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Exports Rebound After Back-to-Back Declines

Exports Rebound After Back-to-Back Declines

By CHRIS CZIBORR

Orange County exports rose in 2003 for the first time in three years, growing 4.4% to $8.7 billion, according to a report by California State University, Fullerton.

The estimated gain marks the first jump in local shipments since 2000, when exports surged 15% to a record $10.8 billion. Computers and electronics made up 55% of local exports this year, followed by machinery at 11% and chemicals and rubber products at 10%.

“The lower value of the dollar and the emerging economic recovery here are driving the current ex-port growth,” said Anil Puri, dean of the College of Business and Economics at Cal State Fullerton.

Shipments to a rebounding Canada made up nearly all of the growth, with an added $379 million in local exports this year. Cal State Fullerton estimates 2003 exports to Canada will come in 40% higher at $1.3 billion.

That makes Canada OC’s No. 2 export market after Mexico. The increase pushes Canada ahead of Japan for the first time since 1999.

“Canada’s been a very good market for us,” said Floyd Pickrell, chief executive of Orange-based dental products maker Sybron Dental Specialties Inc.

The U.S. economic uptick and its effect on Canada helped drive up exports this year. Another factor helping shipments to Canada: the North American Free Trade Agreement.

Canada and NAFTA partner Mexico now make up 40% of OC’s yearly exports, up from 23% in 1994, the year the trade pact took effect.

“The trend has been going in that direction for a while now, not just for Orange County but for California as a whole,” said economist Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University in Orange.

But OC exports to Mexico are estimated to come in lower for the third year in a row in 2003, according to Cal State Fullerton. OC exporters are pegged to send $1.8 billion worth of shipments to Mexico this year, a 6% decline.

Even so, Mexico easily held its spot as the county’s largest export market.

The reason for Mexico’s slump: trouble at the country’s border plants.

From 1993 to 2000, OC exporters did booming business selling electronics and other parts to Mexico’s border plants, which assemble computers, TVs and other products for the U.S. market.

But since 2001, Mexico’s border plants have lost some 400,000 jobs as Asian electronics makers and others have shifted assembly work to China and Vietnam, where low wages trump Mexico’s NAFTA benefits.

The bright side: Cal State Fullerton sees OC exports to Mexico rebounding 33% next year to $2.4 billion.

Fountain Valley-based computer memory products maker King-ston Technology Co. has seen an uptick in Mexico this year, according to Carolina Maldonado, the company’s director of Latin America sales.

She declined to give specific numbers but said Kingston’s Mexico sales are up by 34% this year and make up nearly half of Kingston’s sales to Latin America. The company counts overall yearly sales of $1.4 billion.

“When the U.S. does well, Mexico normally follows,” Maldonado said.

But Mexico still has problems, she said.

“This past year was a tough year, with (President Vicente) Fox not having a majority,” Maldonado said. “We saw a lot of budgets not approved. There is a lot of government business in Mexico. And the credit situation in general was not good. A lot of people are not buying because they don’t have credit with us or their customers don’t have credit with them.”

Officials at Irvine computer security products maker Rainbow Technologies Inc. said 2003 Mexico sales grew 12% in 2003. Mexico makes up about 3% of Rainbow’s roughly $135 million in yearly sales. Baltimore’s SafeNet Inc. is set to acquire Rainbow in the first quarter.

Exports to Japan, OC’s largest export market until Mexico’s ascendancy in 1997, are estimated to have grown 3% to $995 million this year, according to Cal State Fullerton. That’s the first rise since 2000.

“Japan’s economy has been fairly anemic,” Sybron’s Pickrell said.

About 45% of Sybron’s $530 million in yearly sales comes from global markets. Europe makes up a quarter of Sybron’s global sales, Pickrell said, followed by Asia-Pacific at 10% and Canada, Mexico and Latin America at 7%. Sybron makes filling material, sterilization gear and other products for dentists.

“Eastern European countries have been very strong for us,” Pickrell said. “People in Eastern Europe have had nothing for so long there’s a stronger demand for better healthcare in general, so that’s a rapidly growing space for us.”

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