Solid markets and a cheap dollar should drive Orange County exports in 2007, though at a softer pace than this year.
Exports are set to rise about 8% to $16.3 billion next year, according to California State University, Fullerton.
This year, exports are expected to come in nearly 15% higher, slightly off the recent 17% peak in 2004, according to Vincent Dropsy, a Cal State Fullerton economics professor.
Orange County exports are likely to remain stable “because our trading partners are doing well and because the value of the dollar has gone down,” said Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University.
“That’s good news for foreigners,they can buy more,” he said.
The dollar fell about 11% against the euro and 3% against the yen in 2006.
Chapman’s forecast is slightly lower than Cal State Fullerton’s. Adibi said he sees them growing about 7% next year, slightly better than the projected 6% growth for California.
P.J. Salvage, an Irvine-based maker of designer pajamas, sells to stores in Europe, Australia, South Africa and Japan.
The company is eyeing global expansion, where it sees “opportunity for substantial growth,” President Peter Burke said.
The county’s apparel makers are big overseas.
Yet “most of the products that we export are high-tech, like machinery and chemical goods, industrial equipment and precision medical instruments,” Adibi said. “All are what we consider high value-added goods.”
Electronics and computer parts make up the biggest piece of OC exports. They’re expected to be about $2.1 billion next year. Next are chemicals, rubber parts and medical devices.
Exports are expected to support about 249,000 jobs in OC next year, according to Dropsy’s estimates. That’s up 8% from the 2006 forecast.
Mexico, OC’s No. 1 trade partner for more than a decade, is expected to remain the top buyer of local goods at a projected $3.6 billion for 2007.
Asia will continue to be a big buyer next year, taking in about 36% of all OC exports.
Japan is the county’s No. 2 market at an estimated $1.4 billion. Taiwan is No. 4 at about $900 million.
South Korea, Hong Kong and Singapore are also in the top 10.
China is more of a manufacturing hub for OC companies, though exports to there are growing. They’re projected to hit $637 million, more than triple the number in 2000.
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COUNTRY TO WATCH: VIETNAM
Expect Vietnam to be the big up-and-comer.
2007 could be the year Vietnam is accepted into the World Trade Organization, a milestone that could boost business there for OC companies.
Vietnam’s economy has grown at about 8% a year, while industrial production has been growing at about 15% a year.
California is the biggest exporter to Vietnam by far with exports totaling about $537 billion in 2005, according to data from the Department of Commerce.
The Commerce Department doesn’t break out numbers for Orange County. Based on the state’s total, OC exports to Vietnam are estimated at about $50 million.
The outgoing Congress just passed a bill making Vietnam a full trade partner with the U.S., after earlier failing to pass legislation. The move clears the way for Vietnam’s joining of the WTO.
Several OC politicians, including Dana Rohrabacher, R-Huntington Beach, and Loretta Sanchez, D-Garden Grove, shot down the earlier bill in November.
The issue is a contentious one in Little Saigon, where many still advocate isolating the communist-led government in Vietnam.
“The rationale that the economic freedom will lead to political freedom has failed miserably,” Westminster assemblyman Van Tran said in a statement. “Unless you couple free trade and with political freedom, you’re giving away two thirds of the store.”
But many in Little Saigon already are doing business with Vietnam. Garden Grove cosmetology school
Advance Beauty College and Tustin-based nail salon operator Happy Nails are opening a school in Vietnam together.
Normalizing trade with Vietnam makes sense, said Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University.
“They realize that there is a benefit to both sides,” he said. “I think those opposed to it are in a minority camp.”
OC apparel makers could look to Vietnam as a place to have their clothes made, said Richard Swanson, a trade specialist at the Department of Commerce’s Newport Beach office.
“Vietnam, for being a developing country but kind of on the move, is becoming very popular with companies from the apparel industry,” he said.
Optimism about Vietnam is tempered by reality. The country is far from becoming the next Asian tiger, Adibi said.
“Vietnam is at the earliest stage,” he said. “It’s not going to be a huge market for us immediately. But over time it would become more important than some other countries, even Europe.”
,Sarah Tolkoff
