without competitive bidding, New York City consistently awards the most expensive school bus contracts in the nation, and many have gone to companies linked to suspected organized-crime figures. One company that transported handicapped children in Brooklyn was run by a professional mob killer. The last large-scale competition for school bus contracts in the city came in 1979. Since then, several contractors and law-enforcement officials assert, unions influenced by organized-crime figures have obtained a stranglehold over the costs and hiring practices of many of the companies whose yellow buses carry 136,000 riders every school day. $1.6 Billion to Bus Companies Many current and former school officials say the Board of Education's unorthodox policy of extending contracts with yearly cost-of-business increases provides better bus service at a lower price than could be obtained by periodically seeking new bidders. They say bidding is unpredictable and led to higher payments in 1979 and in 1986, when it was tried with a small number of contracts.