Black Future for White?

Perhaps the most sullenly exclusive club in U.S. industry is composed of corporations with annual revenues of more than $1 billion that have wound up in bankruptcy court. At present there are only two members: Penn Central Transportation Co. and W.T. Grant Co., the giant retailer. Soon there may be a third: White Motor Corp., a Cleveland-based maker of heavy-duty trucks.

Last year White lost $69 million on sales of $1.2 billion. Currently, White and its chairman, Semon E. ("Bunky") Knudsen, are in a desperate race against disaster. The company missed a May 1 deadline for repaying more than $100 million in short-term bank loans, and so far has failed to negotiate an extension; the loans now can be called any day that the banks lose patience. The White Motor Credit Co., a financing subsidiary, owes another $200 million. In recent months, White Motor has sought a sorely needed infusion of capital by trying to merge with Cleveland's White Consolidated Industries, a producer of appliances and other products (the two companies were founded by members of the same family, but there has been no corporate connection between them for the past 70 years). Early in May, White Consolidated thumbed down the merger --whereupon John Sheehan, a former governor of the Federal Reserve Board, quit as White Motor's president.

No Plan. Knudsen then vowed to work out a deal with lending banks to save his company--but last week he confessed to shareholders that he had no refinancing plan, only a cost-cutting program. Although Knudsen stoutly denies it, the betting in the trucking industry now is that White Motor will soon have to file a petition for reorganization under federal bankruptcy laws.

If that happens, the event would mark a sour end to the career of Bunky Knudsen, 63, one of the most star-crossed executives in the U.S. The son of a onetime president of General Motors, Bunky went to work for dad's company and rose to executive vice president. Passed over for the presidency of G.M., he did the unheard-of and jumped to become president of Ford--only to lose out in a power struggle with Lee Iacocca, the current president. Undaunted, Bunky in 1971 took the wheel of White Motor and got off to a promising start. He quickly swung a $290 million line of credit from 42 banks, scrapped or sold off unprofitable properties, developed a new line of trucks and farm equipment and built a $30 million assembly plant in New River Valley, Va. In the first two years of his management, White's profits jumped from $2.4 million to $21.4 million.

What went wrong? Competitors say that Bunky spent lavishly, as if he still had the vast resources of G.M. or Ford to draw on, and shrugged off warnings that truck making is a highly cyclical industry. When the 1974-75 recession hit and sales plummeted, White got into a painful cash squeeze, suppliers of parts slowed deliveries and banks became reluctant to go on making long-term loans.

Knudsen still hopes to persuade the banks to pump fresh money into his company. Meanwhile, he is trying to keep White rolling by cutting $38 million this year from operating costs. Among other things, he plans to shrink administrative and sales staffs and close a research-and-development facility. Even if White Motor goes under, there are rumors that several corporations might buy up pieces of the company, if the price were right. But for the moment, both Knudsen's and White's prospects look exceedingly black.

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