Some S.D. Exporters Ready to Reap Benefits of European Changes in ’92
As exports go, the 20-foot-high, inflatable red Fiat sent to France last week by an El Cajon manufacturer may not appear to be all that substantial a commodity.
But the balloon, created by Bigger Than Life Inc. for the auto maker’s French distributor, could be a visible symbol of the opportunities awaiting some San Diego County exporters in 1992, when the 12-nation European Community market becomes generally more accessible to foreign manufacturers.
Bigger Than Life, which specializes in promotional inflatables, is one of several San Diego exporters that plan to intensify European trade efforts in 1992 and after. As a manufacturer of nontechnical or unlicensed goods, Bigger Than Life officials say, their company in particular stands to benefit from pending changes in European Community trade laws.
“We really would like to move into Europe more heavily,” said Peg Trumper, Bigger Than Life’s international sales supervisor. The European Community’s changes will allow the 5-year-old company’s distributors to more easily ship their products to events in various nations, she said.
The centerpiece of the new European Community rules is the elimination of certain physical, technical and fiscal barriers to trade. Stoppages at customs posts will be reduced, and uniform customs documentation will be introduced for all countries, eliminating the need for scores of different forms.
The European Community will also introduce standardized industrial specifications and requirements that will make it much simpler for foreign manufacturers to produce, package and market products for all of Europe. The new standards, which take effect Jan. 1, 1992, will also eliminate differing tariff rates.
However, manufacturers of technical goods, such as medical equipment and biotechnology products, will still require export licenses from destination countries and so may not necessarily find a smoother path to the European market. For that reason, international trade analysts are at odds on just how beneficial the new trade rules will be for many of San Diego’s high-tech companies.
Dick Powell, director of the U. S. Commerce Department’s San Diego district office, said the new rules will have minimal effect on the “several hundred” local high-tech companies that are already experienced exporters to Europe, for whom the European Community’s changes will require only minor marketing adaptations.
Of local manufacturers’ $2.6 billion in export sales in 1988, the last year for which figures are available, about 26% of that was to Europe, Powell said. The amount nearly equals the 28% of total export sales destined for customers in Pacific Rim nations.
“Pacific Rim, Pacific Rim, Pacific Rim is all you hear,” Powell said. “What happened to the European Rim? Just the fact that we do about the same amount of business there that we do in the Pacific Rim is a surprise to everybody, including the media, because all the hype is on the Pacific Rim.”
The Commerce Department’s San Diego office has been deluged with inquiries from businesses about the prospects of selling products in newly democratized Eastern European markets, Powell said. But local exporters probably won’t make much headway into the Eastern bloc until the market infrastructure of distributors, dealers and sales representatives is developed, Powell said.
Still, the European market changes have been beneficial in that they have caused many local small businesses to finally focus attention on international trade opportunities.
“The big problem most small business people have is they are simply not aware that there is potential outside the United States. That’s the problem,” Powell said, “whether it’s EC ’92 or Pacific Rim.”
Mary Teagarden, a professor of international management at San Diego State University, predicted that small businesses will more easily gain access to specialized markets in Europe as a result of the upcoming changes.
“Consumer tastes will remain individualistic,” Teagarden said. Germans will still be Germans, Italians will still be Italians, each with their own likes and dislikes, she said. It will not be “a United States of Europe,” Teagarden said.
Many small firms now find it difficult to compete in Europe because of the costs incurred to build a product to the varying specifications of the different countries. Now, there may be up to 12 different requirements on the same components for household electrical appliances.
In addition, exporters to the European Community must deal with myriad tariffs and 12 currencies. Simply moving goods from country to country “has been a major headache” because of bureaucratic obstacles, Teagarden said. The new rules promise to do away with all the differences, thereby ensuring one standardized marketplace.
However, Teagarden said, U. S. businesses should not expect immediate results. “Everyone’s looking at it like it’s going to happen overnight,” she said. “I think it will be a slow transition, a very political transition. It will happen incrementally.”
Some executives said the changes are more a cause for concern than excitement. Hal Stitt, vice president of marketing for Wavetek Corp., predicted that a smaller number of larger manufacturers will arise to dominate the standardized market.
“The American industry is enamored with the thought that a united Europe will make it easier to sell,” said Stitt, who is also a committee chairman for the San Diego chapter of the American Electronics Assn., an industry trade group. “American businessmen need to plan to protect their own turf, because it’s going to come under attack.”
Wavetek, a test and measurement equipment manufacturer, has sold its products in Europe since the early 1970s. European exports represented about 20% of Wavetek’s $85.2 million in sales in the fiscal year ended last September.
Of the upcoming changes, Stitt said: “It’s kind of like having a bear outside your tent. That causes a little excitement more than caution.”
As far as Bigger Than Life is concerned, the changes in Europe can only help it take advantage of what in 1992 will become the most populous industrialized market in the world. The 12 countries that make up the European Community have about 320 million consumers--30% more than the population of the United States--with a purchasing power of about $4 trillion, according to Commerce Department figures.
Bigger Than Life’s giant inflatables are assembled at its 52,000-square-foot manufacturing plant on Fayette Street in El Cajon. The company employs 120 artists, designers, production and sales employees.
Bigger Than Life projects that its 1990 sales will total $8 million, up from $6 million in 1989. Exports will account for about 15% of 1990 sales, with nearly half those shipments going to Europe.
Trumper said increased marketing of the company’s colorful inflatables, which range from facsimiles of Bugs Bunny to beer bottles, should mean European sales will continue to increase. The European Community’s changes are an added benefit “because we’re already there,” she said. “We’re already ready for it.”
Past and present clients have included Anheuser-Busch, Coca-Cola, Levi Strauss and others in the United States and abroad. But perhaps its best known creation was a 55-foot helium-filled replica of Superman made for the Rose Parade that broke free of its tethers in November, 1988.
After a 30-minute cruise that included a foray into Lindbergh Field flight patterns, the gas-filled caped crusader crashed on Cowles Mountain about 3 miles west of El Cajon.
