New Study Predicts Continued Increase for County's Exports

By PATRICE APODACA

Dec. 17, 1996 12 AM PT

TIMES STAFF WRITER

A booming technology sector and blossoming trade with Pacific Rim countries helped Orange County exports surge 23% in 1995, a new study found.

The Cal State Fullerton report also projected that exports from the county will rise 17% to 18% this year, and 10% to 15% a year for the rest of the decade.

Foreign trade will grow faster than the county’s economy as a whole for the next several years, as trade barriers between the United States and other countries continue to fall and developing countries’ appetites for Orange County products increase, it said.

Vincent Dropsy, an associate professor of international economics at Cal State Fullerton and the author of the report, said the jump in exports in 1995, to $10.6 billion, was partly due to the reduction of trade barriers under the NAFTA and GATT agreements.

The report followed a Commerce Department study released in October that found Orange County’s exports soared 19.4% in 1995, to $8 billion. It ranked the county 13th in exports among 253 metropolitan markets.

The Commerce Department report included goods made by local businesses and products made elsewhere but distributed by county-based companies.

The Cal State Fullerton study estimated only the value of goods made in Orange County and sold abroad.

The huge leap in exports last year was particularly striking, he said, because it coincided with a severe recession in Mexico. The value of Orange County exports to that country, a major trading partner, declined 2% last year.

But the setback was more than offset by a 30% gain in exports to Asia, the largest market for Orange County goods, and a 38% increase in exports to South America, the report stated.

“The good news is that because of our diversification, particularly our diversification of exports to Asia, we’ve been able to expand our sales growth,” Dropsy said.

“This is a very good sign for Orange County, because trade is a very significant engine for growth in our local economy.”

Dropsy assesses the state of Orange County’s international trade every few years. He said he initiated this latest study to discover how the Mexican economic crisis and resulting devaluation of the peso affected the county’s total exports.

He said he was surprised to discover that growth in Asian trade--particularly sales to South Korea, Taiwan, Hong Kong and Singapore--had more than compensated for the slowdown in exports to Mexico.

The expansion in international trade was accompanied by a 20% leap in the number of export-related jobs in the county, to 201,112 in 1995, the report said. That represents more than 17% of the county’s total payroll.

The study also found that the electronics industry has become the county’s fastest-growing exporter in recent years, with foreign sales zooming 33% to $1.82 billion in 1995 alone.

International sales of machinery, which includes computers, grew 27% to $4.56 billion last year, the report said. Shipments of stone clay and glass, textiles, chemicals, and instruments also logged big increases, it found.

That foreign sales of high-tech products produced in Orange County are booming isn’t surprising, given the competitive edge many local companies have developed, Dropsy said. He sees demand for technologically advanced tools and machines made locally continuing to rise as countries in Asia and Latin America become more industrialized.

Dropsy said his optimism about future county exports was based on signs that another free trade agreement among about 20 Pacific Rim countries will be signed. Also, he expects that China will quickly become a major buyer of Orange County products.

However, Dropsy warned of two risks: the possibility that currency fluctuations and unexpected economic downturns in countries that buy large amounts of goods from Orange County could result in lower numbers than those projected.

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Export Picture Brightens

The value of products and materials exported from Orange County has nearly doubled since 1990 and is projected to reach almost $17 billion by 1999. Annual export values in millions of dollars:

1990: $5,993.4

1999: $16,644.0*

* Forecast

Market, Product Action

Orange County’s top five markets in 1995 imported $5 billion worth of local products. By 1999, those same four nations will account for nearly $8.5 billion. Machines, the largest category of Orange County exports, will continue to be No. 1 in 1999. Value of Orange County exports, in millions:

Top Markets

Japan

1999*: +63%

Canada

1999*: +49%

South Korea

1999*: +97%

Mexico

1999*: 61%

Taiwan

1999*: +88%

* Forecast