Los Angeles economy is buoyed by growing imports.

The rapid growth in imports is working wonders for the economy of Los Angeles. "International trade in Southern California is big and fast growing," says the Los Angeles County Economic Development Corp. LACEDC).

Increased trade through the Los Angeles Customs District, which includes the ports of Los Angeles and Long Beach as well as freight movement through Los Angeles International Airport, created 45,500 new jobs in 2005. A total of 450,100 workers are now engaged in the movement of goods into and out of LA ports.

"Some of these jobs tend to be high wage and are found in a wide variety of activities, including vessel operations, services to vessels, cargo handling, surface transportation (rail and truck), air cargo, trade finance, freight forwarding, customs brokers, insurance and government agencies," notes the LACEDC.

The impact of increased activity at the ports is leading to higher real estate values for industrial property. "Even though manufacturing employment in the region is not growing, the industrial vacancy rate was only 2 percent at year end 2005," notes the LA economic development agency. This is the lowest vacancy rate for industrial property in the nation. "Large blocks of land are hard to find in Los Angeles County, especially close to the ports," says the LACEDC. San Gabriel Valley, which is in the vicinity of port area, had an industrial vacancy rate of only 1.6 percent at the end of last year.

The value of two-way trade handled by the Los Angeles port district increased by 11.2 percent in 2005 to $294 million. The New York Customs District was in second place in the country at $267.5 million (up 9.1 percent), followed by Detroit at $228.5 million (up 11 percent). For the entire state of California, two-way international trade totaled a record $346.3 billion, up 9.8 percent over 2004.

The highest value export from the Los Angeles Customs District was "electrical apparatus" with a value of $10.8 billion, slightly down from 2004. "Since these are small, high-value items, 93.5 percent moved by air," says the LACEDC. "A distant second was 'flying devices' at $5.3 billion, followed by electronic machinery at $5 billion and measuring devices at $4.9 billion." The top import into the LA Customs District was electronic machinery at $31.8 billion, followed by motor vehicles at $27.7 billion, (up from $24.9 billion in 2004), and magnetic and radio recording and playback equipment at $20.7 billion, up from $18.3 billion in 2004.

China was the largest exporter of goods into the Los Angeles port district, with $92.9 billion worth of product, up 18.4 percent from 2004. Japan was in second place at $34.8 billion, up 7 percent from 2004, followed by South Korea in third place at $10.9 billion.

The U.S. exported $16.1 billion to China through the LA ports and $11.6 billion to Japan. Total two-way trade with China stood at $109 billion. The two-way trade deficit with China for the LA port district stood at $76.8 billion in 2005, up from $65.9 billion in 2004.

"LACD exports to China were dominated by electrical apparatus, raw and intermediate materials and machinery," says the LACEDC. "Many of those materials and components come back to the U.S. in the form of finished goods. China now accounts for an outsized portion of some types of manufacturing (e.g., half of the world's shoe production). This has caused resentment in many developed countries. Yet nearly 60 percent of China's exports were shipped by firms at least partly owned by foreigners. In the end, foreign companies, including many American firms, make the most money from such arrangements."

While the U.S. Treasury Department recently determined that China is not manipulating its currency, the LACEDC believes otherwise. "The 2 percent revaluation of China's renminbi (RMB) last July was largely seen as a token measure to head off a more punitive action from the Congress," it notes in its annual report on "International Trade Trends & Impacts." "Still tightly controlled by the government, the RMB has since appreciated by just 1.3 percent. The small appreciation does virtually nothing to reduce the U.S.-China trade imbalance, which reached $195 billion in 2005. China's foreign reserves, meanwhile, continue to rise. As of the end of March, 2006, it reached $875 billion. China's purchases of U.S. Treasury bonds and corporate bonds have helped keep long-term interest rates in the U.S. lower than they would be otherwise, which further promotes consumer spending. The surge in foreign reserves is a sign that China's currency is kept artificially low for the benefit of promoting exports. In effect, China is practicing a new form of mercantilism--accumulating foreign currency and securities instead of investing and spending the earnings productively."

Other ports throughout the country saw substantial gains in traffic last year, according to the LACEDC analysis. Two-way trade through the Seattle customs district increased 15 percent to $100 billion. San Francisco traffic increased 5.5 percent to $100.4 billion. Houston had the strongest growth of 30.2 percent, due to the rise in oil imports and diversions of traffic away from New Orleans. Buffalo's Custom district recorded the least amount of growth, 3.1 percent. The value of two-way trade through the San Diego Custom district was $43.4 billion, up 10 percent. "All U.S. ports are struggling with capacity issues," says the LACEDC.

Los Angeles/Long Beach remained the fifth most busy port in the world last year, moving 14.194 million containers (TEUs), more than double the amount moved in 1997 (6.4 million). Singapore moved into first place in the world last year handling 23.1 million TEUs, while Hong Kong slipped into second place with 22.4 million TEUs. Shanghai was in third at 18.1 million TEUs, up from 14.4 million TEUs in 2004. Shenzen was in fourth place with 16.2 million TEUs. "All eyes in 2006 are on Shanghai due to the recent opening of a major port facility there," says LACEDC.

End Of An Era In SoCal

After seven decades of production, airplane manufacturing in Southern California is coming to an end. The last Boeing 717 has left the factory in Los Angeles, and there are no new orders for the C-17, according to the Associated Press. If the Defense Department does not place new orders for the C-17, then the last airplane to be produced in Southern California will roll off the assembly line in 2008, ending seven decades of production during which California was a central hub of U.S. aerospace production.