(00:00:00) And Paul midday continues until one o'clock. We welcome to the studio Minnesota. Businessman, Irwin Jacobs who will be taking your questions about management mergers stockholder rides all the other things that mr. Jacobs has become prominent for talking about and he's doing the media circuit today as it turns out he came in to announce that you had been on another Radio Service earlier today and I'm curious. First of all, you've always been very willing to speak with the public about your attitudes and opinions regarding business. Is there something special about today? Why you agreed to go on to different radio Services? (00:00:37) Well, it's I've got a just a crazy schedule down this summer. I've got 11 weeks of non-stop traveling coming in and just coincidentally I was asked to do this other show early this morning where I was hopeful that we'd get a plug in there which we did for Special Olympics which are coming and there's been some confusion over what people should do that want to get involved in it. So, although maybe this isn't the right. Fort Irwin or whatever else (00:01:01) are on the mic is (00:01:02) yeah. It was it was important. I have never seen such a phenomenal response to an event coming here in the people who want to offer what can I you know, what can we do to (00:01:13) help now? Let's bring listeners up-to-date besides his business activities or when Jacob stepped up to the plate here not too long ago and one the decision along with other folks to have the Special Olympics in 1991 be in Minnesota and you provided some considerable financial support for (00:01:32) that. Well, actually it's the international games which is a the worldwide event, which will represent 91 countries throughout the world will be approximately 6,000 athletes competing mental retardation. From these various countries, it will be clearly the largest event that Special Olympics has put on and you say I stepped up to the plate I what I did my family and I guaranteed under wrote the Olympics coming here to assure that the funding would be in place for it was like 8 million dollars. (00:02:05) Well, that's that answers one question. And then you pose the other one, which is how can people get involved in presumably you're one of the people who knows how individuals (00:02:13) can get. Well what we're doing right now is the formation of several things. We are interviewing people as executive director. There will be an organization put together here hopefully shortly which will be a staff of maybe some 2025 people that will specifically be put together for the organizational function of the international games coming here 1991 beside that we are estimating we're going to need approximately 30,000 volunteers, which is some sizable number of To put together to pull these games off in every aspect people are writing and calling and saying what can we do to help and again, it's this is although I will make the solicitation. It was not really what my intent was to really take away the confusion that what I'm telling people to do is to write me directly and that is directly to my office's at 100 South 5th Street Suite 2500 Minneapolis 55402 and that can be directed directly to me care of the international games. And when we have and what we would ask you to do is if you want to be a volunteer you want to offer your services whatever the case may be. We asked you to write and put it in writing to us because at some point you definitely will be contacted. I don't believe anybody will be turned away in the form of offering their help. It may take several months, but it may be some time (00:03:41) less than that. All right, you've heard right? Don't call Irwin Jacobs at his business address in Minneapolis, which is 100 South 5th Street Suite 2500 in Minneapolis. And that zip code is 55402 will keep that address on hand and give it out. I think at the end of the program however as much as anything we want to talk to you two about business. Now, let's give out the telephone numbers first of all so that we have a chance to get listeners on the line here and get lined up with their questions before we get to our couple of questions here in the studio in the Twin Cities area. You can speak with Irwin Jacobs about business matters or anything else that's on your mind for that matter. Two two seven six thousand 2276 thousand listeners outside the Twin Cities living with in Minnesota. You can Dallas toll free no charge for this call at one eight hundred six, five two 9701 806 five to ninety seven hundred there may still be a couple of people who do not know the name Irwin Jacobs. We call him a Minnesota businessman. But by description you are very proud of your Beginnings at age 15 or 16 was it you were already pretty busy with business matters. Is that right? (00:04:55) Well, actually, you know, I'm not going to tell you that I was considered a businessman. I really knew what I was doing as I hopefully think I'm doing today and even earlier age because of my relationship with my father who had a family business and I was really his sidekick from 6-7 years old. I used to travel with him to the country going to the grain elvers picking up use gunnysacks junk metal, whatever we get our hands on. And really started out to just be kind of a friend to his as he went along because he's always alone and course. I got more involved just being of his side when I was 12 13 years old. I pretty well made up my mind that I wanted to go to school as quickly as possible so I could get into work and help Dad. That's interesting because I (00:05:36) think you make no secret of the fact do you that you dropped out of (00:05:39) school? Well, I finished high school good finish. Yeah High School. I finished went to University for three days. But that was a bargain that I had with my folks that I would try it. If I didn't like it I could leave and I kept my part and I asked them to do the same. Don't bother me anymore. Let me go to work. (00:05:53) All right good or when Jacob since that time has become known as a man whose active in among other things looking for business opportunities companies that may be floundering or failing and seeing where when Jacobs can step in to do something about it. But as part of that you've been connected with the merger activity For Better or For Worse and I presume you think for the better, (00:06:15) but no that's not necessarily true Danny, you know, as what I think we do obviously I'm not going to sit here and tell you what we do is the best thing in the world what it is but this is sumption that mergers are perfect order the worst thing that ever happened. It's on an individual basis and there is no perfect solution or formula frankly to anything in life. And what people forget about is they assume we either should have them or we shouldn't have them but it's my belief that the free enterprise system really whatever that situation is ultimately tells you whether it's right or wrong. No one can assure the success of a merger or an acquisition based on the initial what takes place either buying or merging of companies, but there are people out there who are continually screaming and yelling. This is terrible and there's people out there such as myself who say I think it's very healthy for the system. There is no perfect solution is some people hope there would be is one of the (00:07:11) downsides of the merger activity generally around the United States is one of the downsides of been that an awful lot of money that Might have been available for expanding business new business ventures new business opportunities has frankly been soaked up to finance merger and (00:07:31) acquisition. Well, that's absolutely not true. And of course that's the number one thing here among the politicians or the people who are under siege. What's interesting is we're in it. We're we're in America best country obviously in the world and it recycles no matter where that money goes. It finds itself back into the system. No one takes this money if it's a if you own a stock in a company and I was buying that company and I went out hypothetically and took a loan from the bank to pay the company off. You were one of the beneficiaries of stock for your stock at cash from me that money isn't going out of circulation you're going to do something else with that money, whether it's putting it back in another company, whether it's putting it in the bank whether you're buying a product with it. The system is a recycling process. Now if I was unsuccessful with that business and paid you that money, That isn't your worry that's my concern and whatever happens to me happens to me if that means I lose that business because I couldn't pay back the bank or whatever. What other source I've taken the money from or borrowed it from that has a way of finding itself through the system. I think the other thing that is really a misconception when you say, you know to to create or build we all have to think that and we have many many companies and we're always in the planning stages with that but this theory that the dollars are coming out that could go to R&D or could go to expansion the problem. We've had over the last 15 years what people forgot about this country is that we have over produced and we have created such narrow margins of profitability for corporations that they haven't had the margin for error to go out and do these things with an we've had a in I'm not going to use it in a generic sense. But the people who we hear about most of the inefficient management people, they create the pattern really for what people believe out there if Major name happens in some large corporate American office where it turns very badly the business all of a sudden big business is bad. The fact is we have gotten much much better over the last six seven years and we've been surely in my lifetime. I'm seeing it better (00:09:38) now. We have a very interesting new phenomena not entirely new and that is the United States is net debt, her status and dollar Rich overseas investors from Japan Sweden France. You name it looking longingly at American companies and buying some companies buying large real estate holdings. What does this portend for American Business in your (00:10:02) opinion? Well, you know, it's quite remarkable here. We have been all over the world buying all of our life and have been the strongest influence in Europe and God knows how many other countries that all of a sudden it's become available for these people come invest in our country and everybody thinks that that's all bad. But the fact is if you look at Who owns many of these businesses in Europe? It is American Business. Now what right do we have to go over there and own if they do not have the same right with which to come here and it is in no way shape or form of the magnitude and I don't see it being of the magnitude of that. We have given our influence over there as to what they're bringing here. There is an opportunity for them. There's no question about it and probably the best opportunity in many many decades for them to come and invest here because what's happening the dollar but that is the single to me. The dollar situation is the single best thing that's happened to our country and this deficit side to allow this Import and Export situation to level itself out tomorrow. The trade deficit numbers come out is where maybe not aware of last month. I believe that they came in substantial under what was estimated and I hear that wall Street's looking for somewhere between 11 and a half and 12 and 1/2 billion. I think it'll be considerably less than that number and I may be wrong, but I would be surprised. We don't drop below a double digits in that number and could drop below 10 billion. I still don't believe that we have a handle on how what are what's really happened out there. I think it's much better than that number. I can tell you our businesses. We are exporting at a rate that we have never exported at fact is we were having trouble getting vessel space and shipping products out of this country because the demands are so great. So it takes time and a lot of people are looking for instant results on this but there's no question that surely this is the first time in my business life time that I have seen we've been able to compete both on a national scale and an international scale and we can take anybody on today in the form of pricing for those people who are in a position to do that, but I'm seeing things the best I have seen them. (00:12:05) We're speaking with Minnesota businessman Irwin Jacobs and he is in the studio taking questions from listeners and let's get to the first telephone caller right now. We have a lineup of folks. I believe our toll-free number though is still open in case somebody from outside the twin. Cities within Minnesota would like to place a call that telephone number is 1-866-560-4440 the first questioner right now, good afternoon. We're listening. Well, most of what we get in the media by. Mr. Jacobs is about mergers and takeovers and Former classmates in Hawaii say that what the Japanese couldn't accomplish militarily they're doing economically and buying up the place but it's noon time and that means lunch and that means food and that means Sasha's I've been reading about changes taking place and I got spoiled rotten when I was stationed of Governors Island off the tip of Manhattan. I'd still don't understand even after reading the article in the Sunday magazine about you and the locks Queen who couldn't find a sharp enough knife this life to slice the locks. Why is it that the Pastrami and and beef and all of this in a New York Deli taste so much better than all right. Let's have mr. Jacobs take a shot at that (00:13:26) why it taste better I think is the question again in New York rather than here. I think that's what was said. Only I can tell you is I don't pretend to be the restauranteur of the decade. As you're probably aware. We had opened up a new Marina out and why is that a to create this? What we believed was an R&D Center for our marine operation nationally to understand the the say the forward look in boating and servicing of customers and we believe that a restaurant was necessary to put in there. We definitely tried to create the Jose the surroundings on the menu of a New York Deli. I don't think that we did do that at the time when we did it but we're not too proud of people and we've gone back there and redid this place over and really I think we've done I shouldn't say aye I think our people have done a miraculous job of positioning it now with what the people want and everybody seems to be very happy. From what I've seen. I'm sure there's somebody out there that isn't necessarily happy but it isn't because we're not trying to make you happy. (00:14:29) Let's go to the next telephone caller. Go ahead. We're listening for your question. Will your autobiography which is written a few years ago ever be put into print. (00:14:39) Well, I don't know where you heard. My autobiography was printed but I'll I've often said that I really don't have much to to go out there and put in the form of a buck. I hope I got a few more days in the years left in my life. And maybe I'll be more exciting what's ahead of me than what's been behind me. So I don't think autobiography is really in the in the Horizon as far as I'm (00:14:59) concerned. All right on to the next caller and your question for our guest Irwin Jacobs. Go ahead, please it seems that one of the and discouraging problems that is facing the United States. Is that the wealth gap between the rich and the poor has grown and poor are becoming poorer and richer are becoming richer which seems a real threat to American democracy and capitalism because people are not going to stand for that and indefinitely and it seems to me that the merger and Acquisitions Trend that accelerates the gap between rich and poor because what you do is you increase the value of stocks and dividends. I mean you drive up the price of stock so that shareholders gain and and also by creating fear in company Management's that they're going to be the subject of a hostile takeover. You encouraged Management's to be extremely tough in negotiations with their salaried workers. So salary stay down on the other end of it when mergers happen, there is almost always a large decrease. In employment by the companies that were acquired a lot of people are laid off and that means that there's at least a temporary loss of income for workers and for many workers. It's a very serious loss of income because they don't find a new job for a while or very often they find much much lower paying jobs. So it seems to me that mergers and Acquisitions increase the trends for the rich getting richer and the poor getting poorer. Mm. All right, let's get a reaction. That's all (00:16:36) along. That's a long question. But I think it deserves an answer more than just a word or two because it really is a it's a good question and it's one that's asked frequently out there. First of all, let me say to you that my business is not defined as mergers and Acquisitions and I don't run away from that because I am involved in that speaking firsthand from here in Minnesota. Our involvement here in the state has been through companies who have been financially in trouble one of our companies a great company up a Little Falls. Minnesota is Larson boat company that we bought 1977 when it was getting ready to get shut down by a bank who was foreclosing on it for the third time and we bought that company on a Friday afternoon and I went up there on Monday and told the employees. I will do everything. I can including the financial resources with which to turn this great company around that was some 10 years ago. And today it is way. I would be a fool to sit here and tell you that I had planned for its future as his turned out. It turned out to be a great company and it has responded incredibly well both the community and the consumer out there, but they had just about lost their last breath of fresh air when we got there. And today we have some six hundred plus people working there. I think we had under a hundred and the volume of business. Obviously. It's become a nationwide Book Company. In fact shipping overseas another company again, similarly to that situation is the Watkins company. I know what a Minnesota again that was in bankruptcy court we came in and purchased that company, I believe 1978 and to I don't want to sit here and took my Horner feather of my my situation to tell you how great we are what it is. There are some very very hard decision hard decisions and strong price has to be paid. Everybody is not necessarily happy when something even turns around believe it or not. There are people from a competitive point of view who compete with the Larsen's in the Watkins out there who can't wait for their demise and hope that they're out of business so they can go out and hire more people to take the place in the marketplace at these people are out there doing so what's good for one is not necessarily good for all and to answer your question directly. I will tell you the hardest decision that is made when there is a business being taken over or a bankrupt company be turned around or just a situation that's different than the normality of just sitting there every day and wondering what's going to happen. Everything is fine. That decision is the people decision and from my own point of view. I will tell you that the businesses that we run today and the people We have tens of thousands of people that work for us. I didn't start out that way and I'm proud to say to you that whatever we've done on the people side. Although again. I'm sure everybody out there who's ever worked for me would necessarily agree with this in all honesty, but surely the ones who have seen what's taken place have been there with us. I think are proud and and understand the hard decisions that have to be made to deal with the realities of Life which include certain times consolidation. I mean to compete I said earlier the competition in this world is just I mean, it's imperative that you at all times be looking at who you are and what you're doing and what your purpose is out there and you can't just look at that from a dollar and Cent point of view either believe me. The people side of it is the single most important thing. There's no product made out there today or nothing manufactured that will take the place of the human person who has something to do with making the success or failure of that. (00:20:01) Let's go back to the telephone and take another question for our guest Irwin Jacobs. Hello, it's your turn. I am calling from outstate, Minnesota. Worth I just have a couple of brief questions. I'll hang up and listen my first question Keys around what he said about competition in a competitive market when the United States is going through a phase know where it's entering a competitive World Market and it seems like there's an influx of goods coming into the country a lot of them major purchases like cars specifically Suzuki summarize. What kind of obligation does does an overseas company have when it looks like they may have an unsafe product to the consumer who's purchased at a birth abroad and I guess the second half of the question is is like if if a consumer does have a product like this that may or may not be unsafe regardless if it's a car or an electric carving knife or a coffee maker. What can they do? If they've had the bad Misfortune to make a what is apparently a bad consumer decision. Thank you. (00:21:03) Well, let me try and answer that both questions for you. First of all, we Have the strongest consumer safety codes, I think anywhere in the world here and it's quite remarkable because I know from our own experience. It's amazing how much time and effort we spend here as well as abroad and yet I asked the question I just did before I came here in a situation that what is our competition doing over in this country. We're talking about to my people and they said there are no laws over they pay no attention to it. I've said it's on blue with all the time and money that we spend on it. You know, why should we be at such a disadvantage with them in their own country. The fact is that it's going to happen someday. There's no question about it. And we do set a lot of standards in this country for the rest of the world based on consumer safety and the necessity to give the consumer out there whether its food whether it's a car or whatever else the case may be but all these corporations that you talk about and you particularly mentioned one, you know, I don't believe there's anybody in this world that is making her manufacturing a product and selling it with the belief that it is unsafe or at least The directions to go to it to make sure that if you want something like if it's fireworks, make sure you don't hold them in your hand when you light a match to them, but there's a lot of things out there that are very dangerous. If you don't know how to use them and the unfortunate part that we have here is we've created. Oh, what should I say a disastrous type approach to so many things that really don't want it in the form of we as individuals got to take the responsibility. Whatever that is to make sure that we do it in a safe way. Unfortunately, we have incredible Court situations today where we allow people to run to the court if they make a mistake and we have so many lawyers out there who are waiting for the people to come and in fact advertising for them to come to him if something should happen there is something very wrong about it. And I don't think that's what the safety commission has really put together as an opportunity for everybody just to come run their with what they think is their problem. I think the obligation is first of all if we believe somebody's doing something Without any conscience at all in the form of making a product and not concerned about consumer safety. And it surely they don't they don't belong in the marketplace and I think the consumer will chase them out very quickly, but just to create problems for the sake of doing that. I don't believe that that's right either and believe me if I tell you there are lots and lots of situations thousands of them out there today where if people would have thought before they had used the product in uniform and I don't mean to go overboard in the form of safety just common sense. I don't know what that percentage would be but I'll assure you much of our problems would not exist today (00:23:43) back to the telephone for another question for our guest Irwin Jacobs. And it's your turn. Go ahead, please. Thank you. I've been very concerned about the government bailout of the failing Savings and Loans particularly the ones in Texas that have multi-million dollar deficits and it seems from what I've read in the newspaper. Is that the primary reason for the deficit has been poor management? Unfortunate choice of Investments and excessive interest rate. I was wondering what responsibilities do the officers of these F and SNL's have to reimburse some of the Lost funds from their own actions to the government or to the depositors are they bonded should they be bonded or are they allowed to take to take their multi hundred thousand dollars wages with no responsibilities. (00:24:39) Okay. First of all, you understand that from depositors point of view FDL. I see which is the Savings and Loan Insurance branch and then you get the FDIC which is the Comptroller currencies area of the one you're referring to as a savings alone, which is what we're hearing so much about today up to $100,000 if you're under FDA if if yes under feels like Savings alone. You are totally covered by the government up to $100,000. So from anybody who's listening out there $100,000 you have it in that form of the bank. You have nothing to be concerned about going to the problem now, which is what is believed in many cases is poor management and I would agree with that in many cases. It was the greed of the bank or the banker or the lack of understanding of their business much of that comes from very poor management and I will tell you firsthand. I have had the opportunity to sit down and look at some of these situations from a possibility of buying into that area and it's the government is not taking a very soft. Look. I will tell you they come down and come down very hard on these individuals and the directors and their our bond not binding but they call there's Insurance directors and officers insurance for fraud and things such as that the government goes after all of that and they are not Out to protect the shareholder at the point of where they are going to have to pay off the depositor. They have a massive massive job in their hands today one that almost. I mean it was staggers the mind to think about how many different situations they have to deal with but you got to remember we dealt with all this inflation going back in the early 70s. Everybody believed that there was no end to the prices of real estate no end to the price of farming and no end to the price of expansion and this goes back to the question that you know, where does it become make sense that we all just kind of sit back for a few days and say hey maybe we don't need 10% of here growth to be happy. Maybe what we're doing is just fine the problem with the banking or the savings alone situation was that everybody was looking eyes not literally everybody but those that were talking about and there's very few that are not in trouble. By the way. They're more are than aren't in the same as lone area that their greed in the form of their belief of predicting what was going to take place out there got them in more than trouble than they ever could have dreamt of getting in trouble and there is no No question is people going to jail over it and there has been there will continue to be as you see this unfold such as a Texas situation. They seem to be the worst in the most talked about today. I don't think there's any question in my mind through the state of Texas. There will be some bankers that will be going to jail and I don't I don't believe for a minute that the government is not responding to that area. That's a whole other area of the arm. It's when physic gets involved in there. It's their responsibility to get you as a depositor paid off one and to get the assets sold as quickly as possible and then deal with the individuals as a whole separate issue. (00:27:38) We're about halfway through our conversation with Minnesota businessman Irwin Jacobs and taking listener calls and questions and there are a couple of lines open in the Twin Cities at 2276 thousand 2276 thousand listeners outside. The Twin Cities have a toll-free number with in Minnesota that you can use one 806 589-4030 one 865 to 9700 m. Get back to something you mentioned earlier about your business, you're having difficulty finding vessel space. You said exports apparently are doing very well for some businesses. What does this tell you about your businesses the economy of Minnesota and where you see potential or (00:28:22) promise. Well, I said earlier this is the single best opportunity. I've seen in my lifetime for American industry that understands what their business is all about today the ability to compete both nationally and a competitive basis as well as internationally. I mean with the dollar situation the way it is it's tougher for people to bring their product here. For example, if it's English pound of the French franc do CH Mark or whatever they take it back to take a discount to what it was a year ago. So on a domestic or national basis for the efficient operations and understand their business as well and they have got it going for them better than ever before for the international scene. Obviously, their buying power has expanded from the form of what's happened to their currency versus ours. I mean if you took the Japanese Yen for an example and you know, it's half of what it was here short while back which gives them twice the buying power in our country that they had at that time. So they're buying our products as well as coming over here and buying businesses or whatever (00:29:21) else. Well everyone keeps talking about the Pacific Rim Nations and presumably your businesses are interested in that. Apparently the Western Europeans are still good customers the 3M Executives were over there today in touring Europe talking about that. So are the opportunities for American businesses all over the globe. (00:29:37) Oh absolutely and you know, what else is happening out there is becoming a global competitive World from the standpoint that we are becoming a market not 12 different markets the competition today when you talk about these underprivileged nations that have become sophisticated in the ability to go out there and compete today if we've given the tools necessary to do and you got to remember we thought we were going to be a paper Nation at one point and we weren't going to have any industry left in this country. What is interesting since October 19 that I find and it's almost 180 turn died. I can't explain it to you. I don't have the answers to it. But I have seen a a level of both efficiency and need for our products that I haven't seen. Like I said in my lifetime that we are becoming an industrial nation. Once again, I mean steel is running at 92 percent capacity which has never happened. When you look at the efficiency levels that were running at (00:30:29) today. Well, you're sounding fairly bullish at the moment. Do you see some areas of concern where we were clearly not strong? (00:30:36) Oh, there's no question about it, but I don't overall basis what built this country was industry remember and it was you know, it was the steal the cars you technology and everybody was concerned that we sold all this and turned our equipment over to other countries to compete with us. I don't believe that that's the case anymore. I believe that we've become and will continue to become Premier again is to being a great industrial (00:30:57) nation. Let's go back to the telephone with more questions for our guests Irwin Jacobs. And it's your turn. Go ahead, please. First of all, I'd like to say that And vessel space and just a general shortage of container boxes to go overseas. What is your business sir? We work in small manufacturing plant is with raw product and leather and I'd like to say I'd like to ask you if you think from a manufacturing point of view. What do you think of the business climate in Minnesota and if it will get any better or from a competitive level in this country about ballgame? (00:31:33) Okay. Well talking about Minnesota. Listen. This is my home. I've lived here all my life. I love it. It's a quality of life that I always said, you know our taxes always seem to be higher here than most places and I say which you get what you pay for in life to a great degree. I think that the only problem I have I don't mind paying my additional carry for the quality of life that we have here, but I will continue to to hammer down on our government within our state which I believe is something to be From the standpoint that we have scared away so much industry in the state and although I see us out looking for another hundred jobs here another hundred jobs there. We've really lost the what I should say is the major growth that from industry that take place within our state at least at this initial time. We still aren't facing up to the workman's comp situation the tax situation and it isn't by myself paying less taxes it just looking at the whole overall situation surely our quality of life. As far as I'm concerned is the best there is anywhere in the world yet alone in the country, but when it comes down to the realization of what it takes you don't just pick that up overnight. It's something that you either have or you don't have and unfortunately we continue to have a legislation group that really doesn't understand the realities. There's so much back scratching and you take care of me. I take care of you or internal fighting within themselves as to what they think is important that Really the major job does not get done. (00:33:08) All right back to the telephone another caller with a question and it's your turn. Go ahead. gentleman, I have a couple of ins her when I was wondering if it was necessary for our student these days to achieve a master's degree in order to become a top ranking officer in a large corporation. My second question is is it well what kind of job could a person in the Communications Department get in a business these days I'll hang up and listen to your answers. Thank you, (00:33:42) you know there are situations that I'm sure that you need your Masters for and there are other situations that you don't I think your question is are you I will think this is what is anyways are you asking the question? Is it absolutely necessary to have a master's degree to get the proper position within a corporation. They know I don't think that that's absolutely necessary and yet there are some people to perceive if they have their masters classes are number one in the class or number two or whatever that number is they automatically have assured success within where they're going and in the business world. That is absolutely not true either. I remember speaking to the graduating class at The Amazing Race of Minnesota and there were some 200. 80 or something of them couple years ago, and I said that I'm going to speak to the bottom two hundred ran the top 80 to tell them that I think their life is out ahead of them and that they got try maybe a little bit harder but it's not going to be any easier or harder for anybody no matter where you graduate your class. If you have the basic common sense with which to go out there and compete in this world. I think that was basically your question is do you need it? And I really I do not in any way discourage anybody from an education. I have five children. I absolutely want them to have they're all getting their formal education for those that want them and making sure that they all get the chance and I encourage it is very important and the one thing in my life. I wish I could have over again is that I want to go to night school and it isn't because it would have made me better in business what it is. I wish I had a few more abilities than what I do today in the form of knowledge and I'm hungrier today than I've ever been before for it (00:35:10) back to the telephone and another listener question for our guest Irwin Jacobs. It's your turn. I had a quick question. Awesome editorials as I dread basically about the fixed asset regeneration in American industry and something that you alluded to the fact of the low profit margins that corporations were unable to generate enough money to put back into fixed assets to ensure long-term growth and long-term competitiveness competitiveness in the world market now hang up and listen to your answer. Thanks. (00:35:46) Well, I don't really know what the question is. You've given me the statement really in what it is, but I will just comment to that and just say to you that a lot of people use that as an excuse such as people for example who have a balance sheet today that have written off these fixed assets over the years where they really show no value in the balance sheet, but they're worth a lot of money and really are not getting the return on those that they could get say if they took that money and invest it in something else within their business. A lot of people have forgotten about what Are their net worth is or what the worth of certain properties are based on the last 20 years in these companies out there as we know are 50 and 40 and 30 years old who have been very fortunate to buy whether it's real estate or fixed assets or whatever the case may be that have written it off their books and not using it that doesn't mean that they have to close their business up to get the value out of it management should always be aware and should always be concerned about shareholders Holdings because you as a shareholder out there if you were looking at a balance sheet, it was on the books for 0 you really are at a great disadvantage not knowing what the value of that company is and how will you know if management doesn't do something about it. That's why we are seeing so much restructuring in America today and that's become Vogue word restructuring and that's being done with people who have had the ability to take their assets and convert them into money either to pay them back to their shareholders or to spin off businesses to their shareholders or whatever purpose was to bring the value out that really isn't on the balance sheet. It's an ongoing job and something that has to be That publicly held companies at all times (00:37:19) back to the telephone for another question and another listener and it's your turn. Go ahead, please. Mr. Jacob select ask you a question related to the fundamental Integrity of the stock market. It seems to me that in the merger acquisition game. There are three primary players, you have the arbitrageur the investment banker and finally the corporate Raider himself these people work together intimately. They're involved seven days a week in any legitimate acquisition Viet hostile or not. So there is months of planning involved a lot of key people are going to know about the attempt to the plans taking place. If any of these people violate that confidentiality by making One telephone call, there's the possibility of making fantastic sums of money while at the same time, you're telling yourself that no one's getting hurt in short leaving aside any of the revelations of boesky or the others. How can the market be kept clean? (00:38:15) Well, first of all, Let me tell you that it and I got to answer this in several different ways. First of all, you said to preclude boesky which was you know, phenomena of our time all by itself and to think that there's months of time to spend these transactions that is not true. There is not months of time unless you are monitoring the situation if some one is eminently going after a company and you are going to do it. You aren't going to do it over months. You're going to do it on a very short period of time and that's where the danger becomes because there's no question that we hear rumors every single day as you pick up your newspaper that this company stock is too cheap and there are Canada to be taken over that is an ongoing line of that comes through every day and whether it's radials newspapers or TV but what is important is this Integrity that you speak about and I think that I've often said that I believed that if we gave the necessary tools to the SEC to do this in the proper. Way, then there would be some example sect that when effect tell people look you're not just going to get your hand slapped. You're going to jail. If you do something wrong with in it. There's no question in my mind that there has been a world of Correction that's been done since the boesky situation. However, is it been perfected? I don't believe it has will it be? No, I don't believe it will be I think the greed that exists out there today and I'm not picking on Wall Street or New York because you see it in more places than that. You're dealing with the human element and the scary part is is what you just brought up that it that telephone call that you speak about to a person but I will tell you that the government does have the ability to monitor in the New York Stock all the exchanges do and they watch it very very closely today that anything strange that happens out there the electronic system that's set in place today whistles and bells go off. I just don't believe that That you can allow this to happen without continuing monitoring this and policing it to take away. This greed that exists out there in the form of what it does. Also. I would say to you you put together the arbitrageurs the so-called Raiders and I think the investment bankers as a group that makes us all happen. That is absolutely not true at all and I will tell you there are more transactions being done among business than there are between arbitrageurs and Raiders today. If you will look at every acquisition since the first of the year only and I will take you back further than that. You will find that it is business consolidating with business. I mean when G General Electric decided to do a take over, I believe it was I forgot name of the company but Whirlpool had made the the offer first for it and had a transaction with the company in a friendly form on a merger GE came and they did a hostile takeover. Now, you don't consider them a Raider as the street considers him and yet look at what's taking place in business out there today. The Raider really is not The factor and yet if I'm considered a Raider which I've been called many many a times and I'm not afraid to hear that directly or indirectly. It isn't myself or the group of people such as myself that are making these markets. Although there is an awareness to our existence out there based on the fact that there are people are willing to take them on and if that's bad so be it in the form of what you or somebody else thinks but I think there's a definite place for that and just the thought of the fact that people stay on their toes and be aware that there are people out there that can run their businesses may be better than they can if they aren't able to do it. I think that's a good check and balance (00:41:58) about 15 minutes remain in our conversation with Irwin Jacobs and we'll go back to the telephone for another listener question. Hello, it's your turn. Hi, I'd like to know what Irwin's I get an update on his battle for control of the Minnesota Vikings and As a stockholder, does he feel that there are now operating better as he sort of watches over them? Thank you. (00:42:24) Well the battle isn't over with yet. Hello sure, you we continue to litigate the situation. Am I pleased with an absolutely not there's no change in my look at it. What's confusing to the public is not knowing all the things are going on. It's not because we're keeping it in some secret vault. We are in the courts appealing the last decision as well as Carl and I are on the boards Carl pull and I are on the board of the Vikings. Am I satisfied with the progress that's taking place or no? I'm not satisfied with it at all. I really can't tell you where it's all going to end up at this point. There's no secret to the fact that Mike Lynn is still there and doing his thing for the most part but rest assured that we are there with the a greater looking interest in than they've ever had (00:43:11) before. All right back to the telephone more questions for Irwin Jacobs and it's your Go ahead, please. Hello. Mrs. Jacobs. See my question is I'm a student and I'm just I got undergraduate degree in business and I know finishing up law school at night. And my question is I want to get into some sort of business that deals with managing and owning a small company. And what what should I do first? My first job should be in order to get involved that sort of thing and what sort of Industry should I go into as far as service real estate manufacturing Etc. (00:43:45) Well, two things first of all, there is no set industry what a person should go into just per se that's what I think you should do. I think it's important a lot of people want to go in business for themselves today either coming out of school or people who have been working for other people and you have to know your strengths and have to know your weaknesses in order to make the right decision what that is, but surely coming out of school whatever age you are man or woman. It's my belief that rather than just say you want to do this that you get the experience of understanding what it is to be involved in business. It's not a cakewalk for the best businesses. It's not a cakewalk, and it's not a sure thing. What I think is important is people to get experience at whatever level. They get it in before they make that decision, and that doesn't assure you success either by the way, but surely you at least have a look at what business is all about from an employee's point of view or an associate's point of view or whatever the case may be out there. I think what's important for people to do is to understand rather than just make that decision that I want to be in business because I was sure you there's a lot of people who have done just that and I'm sorry that they did it and there's other people who have done it and couldn't be happier myself speaking (00:44:52) more callers with questions. We'll go back to the telephone and it's your turn to speak with Irwin Jacobs. Every year of college come in and explain what's going on in the business world and he wouldn't have people talking about this Great Gulf between the rich and the poor and you wouldn't have candidates that we have now on the Democratic side talking about taking away from the rich to redistribute to the poor in the form of taxes. They would understand that these people don't put it under their mattresses. They have to put it to work to employ people and we have such misunderstanding. I think it was treated very well by the government mandated plant closing notice that was such a propagandistic thing as far as explanations were concerned and they didn't use your good people the Twin Cities who have the new technology businesses. They were used by macneil-lehrer to illustrate beautifully why that should not be government-mandated. All right. Let's get a reaction. I have a feeling you have a soul mate here in (00:46:06) Irwin Jacobs. I tell you that is really a great question. That's one that's close to my heart from the standpoint that I do get out as much as I possibly can to Beak I've done it both in high school and the college level and in fact last week. I had a debate with a well-known Professor from Columbia University. That was absolutely I was so upset listening to his belief as to what you take place in this country. And I mean, he was a very well-known Professor when I listen to his opening statement. I will tell you what I said to the group there I said, the only thing that I was really upset about was to be the belief that he was actually teaching our young people in America with his thought processes to what they had. Look forward to based on what he believed was going to take place in the world out there. And if you listen to him the world was coming to an end very shortly based on what's Happening to American Business. I couldn't agree more with you that there's a misconception or people are not understanding in the in the teaching process of what the real world is really all about now. That doesn't go totally for everybody. I've had some great experiences. At universities and there's been some bright people both at the professor and the student level but I don't think there's any question that the number one thing that we lack is the clear understanding of what the system is all about. And that isn't something I can do here today for you in a few minutes that we've got but I think you bring up a very important and valid point that the system and surely I know I try and do my part but it's not enough. I know that but I encourage everybody out there in business no matter what levels of success that they've had in the forms of whether their corporate Executives or whether they're entrepreneurs are running their own businesses. It is important and they owe it to the system to get out there and really speak about the human things and the common sense of life that has much to do with success and failure when they get out of school and I see some of the ideas that they're coming out of there with it is scary believe me it is so I agree with you and I think it's important and that has no beliefs as to what my I mean, that's not to do with my beliefs what I should be saying, but I think it's important. More people speak up over that (00:48:18) back to the telephone another listener with a question and it's your turn. Go ahead. Yes, you spoke critically of the legislature a few moments ago and it was wanting to get your opinion on two things. One is the Greater Minnesota Corporation. And the other is the governor traveling abroad to generate interest in Minnesota as a Locale for international trade business. Whatever the case may be all of a sudden. (00:48:48) Well, I guess what you're saying is the legislature they get this right? (00:48:53) Well, the Greater Minnesota Corporation question pertains. I supposed to the long-term payoff which may come from this from this public supported (00:49:01) agency. And I frankly I know I was at one time was supporters of the Governor from the standpoint even put money in there to allow them to go travel to do these things with but if we're going to get into the governor's situation, I don't think this is the proper time for it from my own point of view becomes my political (00:49:16) viewpoints. Well, does the governor doesn't matter if it's a purpose shh sinner Mikaelson or anybody else do they have a role when traveling abroad and trying to sell the state's attributes its business climate doing business from (00:49:27) Minnesota. What's remarkable to me is you know, why do people when they're having a situation. I mean, why can't we take care of our situation as it exists today and to create the example based on what we're doing rather than go out there and finally we've lost a lot of industry in the state and you know, how many times have you heard a thousand jobs or 300 jobs or 500 jobs are lost and you Somebody going out looking for a hundred new jobs. I'm a-saying give up on the job site of it. But we have got a lot of domestic problems to solve within the state before we can go out there and tell them what a wonderful place. This is to come from a new job area with with the disadvantages of what we have of other (00:50:05) states can a state-supported R&D organization like Greater Minnesota, which doesn't engage I guess in the R&D itself, but which might help provide seed money grant money for research and development and product development. Is that a role for government (00:50:18) what's wrong with enhancing the businesses that we have within the state? You know, I go back to that again. Are they not important any longer the business we have here are the only important when they get ready leave town and then you say what do you need to keep you here? My viewpoint is this is where the hardcore decisions come from the legislature and from the powers to be there in government is to deal with the realities of life that we have today. We got a lot of businesses a lot of people to take care of right now and I'm not for turning off the the program to go out there and bring new technology new businesses everything else here, but the Best set by what is here today. And if we can't deal with the realities of what that is, you are going to fool these people they're going to come running here if there's better places for them to go and they're going to look at it from a financial point of view first and we know that they don't realize the quality of life. They haven't had the pleasure that we've had to live here all our (00:51:02) life. All right a few minutes remaining in our conversation with Irwin Jacobs back to the telephone another listener question. It's your turn. I've got a question about mr. Jacobs interest and maybe his insight into Leisure and entertainment Industries given the world currency situation. Most of our exports are back but regardless of that us television movies records other Leisure products have been consistently net positively exported for years. I imagine he touches on some of that with this building their efforts and I'm curious about his opinions and his interests in those fields. (00:51:39) I don't think there's any question that probably one of the number one areas of growth on a relative basis is the area of records and movies that we produce in this country today that the hunger for our product that exists in the world out there today from all countries. Whether it be Japan or from England France Germany, whatever it is, their desire for our product today is is that a rate and Pace that has never existed before and I see it continuing to grow and there's more effort being put in a to create it for for them. I have a see I have a son who's in the acting business. So I do follow it from a standpoint of just watching his career, but I do have some friends in that business also and they are telling me that is absolutely the brightest picture they've ever had before so I would be very much an optimist as an industry looking forward from exporting both all forms of entertainment in the in the sense of Records or Movies out of our country (00:52:41) time for a couple more questions and we'll go back to the telephone. It's your turn. Go ahead, please. Yes. Mr. Jacob most of the problems. I see in the legal system the economy social welfare services are the result of people not taking responsibility for themselves. I'm wondering if you agree with this. How would you change this? (00:52:59) Well, first of all, that's a awful broad question a real simple answer when you say the individuals. I don't think there's any question that there's people that take advantage of the system out there from the standpoint of standing up and screaming and yelling the loudest because they're not being taken care of or some very focused looks at certain groups that say they are the under privileged of what there is there surely are needs out there that exist today for both individuals and groups of people in our country. I don't think we will ever accomplished perfection in the area of taking care of all the needs or what they are. I think what's important is that we never let up the the the fact that there is a need for it out. There. It is a responsibility for us who are fortunate enough to be able to Open those areas and the government you cannot for one minute believe the government's going to be able to carry this burden all by themselves. I just don't agree with that time (00:53:48) for one more question. And that's yours. Go ahead, please I understand that over 20% of prime Real Estate Value in New York state and California as well. As thousands of Acres of most productive. Farmland is controlled by Foreign interests. And I just wonder when these investors can get higher interest rates and other countries, they'll withdraw their funds from the US as any of us would do. What do you think will happen to the value of our Prime real estate when these foreign investors withdraw their in (00:54:20) investment? I don't really see them as a group draw withdrawing you got to remember this is still the safest place in the world and history has proven that I think everything going forward tells you that this is the safest place in the world for anybody to invest in for safety reasons when you look at what's happened to different parts of the world out there. So I believe that it's really a safety. As far as the foreign investor looks at both from a standpoint of safety as well as from a standpoint of their investment believing that it will be worth obviously more someday and a lot of people from out of the country are just buying because I think this is part of what they should have in their own personal portfolio, whether it be from the east or the west or whatever the case may be. I do not see the foreign investor pulling out of the so-called real estate market matter of fact, I would not be surprised to see them have more real estate in this country than what they have today. (00:55:09) We've got about two minutes remaining. Do you want to make a little news you've talked about some of your business enterprises Larson Watkins anything you want to announce its cooking and (00:55:18) we're always we've always got something going on then from the standpoint. I don't have any great Public Announcement as I'm sure you're aware. We're going private with the Min star which has been around several years and its really kind of a it people have called me almost with an emotional feeling to it the saying, you know, we've been around with you for six seven years in this. It's kind of sad to see it go away from that point. It's something for us to talk about We're still around. We may be back in the public markets over something (00:55:42) something you've spoken very buoyantly of entertainment. Obviously, that's one area. You think holds some considerable investor promise apparently is a try. (00:55:49) No I think very much so that the hunger for entertainment is something that continues to grow at a (00:55:55) pace what else food products from the United States abroad the food processing. What are the bright areas that (00:56:00) you looking we're looking today. Now as we've seen the Midwest particularly. Our farm communities are in desperate need of Rainer. We've got some real severe problems on our hands looking forward from Commodities point of you seen what's happened over the last 10 days and you know, it just shows you how vulnerable we are when you see something like that happen can it happen, you know whole country have inflation based over one, very small region (00:56:22) and basic manufacturing as opposed to service. Are you (00:56:26) very much. So I'm very high in basic manufacturing. There's no question about it that were in that cycle as far as I'm concerned that is really a Revolution going the other way saying, hey, we have the competitiveness. We have the advantages that we haven't had in a long time with the dollar. Have the efficiencies and we've got some good management and good operating people and good employees out there that really care and want to take care of their jobs today. (00:56:46) We began the hour by speaking with Irwin Jacobs about the international Olympics the international Special Olympics to be held in the Twin Cities, Minnesota 1991. He gave out an address. This is quite apart from the conversation. We've been having for the past 55 minutes, but as mr. Jacobs pointed out about 30,000 volunteers will be needed for that. He said and you can write to him directly if you're interested in more information. That is Irwin Jacobs. 100 South 5th Street, Suite 2500 Minneapolis 55402 that's the Special Olympics. Thanks for coming by and thank you for my great pleasure. And we also thank all of our listeners for calling in with questions and thanks to Bill where I'm for handling the telephone traffic. Now we have some time to pass along a bit of weather information and on that front there was some precipitation in the forecast but it is not all that widespread at all. We still do not have the brand-new Minnesota forecast, but there has not been a great deal of change from the early morning forecast for Minnesota today. Mostly cloudy with scattered showers and thunderstorms north and west partly sunny and hot in the Southeast highs from the mid-70s north west to the low 90s South tonight and on Tuesday, mostly cloudy with a good chance of showers and thunderstorms North and Central and a lesser chance of rain in the South low temperature readings overnight from the low 50s North West to the upper 60s in the south in the highs tomorrow. The upper 60s North West to near 90 in the South doesn't look as though that cold front is going to move very much at all for the Twin Cities this afternoon partly sunny and hot and the high around 90 and southwesterly winds up to 20 miles per hour tonight partly cloudy with a 30% chance of rain. Stay with us. Now more fine programming on this Minnesota Public Radio Station a reminder that midday from Minnesota Public Radio on Monday is made possible with the financial assistance of television station KX L. Ik XLT serving Central, Minnesota and Rochester on UHF channel 41 and 47. This is Dan Olson reporting. And a reminder that today's programming on ksjn is sponsored in part by Paul McRoberts trial attorney and advisor in legal matters. Stay tuned take out his next on ksjn 1330 Minneapolis st. Paul the times 1 o'clock.