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Wednesday, Oct 4, 2023

Trade—Manufacturers, other firms ride high on export sales

Trade: Telecom Services Expand in Latin America; Jobs Shift Outside U.S.

Although actual numbers were unavailable from the federal government, San Diego companies, particularly those in high-tech manufacturing, continued to boost their sales from increased exports to overseas markets.

The experience of Nuera Communications, a 4-year-old telecom manufacturer, was typical of the type of growth reported by many firms making complex electronic equipment and machinery.

Nuera makes equipment used by major telecom carriers for transmitting and switching voice and data. The devices are essential for the convergence of voice and data that is happening on a global scale.

For the fiscal year ended March 2000, Nuera reported revenues of $35 million. This fiscal year, revenues should reach at least $40 million, said CEO Bill Ingram.

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“We’re moving into top-tier carrier accounts with converged communication products,” Ingram said. Among Nuera’s customers are AT & T;, Singapore Telecom, China Telecom, Sprint and WorldCom.

This year, about half of its sales came from international accounts, but for the upcoming year Ingram expects export sales to make up 60 percent of total revenues.

About a third of its sales are derived from Asian customers, he said, naming China, Taiwan, Singapore, Indonesia, India, and Thailand as places where the firm has significant sales. Driving those sales is an ongoing shift by many nations to deregulate or privatize their telecommunications systems, he said.

Statewide Rise In Exports

Nuera’s products were part of an overall rise in California exports in what is shaping up as a record year. According to the most recent figures supplied by the state’s Trade and Commerce Agency, total exports for the state through Sept. 30, 2000, were $94.5 billion, more than 21 percent above the like period in 1999.

Matt Anderson, director of the federal Department of Commerce’s Export Assistance Center, said the state’s numbers will undoubtedly be reflected by a similar rise in exports coming from San Diego.

“Once our metro stats do come out, you’ll see San Diego as one of the top gaining markets in the nation,” Anderson said. Based on data released in 1999, the San Diego region ranked fifth best in the nation in terms of export growth for 1998 (the most recent year such statistics are available). During that year, total exports from this area reached $8.6 billion, about 10 percent higher than the prior year’s results.

Anderson said looking at the activity of the office he oversees, the past year should show exceptional export growth. During the past year, the office “facilitated” 115 deals that had an eventual contract value of about $250 million, he said.

By facilitating, Anderson said the office provided some type of counseling or other type of service to a company. Many of those deals were likely related to some of San Diego’s larger electronics manufacturers, he said. Firms such as Cubic Corp., ViaSat Inc., and AMCC all were doing remarkably well in the export growth, but so were many smaller companies.

Ed Richard, managing partner of Orbis Communications Inc., a San Diego-based electronics contract manufacturer, said his company has diversified its business over the past 18 months, moving into providing wireless telephone service in Latin America. About half of Orbis’ 2000 sales, which hit about $40 million, came from the region. Last year, sales were about $18 million.

“We spent most of 2000 installing the backbone infrastructure in the three countries we offer our telecommunications services, Peru and Argentina. In 2001, we’ll be adding Chile and Brazil to the service,” Richard said.

Last month, Orbis was in the process of acquiring a third assembly plant for its operations. It already has plants in Tijuana and Argentina. At its headquarters office in Otay Mesa, Orbis is in the process of hiring more employees, and will likely expand its staff from 28 to 50 by February. The jobs are primarily engineering and technical, Richard said.

While the firm’s growth has been substantial, the best may be yet to come.

“The fact is that most of these countries have stabilized in terms of their political democracies and they’ve all realized the value of privatization, especially in the communications sector,” he said. “Lastly, less than 2 percent of their populations are connected to the Internet. We view that as an enormous market opportunity.” Although there were plenty of local success stories, there was also continued evidence of global competition forcing cuts in many manufacturing jobs, and moving them to countries with far lower labor costs.

For example, last May, San Diego-based Alaris Medical, a maker of medical pumps used to infuse liquids in patients, announced it cut 150 jobs at two sites in the United States, 100 in North Carolina and 50 in San Diego. The local job cuts were caused by improvements in Alaris’ manufacturing processes, while the Carolina jobs were shifted to its plant in Tijuana, said Bill Bopp, Alaris chief financial officer.

Alaris operates manufacturing plants in England, Mexico, and the United States, and has about 2,750 employees, including about 700 in San Diego and 1,400 in Tijuana, Bopp said.

Some local firms used overseas manufacturing almost exclusively and with satisfying results. Vista-based Directed Electronics Inc. subcontracted for practically all its manufacturing in Taiwan, while maintaining local design, development, sales and administrative offices here. This year’s sales should break $100 million, up from $87 million in 1999, said Ken Gammage, DEI’s communications director.

About 10 percent of the company’s sales came from exports to such nations as Canada, Mexico, Australia and Japan. Last year, DEI gained a foothold in Europe when it acquired its biggest competitor, Clifford Electronics, which had a sales and distribution office in the United Kingdom.

“We’re doing more in Europe now, and even have a distributor in Romania,” Gammage said.


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