Expo Taps Central America

Judy Barcelata sees opportunity in storm-ravaged Central America. Her San Dimas company sells new and used ambulances and manufactures emergency medical equipment such as head stabilizers for accident victims.

“Our culture sometimes doesn’t see how important it is to take preventive measures,” said Barcelata, vice president of Fegal International, which expanded here from Mexico in January. If her company’s products had been employed in Central America when Hurricane Mitch devastated the region last fall, Barcelata argued, “maybe we could have saved more lives.”

Barcelata will soon be making that pitch to high-level Central American officials and businesses without leaving Los Angeles. The U.S. Central America Trade Expo--to be held Sunday through June 8 at the Los Angeles Convention Center--is the first of its kind here to focus on pumping up trade with a region that experts say remains largely untapped, even as U.S. companies scramble to enter South American markets further afield.

Organized by the Central American Chambers of Commerce in Los Angeles, the expo is also a testament to the increasing sophistication of the 2-million-strong Central American emigre community here.

The event was planned long before the hurricane dealt a near-lethal setback to the economies of the region, particularly those of Nicaragua and Honduras. But the tragedy has introduced a new level of urgency and possibility to the burgeoning trade relationship.

Commerce Department officials will launch a series of national workshops at the expo on Monday to detail opportunities for companies that wish to participate in U.S.-subsidized reconstruction of the region. The event comes just weeks after Congress allocated $1 billion to such efforts.

“Central America needs everything,” said Tito Lagos, a Nicaraguan native and one of the event’s organizers. “If we are talking about health services, they need health services. If we are talking about schools, they need that. But now the priority is to repair roads and bridges and build housing. This is a project that will last years.”

The hurricane caused an estimated $8.5 billion in damage, claimed 9,000 lives and left millions homeless. Recruitment for the reconstruction efforts will focus on road and bridge repair, and construction of housing and environmentally sound systems for potable water, a Commerce Department official said.

Also participating in the workshop Monday are the State Department, the Overseas Private Investment Corp., the Inter-American Development Bank, the U.S. Agency for International Development, the Small Business Administration and the Export-Import Bank.

The prospect of lucrative contracts has drawn interest from dozens of companies here. Among them is Benito Sinclair & Associates, a Los Angeles construction engineering firm whose previous jobs include work on the airport, police and Metrolink stations. The Panama-born Sinclair said he has long pondered an entry into the Central American market and now “the timing is right.”

Other companies are eyeing the region as a manufacturing locale.

Vernon-based CR Laurence Co., a manufacturer of glass products with locations throughout the United States, Canada and Germany, is looking to move production of its shower door hinges and accessories to Central America. The company also views the region as a market for its bullet-resistant security glass, said President and Chief Executive Don Friese.

Central American emigre organizers drew on tight connections back home to put the event together. Expected attendees include government representatives from El Salvador, Guatemala, Panama and Belize. Businesses from those countries as well as firms based in Nicaragua, Honduras and Costa Rica also are slated to appear. They’ll represent a host of industries including food, alcohol and apparel concerns looking for U.S. distributors.

Expo officials likewise recognize that commerce must flow both ways in any successful trade relationship. Hugo Merida, executive director of the Central American Chambers of Commerce of California and the event’s lead organizer, hopes to broker opportunities in Central America for companies here.

“What we have seen is a lot of businesses from other countries like Taiwan that are getting in and the United States has been lagging,” he said. “There are a lot of opportunities in the medical, technological and construction fields.”

Trade with the region has been hampered in part by the North American Free Trade Agreement, which has left Central America struggling to compete with Mexico, particularly in sectors such as textiles. Furthermore, foreign companies that might have invested in Central America have turned instead to Mexico to ensure their access to U.S. markets.

Efforts by Central American advocates and the Clinton administration to push for so-called NAFTA parity for Central America and the Caribbean have so far been unsuccessful. And much of the trade that does exist with the United States has favored Miami, the East Coast and Houston, said Raul Hinojosa, who heads UCLA’s North American Integration and Development Center.

Despite the hurdles, trade experts say the region nevertheless presents substantial opportunities for California.

Trade figures between the ports of Los Angeles and Long Beach and those of Central American nations show a drop in imports over the last three years but a marked growth in exports including machinery and electronic components, particularly to Guatemala, Costa Rica and El Salvador, according to Commerce Department statistics.

Exports to Guatemala, for example, ballooned from $40 million in 1997 to $70 million in 1998, the last year for which figures are available. Overall exports to Central America through the two ports increased from $228 million to $270 million.

Those figures represent only a fraction of overall trade, much of which travels over land. Statewide exports to Guatemala topped $33 million in the fourth quarter of 1998 alone, up from $21 million the previous year, while exports to Costa Rica exceeded $45 million, up from $35 million in the fourth quarter of 1997.

The figures are minuscule compared with the $3.4 billion in California exports to Mexico over the same period. But the increases are nevertheless promising, Hinojosa said.

“The growth rate in exports from California has been a faster rate of growth than even to Mexico,” he said.

Costa Rica has also begun to establish a powerful presence in U.S. technology corporations. A $500-million Intel Corp. chip complex represents the biggest single foreign investment in the country’s history. Other technology giants including Microsoft Corp. also have put down manufacturing roots there. Panama and El Salvador, too, are eager to promote themselves as a destination for high-tech manufacturing, Merida said.

Despite the recent activity, the trade potential of the region has barely been touched, said Vance Baugham, director of trade development for the World Trade Center Assn. for Los Angeles-Long Beach.

“We’ve been so focused on Asian trade. One of our natural areas of strength is Latin America and a lot of trade there is lost,” Baugham said.

While many businesses have begun to pull some eggs from the Asia basket, “a lot of companies are skipping over Central America to go straight to South America,” added Jim Paul, World Trade Center Assn. trade manager.

Key to an increase is better transportation for both passengers and freight--improvements now underway between Los Angeles and South America, Baugham said. For example, direct flights to Chile begin this summer.

“You need competitive transportation rates, but you don’t get those until you have any volume of business,” he said. “It’s the chicken and egg thing, and events like [the expo] create an environment that encourages business to look in markets that they traditionally wouldn’t have considered.”