WORLD OF HURT
OC Exports Set to Fall Again, Rebound in 2003
By CHRIS CZIBORR
Orange County exports are headed for their second straight annual decline as all of the county’s major markets curtailed buying this year.
Shipments are pegged to fall 4.7% to $9.1 billion this year, according to California State University Fullerton.
The drop follows an 11% exports plunge in 2001.
“This year we had an export downturn due mostly to the global economic slowdown,” said Vincent Dropsy, associate professor of international economics at Cal State Fullerton. “But with the expected economic recovery, we expect exports will resume growth.”
That’s the good news.
Next year, Cal State Fullerton projects a big export rebound,26% growth to $11.5 billion.
Exports are seen hitting $12.6 billion in 2004 and $13.6 billion in 2005.
For now, OC’s major markets,Europe, Mexico, Canada and Japan,are slumping.
“Our exports have slowed down since the beginning of 2001,” said Anil Puri, dean of the Cal State Fullerton’s College of Business and Economics. “The U.S. has the largest economy in the world, and until that starts recovering the rest of the world is not going to move too much.”
Asia is a relative bright spot, said Humphrey Chan, vice president of Asia-Pacific operations for Irvine computer security products maker Rainbow Technologies Inc.
“Asia picked up the slack for us,” Chan said. “2001 over 2000, our sales increased 10% to 20%. We expect similar growth for 2002.”
Even Japan, which is suffering from a long-running downturn, is showing some signs of life for Rainbow, Chan said.
“In the third quarter we did pretty well there,” he said. “Japan was a big contributor of revenue growth in that quarter.”
Japan is the county’s second biggest export market after Mexico, buying about $1.3 billion worth of local goods in 2001.
Exports to Japan this year are coming off an 11% decline in 2001, according to Cal State Fullerton.
“The Japanese economy has been dead in the water a the long time and last year was an especially bad year,” Puri said. “Prospects for a future recovery are dim.”
But Japan isn’t alone.
All of OC’s major markets saw declines last year,a trend that’s likely to hold for 2002.
Only China and two smaller markets, the Philippines and Belgium, showed gains in 2001.
“China is a bright star,” Puri said. “The country is doing very well.”
But while China is a big production country for OC companies, it’s still small as a market for local goods.
Last year, OC companies sent $249 million in goods to China, placing it 12th among OC export markets.
But what’s eye-catching is the growth in exports to China: up 32% from 2001.
With Japan’s slump, Mexico easily topped the list of OC’s export markets again, buying $2 billion of the county’s goods in 2001. But that was down 6.7% from $2.1 billion in 2000.
Canada again was the third largest OC export market, buying $1.1 billion worth of exports,down 16.1% from 2000.
“Mexico and Canada are so tied to the OC and U.S. economies, so exports to those countries decreased,” Puri said.
Mexico has gained in its share of OC exports at the expense of Japan since agreeing to the North American Free Trade Agreement in 1994.
Mexico now accounts for more than 20% of all OC exports, Japan 13% and Canada with about 12%, according to Cal State Fullerton.
Don’t look for Japan to leapfrog Mexico in 2003. The Paris-based Organization for Economic Co-operation and Development recently said it expects little to no economic growth in Japan until the end of 2004.
