Orange County exporters had a buoyant 2000, with an anticipated 15.1% increase to $14 billion in exports this year and slower but still strong growth projected for 2001, according to California State University, Fullerton.
“Overall, the picture is very positive,” said Esmael Adibi, professor and director of Chapman University’s Center for Economic Research in Orange. “We are very bullish about export growth in OC.”
Total OC exports,mainly technology products, industrial goods and medical and scientific instruments,are expected to grow 10.5% to $16 billion in 2001. By 2004, OC annual exports are expected to top $20 billion, according to Cal State Fullerton.
“Most of the growth in exports will come from Mexico, South Korea and Southeast Asia,” Chapman’s Adibi said.
This past year’s exports accounted for about 12% of the county’s gross domestic product and helped support about 223,000 jobs, or about 17% of OC’s non-agricultural jobs.
Orange County companies say they hope to expand sales to key global markets in 2001. Beckman Coulter Inc., a Fullerton maker of medical diagnostic products, is looking to further growth in Asia next year, according to spokeswoman Jeannie Herbert.
“The Far East continues to adopt Western medicine, which is good for our business,” she said.
A big variable is Japan, where the economy has been in the doldrums for years now. Economists expect Japan to rebound late next year.
“Japan is a concern because its economy continues to stagnate and doesn’t show any signs of appreciable improvement,” said Anil Puri, dean of the College of Business and Economics at Cal State Fullerton. “This should change during the second half of 2001, where we expect to see substantial improvement.”
Beckman Coulter is uncertain about its Japanese sales for next year: “Japan has unresolved economic and healthcare funding issues, which makes it a question mark for us in 2001,” Herbert said.
Mexico, which surpassed Japan as OC’s top export market in 1999, should post further growth in 2001. Next year, rules providing preferential tariff treatment for Mexico’s border plants are set to be phased out, and products shipped from the plants will have to be 50% or more made of components from Mexico, the U.S. or Canada. The trend already has helped drive up OC exports to Mexico, and should fuel shipments next year even as Mexico’s economic growth slows.
Slower U.S. growth also could have a ripple effect on Europe and Asia, Cal State Fullerton’s Puri said, and impact local exports, especially if the U.S. slowdown is more dramatic than expected.
Countries such as Mexico, South Korea, Taiwan and Singapore are particularly vulnerable to fluctuations in U.S. economic growth, he said.
“They do value-added production and then re-export to the U.S.,” Puri said. “Trade with Japan and Europe is more likely to comprise of completely finished products.”
Still, Puri said he is optimistic about OC’s trade growth for 2001. “On the international front, I don’t think there are any major problem areas for the county,” he said.
Interplay Entertainment Corp., an Irvine video and computer game producer, saw global sales increase in 2000 and expects the trend to continue next year, according to Kellee McKeever, director of international sales.
“A few of our titles hit No. 1 in sales in Australia, and we’ve seen huge growth in South Korea,” she said. “Asia in general has been improving consistently each year since bottoming out in 1997.”
Latin America, which also experienced a sharp downturn during the late 1990s, has not recovered to its pre-1997 levels of growth for Interplay, McKeever said.
Interplay anticipates a positive 2001 for the game maker’s Japanese sales, though that’s more a reflection of the country’s hot video game market rather than the overall economy.
“Japan will be one of our biggest foreign markets next year,” McKeever said. n
