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Southland Exporters to Japan Hurt by Falling Yen : Trade: U.S. firms are beginning to see a reduction in orders because a strengthening dollar is driving up costs to their customers.

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TIMES STAFF WRITER

The plunging Japanese yen is beginning to hurt Southland companies that export goods to Japan. And each day that the yen drops further compared to the dollar, the worry level goes up at other exporters that haven’t yet felt the pinch.

“We’re hearing that business either is coming to a screeching halt, or that Japanese (distributors) are delaying orders until they see what will happen next with the yen,” said Jana Goldsworthy, a marketing specialist at Pacific InterTrade Corp. in Westlake Village. The consulting firm helps develop export markets for U.S. manufacturers.

Since Jan. 1, political and economic turmoil in Japan have driven the yen down 10% against the dollar. It took 144 yen to buy a dollar at the start of the year. Now it takes about 158 yen. A year ago, the rate was 132 yen. The more yen to the dollar, the more expensive U.S. goods become in Japan.

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Many U.S. companies only recently have begun to sell products in Japan, as that market has slowly opened to foreign goods. The Bush Administration has been putting increasing pressure on Japan to import more U.S. goods to help trim the trade imbalance between the two nations. But the yen’s weakness now threatens to destroy many of the export gains made by U.S. companies in recent years.

Perhaps nowhere else in the United States is Japanese trade as important as it is in the Southland, the jumping-off point for many firms involved in Pacific Rim export. How some area firms are being affected by the yen’s fall:

* Chatsworth-based Paramount, a manufacturer of lawn trimmers, blowers and other garden equipment, has had Japanese reorders “pushed back and pushed back” as the yen has continued to drop, said Pacific InterTrade’s Goldsworthy. Her firm helped Paramount enter the Japanese market just last year. Shipments totaled $1.6 million.

Because the Japanese distributors of Paramount’s products pay for the goods in dollars, they now must ante up 20% more yen than they did a year ago for the same product. So if they continue ordering Paramount’s goods, the distributors either must charge customers 20% more or keep prices level and sacrifice profit margin. So far, the distributors have opted not to reorder on a large scale, Goldsworthy said.

* Zero Halliburton, a Pocoima-based firm that makes upscale aluminum briefcases, luggage and photographic equipment cases, is having problems with a Japanese distributor that is under contract to sell a specific quota of Zero Halliburton luggage in Japan.

The distributor can’t come up with the extra yen it now needs to buy the U.S. company’s goods, said Scott de Ruyter, Zero Halliburton’s international sales and marketing manager. “They’re coming here Monday to discuss the situation with us,” he said.

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* In Anaheim, the Kwikset lock-making division of Black & Decker Corp. “hasn’t seen a substantial slack-off in orders, but the warning signs are coming across,” said Ray Eeling, group marketing manager of hardware and plumbing for B&D;’s international group.

He said he has been getting faxes from Japanese importers warning that the yen-dollar rate has created “a bitter time” for them. Kwikset sells residential and commercial locks in Japan.

Some area companies say they’re able to sell in Japan despite the yen’s decline. Sideout Sport of Pasadena, which makes a variety of beachwear, shipped a big order to a Japanese distributor in the first week of January. Sideout just learned that the distributor’s order list for a May shipment will arrive Friday or Monday, said Charles Malouf, director of licensing.

“The yen doesn’t seem to have affected our business,” Malouf said. Sideout’s clothing already was a high-end line in Japan, and consumers there seem to be willing to pay even higher prices for American fashions, he said.

But for many U.S. exporters, a further decline in the yen will mean lost business in Japan. The alternative is that U.S. firms will have to cut their prices, giving up profit to keep market share. The lower the yen goes, “I think there will be a lot of pressure on our side to lower the price of our products,” said De Ruyter.

The Japanese themselves seem to think the yen can only get weaker. “We’ve been getting feedback from Japanese clients, and they’re talking about 170 yen to the dollar,” Goldsworthy said. “That makes us nervous.”

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Besides the damage to U.S. exporters, the falling yen poses another danger to companies here: It makes Japanese goods cheaper in the United States.

“We were looking at a lot of new export business with Japanese (trading) companies. Now they’re saying, ‘Boy, have we got something nice to sell you ,’ ” Goldsworthy said.

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