Trade
What do Asia’s fiscal woes mean for Southern California?
That’s the question rippling through L.A.’s international trade community, with 1998 looming beneath a cloud of uncertainty.
No one knows exactly what effect the currency devaluations and financial system breakdowns in Asia will have on Los Angeles and California as a whole. Some economists predict they could cost the state as many as 65,000 jobs; others argue that thanks to Southern California’s highly diversified economy, the impact will be less severe here.
Few, however, would deny that the stakes are high.
Exports to fast-growing economies in Asia climbed steadily throughout the early 1990s, and constituted one of the few bright spots in a local economy ravaged by defense downsizing and recession.
Even now, with the local economy on the mend, the impact of Asian trade continues to be considerable: In 1996, $48.5 billion worth of exports moved through the Los Angeles customs district en route to Asia, according to the U.S. Department of Commerce. That includes $16.2 billion to Japan and $7.4 billion to South Korea two countries whose long-term economic health remains very much in doubt.
But as economists speculate on the impact of the Asian crisis, thousands of local traders are scrambling to adapt to fast-changing conditions.
Many traders are seeking new customers domestically, or in Latin America and Europe; others are hunkering down for what could be a long couple of years as they wait for the Asian economies to stabilize.
But the strong U.S. dollar is welcome news for importers and a number of L.A. businesses already are rushing to capitalize on their newfound buying power.
“Our customers will be positively affected because they buy from, rather than sell to, Southeast Asia,” says Robert Franko, president of Imperial Financial Group Inc., which finances a large number of high-technology and apparel firms in L.A. “Our view is that the effects for our client base will not be negative. We don’t detect any blood in the streets.”
Meanwhile, local shippers can breathe a sigh of relief over the fact that last fall’s breakdown of the intermodal transportation network finally appears to be at an end. At the height of the congestion sparked by Union Pacific Railroad’s difficulties in absorbing Southern Pacific 22 ships were anchored outside the L.A.-Long Beach port complex, costing shipping lines hundreds of thousands of dollars due to the delays.
Now, with the holiday shipping season drawing to a close, cargo is once again flowing through the harbor with relative ease; shippers say the situation should be back to normal by the end of the first quarter of 1998.
Looking to the future, a number of major trade and transportation projects are likely to continue to inch forward in the months to come, including the Alameda Corridor, the proposed $8 billion expansion of LAX, and the Port of L.A.’s Pier 400 expansion, a state-of-the-art container terminal scheduled to open in 2001.
Larry Kanter
