State’s Exports See Healthy Gains
California is finally back on a strong export growth track, thanks to surging overseas demand for everything from high-tech computers to low-tech waste paper.
The state’s merchandise exports rose 13.9% in the final three months of 2003, the strongest year-over-year quarterly gain in three years, according to government trade statistics released Friday. The healthy increases in exports across a variety of sectors, from food and agricultural products to chemicals and machinery, signal that the state’s economy is on the mend, economists said.
Perhaps the most encouraging news came from the long-suffering technology industry. Although annual shipments of computer and electronic equipment -- California’s largest export -- fell for the third straight year, the final quarter of 2003 proved a winner. Technology makers saw their overseas shipments surge 10.5% over the same quarter in 2002, their biggest gain since 2000.
For all of last year, the state’s merchandise exports totaled $94 billion, up 1.9% from 2002, according to the report, based on federal government data and prepared by the Massachusetts Institute for Social and Economic Research, which publishes official state-by-state trade statistics.
California exporters are getting a boost from a weak dollar, a budding global recovery and a fast-developing China, experts say. California exports to the Asian giant soared 22% last year, as China snapped up everything from waste paper to software to fuel its humming factories.
“China increasingly is becoming the workshop of the world,” said Jock O’Connell, a Sacramento-based trade consultant. “A lot of exports going to China aren’t for consumption by Chinese consumers. Rather, they’re components of production” for the manufacture of goods that will end up back on retail shelves in the United States.
The improved export figures came against a backdrop of falling consumer confidence and a record U.S. trade gap that rattled Wall Street and sent the Dow Jones industrial average and other stock indexes lower.
The Commerce Department reported Friday that the total U.S. deficit in goods and services hit an all-time high of $489.4 billion, 17.1% higher than the previous record set in 2002. Last year’s deficit with China was an unprecedented $124 billion. And the University of Michigan reported that its index of consumer sentiment slumped unexpectedly to 93.1 this month from a robust 103.8 in January.
The negative news worried investors, who unloaded stocks in advance of the three-day holiday weekend, and economists fretted about America’s addiction to consuming more than it produces. Some are concerned that the nation’s whopping trade imbalance could eventually send the dollar into a free fall that could wreak havoc on financial markets and the nation’s economy.
“Does it worry me? Yes,” said Joseph Hurd, senior economist with the UCLA Anderson Forecast. “You just can’t continue running huge trade deficits year after year.”
On the bright side, U.S. exports of goods and services topped $1 trillion, up 4.6% from 2002 and their best year since 2000. The rise was particularly good news for California, whose merchandise exports account for about 7% of the state’s economic activity.
California’s export performance has been lagging behind that of the nation because of the steep plunge in the shipments of computers and electronic products after the tech bust nearly four years ago. At the height of the boom in 2000, California firms exported more than $60 billion in high-tech goods abroad, which amounted to more than half of the state’s total merchandise exports that year.
The industry’s fortunes have fallen considerably since then. California exports of technology goods last year totaled $36.7 billion, their lowest level since the mid-1990s. Still, the double-digit increase in fourth-quarter exports points to a worldwide increase in technology spending as companies seek to upgrade or replace aging equipment.
Fresno software developer Yosemite Technologies Inc. has seen its foreign revenue double over the last two years, particularly among small and medium-size firms in Europe, said Chief Executive Kevin Reinis. The company’s products, which help companies preserve and restore data, are being used by clients as varied as the French postal service to banks in Greece. The fast-growing foreign customer base has meant plenty of jet lag for Reinis, who recently hopscotched from Germany to Japan in search of new business. But he said it was rewarding professionally as well as financially.
“It’s exciting to be in a global market,” Reinis said. “How many companies in Fresno can say they are a global software company?”
Maybe not many, but farmers around the San Joaquin Valley are old hands at international trade. Agricultural products are one of California most important exports, jumping nearly 20% last year to $4.8 billion.
Foreigners have long been fans of California cotton, nuts and citrus. Now the state’s fig farmers are looking for a bigger piece of the action as well.
Still working off a glut of the chewy fruits that are used principally in fig bars in the United States, the industry is looking to stimulate foreign appetites as well, according to Richard Matoian, manager of the California Fig Advisory Board in Fresno. He said about 20% of California’s dried-fig production goes abroad each year, mainly to Japan and other Asian nations. The promotional group is planning to add to its roster of foreign trade shows to develop a new crop of fig fans.
“Like any other agricultural commodity, we have to look at exports as really our only growth area,” Matoian said. “Domestic consumption of dried figs has been stagnant because we have an aging [customer] demographic. Young people just don’t like to eat dried figs.”
Matoian said fig growers, like many U.S. exporters, are eager to crack the surging Chinese market. China last year purchased $4.5 billion of California goods, becoming the state’s fourth-largest export market behind Mexico, Japan and Canada. In 2000, China didn’t even rank in the top 10.
California’s largest-volume export to China is waste paper to feed that country’s paper mills, which are cranking out cardboard boxes to package all the consumer goods destined for the United States.
Allan Co., a Baldwin Park-based recycling firm, now sends 40% of the waste paper it collects to China, up from about 10% in 2000, said company President Stephen Young.
“It’s a real boom market over there,” Young said.
