As local businesses head into their budget-planning season, the economic problems in Asia are impacting their spending plans for next year both positively and negatively.

Many companies that sell products and services to customers in Asia are expecting less business from that region, so they’re scaling back their marketing programs and shifting those resources back to the United States.

Other L.A.-area companies, however, are benefiting from the Asian turmoil because they buy products or supplies from Asian companies or use Asian labor. The cost of those Asian goods and services is much lower due to the devaluation of Asian currencies.

Still other Los Angeles-based companies are both being hit on the selling side and benefiting on the buying side. On balance, the Asian problem for many of those companies is a wash.

Take Vans Inc., for example. Last year, the Santa Fe Springs-based shoe manufacturer derived about 8 percent of its $174.5 million in worldwide sales from Japan, the company’s single largest export market. In the second half of 1997, Vans saw an increase in sales to Japan, but the company is now reporting a sharp drop-off.

In response, the company shifted budgetary resources for its fiscal year (which began June 1) from Japan to Europe, where Vans is using the money to buy up distributors and consolidate its business.

“We just tried to match spending (in Japan) with expectations (of sales), said Kyle Wescoat, Vans’ chief financial officer.

The budgetary changes were not major, Wescoat said, because the company expects business in Japan to pick up again in the first half of 1999 the second half of the company’s fiscal year. That should essentially offset the first-half weakness.

In addition, about 90 percent of Vans’ products are made in China and Korea. Because of the weaker Asian currencies against the U.S. dollar, Vans’ labor costs for the year are expected to drop resulting in additional adjustments to the 1998-99 budget.

“We think, on balance, we are benefiting more from what’s going on there than we are being negatively impacted,” Wescoat said. “On balance, we do more sourcing from that part of the world than we sell into that part of the world.”

Atlantic Richfield Co. hasn’t been so lucky. The downtown L.A.-based oil company, which is about to enter its budget season, has been hammered by low worldwide crude oil prices, which have forced Arco to keep its retail prices low, thus reducing margins. Now, the company’s natural gas business in Indonesia is taking a hit as well, as companies there scale back production, and therefore use less power.

Dennis Schiffel, vice president of investor relations for Arco, said the exposure is not major about 30 percent to 35 percent of annual sales comes from natural gas, and only 10 percent to 15 percent of that typically comes from Indonesia. But he said it will have an impact.

“Anytime you sell into a specific country other than your own, you have significant exposure,” he said.

Schiffel said that in Arco’s budget for 1999, which will be prepared in October and November, capital expenditures will be 5 percent to 10 percent lower than this year. But, he added, the capital budget for this year was unusually large because of a number of infrastructure projects, so a drop in next year’s expenditures was expected even before the Asian crisis.

Schiffel said Arco tries to avoid altering annual budgets for such expenditures as oil exploration and new-facilities construction because results from such long-term projects typically do not materialize for years.

“You try to avoid dramatic upturns or downturns in your capital spending or your exploration spending,” he said. “There may be fluctuations, but you try to keep those under control. I think if a typical oil company had a knee-jerk reaction to low oil prices, three years out they will be bemoaning that, because that’s when the results will show up.”

Foreign exposure also will affect next year’s budget at West L.A.-based Nadel Architects Inc. A significant part of that firm’s business has come from designing high-rises in China, but that business has dropped off dramatically since earlier this year.

Fortunately for the firm, U.S. real estate development activity has picked up, and that increased domestic business has more than replaced the Chinese business it is losing, said Linda Merritt, Nadel’s director of marketing.

When Nadel starts writing next year’s budget in November, the firm will cut its travel budget by between $80,000 and $100,000 because of the decreased travel to China, Merritt said. Two Nadel division heads in the past have been headquartered in China and came back to the United States only when needed. But given the decreased business in China a decrease expected to continue into the next fiscal year the two executives will be budgeted to stay in the United States most of the time, and only travel to China if necessary.

In the end, Merritt said, the firm is actually coming out ahead, since the profit margin on domestic projects is typically higher than on foreign projects, which involve the use of foreign firms to translate documents and higher travel expenses.

“It costs money to do business there,” she said. “It’s not like the profit is enormous.”

Some companies expect the problems in Asia to last only a short time, and therefore not affect their long-term planning.

Century City-based Northrop Grumman Corp., for example, sees a drop of $250 million in sales over the next two years because of cancelled and delayed orders from Asia for Boeing Co.’s 747, for which Northrop makes fuselages and tail sections. But Northrop spokesman Jim Taft said no changes will be made to next year’s budget based on Asia’s problems, because the 747 orders are expected to return once the economy recovers in Asia.

“There’s no impact to the company’s capital expenditure,” Taft said, noting that the company completed a five-year, $100 million investment in its 747 parts line last year. “We still anticipate we will continue to benefit from that investment as the program goes forward and it certainly will continue to go forward.”

Charlie Woo, chief executive of L.A.-based Megatoys, said he has had to adjust his shipping budget because freight companies are being forced to ship empty containers back to Asia because exports from the United States to Asia have dropped off and therefore are charging more to bring full containers here. Megatoys is now spending more than $2,000 to ship one container from China, Woo said, while not long ago it was spending as little as $1,400 to ship a container.

Woo said he is unsure how his company’s 1999 budget, which he writes shortly after the Christmas season ends, will be affected by the Asian crisis. He remains hopeful that this year’s shipping expense increase will not find its way into next year’s budget.

“In the next year, the shipping costs are going to go down,” he said. “I believe the shipping situation is a temporary situation.”