January 8, 1991

In a converted warehouse at the foot of the Bay Bridge here, hissing color presses stamp the likenesses of Madonna, New Kids on the Block, M. C. Hammer and other pop stars on thousands of T-shirts. On another floor, workers stock hats, buttons and posters with the images and logos of performers like Janet Jackson and Led Zeppelin, readying them for concert halls and stores around the world.

Two major unions offered yesterday to defer part of their pay this year to rescue the New York City school system from a budget gap that otherwise could force severe layoffs or a payless furlough. The offer from the heads of the unions representing New York City teachers and school aides came in response to a proposal last week by Schools Chancellor Joseph A. Fernandez for the payless furlough and could be a harbinger of concessions by other municipal unions to help the city close its budget gap.

BANKING IN TROUBLE The decision to protect all Bank of New England depositors in an effort to forestall a panic will make a move to limit deposit insurance less likely, U.S. officials and lawmakers said. [ Page A1. ] BankAmerica said it was interested in acquiring the banking units of Bank of New England and "is in discussion" with the F.D.I.C. [ D8. ] Bank of New England officials faced a number of novel situations, like ordering pizza for F.D.I.C. officials. [ D8. ] At Connecticut Bank and Trust in Hartford, few would have guessed the bank had been declared insolvent. [ D8. ] THE ECONOMY Alarmed by state laws regulating environmental claims like "recyclable," many large consumer products companies are seeking national standards. [ D1. ] Senator Riegle sought to play down his ties to Keating, testifying that he could not remember several conversations. [ A16. ] Congressional Democrats began their campaign to blame the Bush Administration for the recession. [ A16. ] A legal challenge to the National Football League's limits on free agency will not be heard by the Supreme Court. [ B9. ] COMPANIES Defense Secretary Cheney canceled plans to build a new Navy attack plane. The Pentagon said the builders of the $57 billion A-12 warplane, McDonnell Douglas and General Dynamics, had defaulted by not sticking to schedule. [ A1. ] The cancellation was a signal to the military and its contractors that the old ways of doing business are dead. [ A18. ] Eagle-Picher filed for bankruptcy protection, three weeks after the company fended off an effort by lawyers representing asbestos victims to force it into bankruptcy proceedings. [ D1. ] Winterland Productions' headquarters is a busy place, helped by its contract with New Kids on the Block. [ D1. ] Wellman has quietly demonstrated that a large, profitable business can be built using waste plastic as a raw material. [ D1. ] A.T.& T. lost face but not much money when a severed cable cut off most of its long-distance for the New York area. [ D2. ] Preliminary approval of the sale of Pan Am's London routes to United is expected from the Transportation Dept. this week. [ D4. ] Saatchi & Saatchi is making headway in its efforts to refinance a convertible bond issue, Saatchi executives said. [ D19. ] 3Com said it was getting out of the software business and looking for a buyer for some other businesses. [ D4. ] MARKETS Oil prices moved sharply higher after tough talk on the Persian Gulf. Crude gained $2.75, or 11 percent, to $27.65. [ D1. ] Fear toppled stock prices and brought the decline in the Dow in the year's first four trading days to 111. For the day, the Dow tumbled 43.32, to 2,522.77. [ D1. ] Prices of Treasury securities fell sharply and interest rates rose after a big jump in oil prices. [ D16. ] The futures prices of gold and silver soared amid war fears. [ D17. ] The dollar advanced sharply, then eased. [ D17. ] TODAY'S COLUMNS There is rising concern that insurers might be vulnerable to the same problems as banks. The author of a study on the topic sees less risk for insurers. Talking Business. [ D2. ] Now might not seem the time to buy semiconductor stocks, but a few analysts say there are bargains. Market Place. [ D10. ] The Sugar Association is urging consumers to sweeten up, guilt-free, but some critics see deception. Advertising. [ D19. ]

Defense Secretary Dick Cheney today canceled plans to build a new Navy attack plane, the largest weapons program ever terminated by the Pentagon. The decision, which surprised military analysts, was announced in a Pentagon statement that said the builders of the $57 billion A-12 warplane program had defaulted on the program by failing to "design, develop, fabricate, assemble and test the A-12 aircraft within the contract schedule."

Long before the recent spate of announcements of recycling plans by producers and users of plastic, Wellman Inc. was quietly demonstrating that a large, profitable business could be built using waste plastic as a raw material. But Wellman's plant here also stands as noisy testimony that recycling is much harder and more expensive than many would-be participants might expect. Wellman has invested millions of dollars and years of trial and error, yet finds itself forced to scramble for new sources of waste plastic, to invent new technology for processing the increasingly mixed stream of plastic it receives, and to find new ways to market the polyester, nylon and other products it makes from the recycled material. Flakes to Fluff to Fiber Each day at this sprawling plant in the flat marshlands of eastern South Carolina, an hour's drive from the Atlantic coast, bottles, photographic film and industrial waste undergo a deafening transition from refuse into fibers, which will mainly become carpeting and stuffing for furniture, bedding and sports garments. The waste is transformed into small flakes, then cotton-candy-like fluff, then sleek filament, and finally crinkled fiber.