Orange County exports should hit a milestone next year, surpassing 2000’s record after a recovery from the recession and technology meltdown a few years ago.
The weaker dollar is helping, making products from here more affordable in Europe and Japan. But the real driver is economic growth in Asia.
In all, local exports are pegged to grow 10.7% to $11.9 billion next year, according to California State University, Fullerton. That would be a record, topping 2000’s tally by about $500 million.
Next year should be a continuation of a trend, according to Cal State Fullerton. This year, OC exports are seen growing 20% to $10.7 billion, the second straight year of gains.
Beyond next year, exports are seen rising through 2006, hitting $12.9 billion.
OC exporters have pretty much every major region to thank. Mexico, OC’s largest export market, is seen absorbing $273 million in added shipments next year, for a total of $2.6 billion.
Japan, the county’s No. 2 market, is seen taking 7.5% more in local exports for a total of $1.3 billion.
Shipments to Europe are seen growing 10.6% to $2 billion in 2005, helped by rebounding economies and the weaker dollar.
“Outside the U.S., our largest market in 2005 will be Europe,” said Michael Sager, senior vice president of marketing for Fountain Valley memory products maker Kingston Technology Co.
The biggest news arguably is expected growth in Asia.
“The markets in particular that OC exporters next year will look for will be in the Far East, particularly Japan,” said Esmael Adibi, director and professor of economics at Chapman University in Orange. “China, Taiwan and South Korea also will be key export markets for Orange County.”
Asia’s gain is seen coming at the expense of Canada, which is projected to buy fewer local goods in 2005, according to Cal State Fullerton. The prediction is for a 10% decline in shipments to Canada for a total of $874 million in local exports.
Part of the reason that OC export shipments to Canada are expected to fall next year is that the U.S. economy is not growing as much as predicted. So goes the U.S. economy, so goes Canada.
“Exports to Canada are showing a continuing downward trend,” said economics professor Vincent Dropsy, who does Cal State Fullerton’s export forecasts. “While Canada’s economic growth has not been as strong as expected, that alone isn’t enough to explain why export growth seems to be slowing so much.”
On another trade front, textile import quotas are set to end on Jan. 1, giving fabric from China, India and other developing states freer access to the U.S.
That’s good for local apparel makers and retailers, though the few textile producers left here are likely to feel the sting of added competition.
Separately, the World Trade Organi-
zation’s Doha round of trade talks is set to resume next year and could wrap up by the end of 2006. The goal is to ease trade restrictions on goods and commercial services, as well as the thorny issue of agriculture.
MARKET TO WATCH: CHINA
China actually could happen as an export market in 2005.
Long a hub of low-cost production, China is seen taking in $930 billion in Orange County exports next year, a 46% surge. The country is seen displacing Canada as the OC’s third-largest export market after Mexico and Japan.
China’s joining of the World Trade Organization in 2001 is a factor. Next year, Beijing is set to cut tariffs and other trade barriers as part of its membership in the group.
Exports to China could get an added boost in 2005 if Beijing lets its currency appreciate against the dollar, which some expect will happen. Any gain in the yuan would make U.S. exports to China more competitive.
Executives said it’s hard to overstate how well their sales in China are doing.
“Sales for our consumer products in China will almost double next year,” said Jim Peterson, chief executive of Irvine chipmaker Microsemi Corp.
“We believe we can get 25% growth in China next year,” said Michael Sager, senior vice president of marketing for Fountain Valley-based Kingston Technology Co.
,Chris Cziborr
