- 7 -
to be inserted between 10 and 17 meters below ground. It was
estimated that it would cost $1.4 million to level and
reconstruct the factory floor. BTR Dunlop, Inc. (BTR Dunlop),
was not made aware of these problems before it purchased Schlegel
Corporation in 1989.
Economic Conditions
In mid-1989, the U.K. economy was slowing, following a long
period of growth that began in the early 1980's. Gross National
Product growth peaked in 1987 at a rate of 4.7 percent and
declined to 4.3 percent in 1988. This trend was expected to
continue for the following 2 years with a recovery anticipated in
1991 or 1992. In 1989, the U.K. automotive industry was,
however, in a position to benefit from the impending European
community integration set to occur at the end of 1992. There was
concern that the resurgence of automobile production might not
help automotive component producers because many automobile
manufacturers in the United Kingdom were using components from
abroad. The U.K. construction industry had experienced
significant growth in the years leading up to 1989, but, due to a
rise in mortgage interest rates, this trend was expected to
decline.
The economic conditions in Germany in 1988 and 1989 were
good, with both the construction industry and automotive industry
expanding. The automotive component industry was seeing signs of
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