Exporters Look to Stage Comeback in 2003; Iraq a Variable
By CHRIS CZIBORR
Orange County exports should start growing again in 2003 after falling for the past two years.
Local exports are pegged to grow by 26% to $11.5 billion next year, according to California State University, Fullerton. That’s up from back-to-back yearly export declines: a projected 4.7% falloff in 2002 and an 11% decline in 2001.
“I expect a strong rebound of export growth for Orange County unless dramatic unexpected events unfold,” said Vincent Dropsy, international economics professor at Cal State Fullerton.
War with Iraq could hurt OC exports, Dropsy said.
“It’s difficult to predict,even the experts do not agree about the range of scenarios,” he said. “If oil prices skyrocket and stay high, then we could have a worldwide recession, which would reduce our exports.”
Cal State Fullerton expects North American Free Trade Agreement partners Canada and Mexico to buy about 30% more in OC goods in 2003 compared to this year.
“Mexico and Canada will have strong rebounds as export markets,” Dropsy said.
Mexico was one of the few countries in 2002 that didn’t decrease orders for OC products. In 2002, Mexico bought a projected $2.1 billion in OC exports,a 7.3% increase from 2001.
“We are still bullish on Mexico,” said Ed Ehrman, worldwide director of operations planning for Fullerton medical gear maker Beckman Coulter Inc. “The U.S. economy put a bit of a damper on Mexico this past year, but the country is more stable than it was a few years ago.”
Expectations for Japan remain mixed.
“Japan is a big question mark,” Dropsy said. “The government has proposed reforms, but the question is whether the reforms will proceed quickly. We expect Japan will partly recover in 2003 from its quasi-stagnation.”
OC’s exports to Japan in 2001 fell about 10% and 2002 exports are projected to come in 15% lower, according to Cal State Fullerton. Next year, OC exports to Japan could rebound 26% to $1.3 billion, Cal State Fullerton said.
Beckman’s Ehrman said his company expects to have a reasonably strong year in Japan.
“We will have a better year than we’ve had in a while in Japan,” he said. “We have some new products that we expect will do well there, even though the economy there still is struggling.”
The European Union looks likely to show recovery next year.
“Trade between OC and Europe will improve next year,” said Esmael Adibi, Chapman University’s economic research director. “But growth will be slow.”
South America stands to be a mixed bag.
“South America is still in turmoil and is a high-risk area,” Beckman’s Ehrman said. “I don’t see a turnaround happening there anytime soon.”
One bright spot: Chile. The U.S. and Chile earlier this month completed a free-trade pact. Both sides said they will submit the agreement to their legislatures for approval in 2003.
MARKET TO WATCH: CHINA
After a flat 2002, China is set to resume strong export growth for Orange County next year.
California State University, Fullerton expects China to buy $314 million worth of goods from OC next year, up 22% from 2002.
“China will continue moving up our rankings of top export destinations,” said Vincent Dropsy of California State University, Fullerton. “We expect it will become a top 10 export destination for OC in the next three to four years, especially because the country recently joined the World Trade Organization.”
OC exports to China have more than doubled from 1997 to $247 million in 2002.
“We expect China to continue to do real well for us,” Ed Ehrman, director of worldwide operations for Fullerton medical gear maker Beckman Coulter Inc.
Officials at Irvine computer security products maker Rainbow Technologies Inc. also are upbeat about China.
“The market for security products there is very strong and their economy is still growing very rapidly,” said Humphrey Chan, vice president of Asia-Pacific operations for Rainbow. “We expect demand for our products there to grow 20% in 2003.”
,Chris Cziborr
