Bracing For The Flood Consumers Will Like Cheap Asian Imports, But U.S. Business Will Suffer

Consumers may cheer a wave of cheaper Asian goods coming into the United States, but it’s hardly good news for American companies that have to compete with them.

As the financial crisis in Asia continues, Americans in import-export businesses, electronics chains and textiles manufacturers are bracing for cheaper goods from Asian countries whose currencies have been battered to new lows.

“That’s a major concern for us,” said Al Howell, spokesman for the Southeastern Apparel Manufacturers and Suppliers Association.

Howell, like officials in other U.S. sectors that compete with or deal in Asian-made products from cars to computers, said there hasn’t yet been a big impact from the region’s financial crisis on prices in America.

But many economists and trade activists expect the comparative strength of the dollar and efforts by some struggling Asian companies to raise cash with bargain sales to result in cheaper imports.

Gene Milosh, of the American Association of Importers and Exporters, said lower prices from Asia might start showing up in the next couple of months.

“If there is no stabilization of the currency, then you will have all kinds of pressure,” Milosh said. “There will be pressure to lower the prices.

“We are in position to help the Asians, but how much and for how long is the question,” Milosh said, adding that lower Asian import prices and increased competition in the United States may spur protectionist sentiment in Washington.

The turbulence sweeping through Asia since last summer has sent currencies in Thailand, Malaysia, Indonesia and Korea tumbling to record lows. At the same time, the dollar has been soaring, making U.S. goods pricier overseas, and Asian goods cheaper.

A flood of inexpensive Asian shoes, cars and clothing could worsen the U.S. trade deficit in the months ahead.

In making his economic forecast for 1998, Jack Guynn, president of the Federal Reserve Bank of Atlanta, projected recently that inflation would remain low, about 2.5 percent, “as cheaper Asian imports provide more competition for U.S. goods.”

Guynn said it’s difficult to pinpoint where and by how much prices will drop, but he offered apparel and automobiles as two possibilities.

“All those things that come from that part of the world … (the economic crisis) will be hitting different companies differently, depending on what their products are,” Guynn said.

Consumer electronics, including televisions and video recorders, might also have price drops. Dell Computer, citing the Asian crisis, last week snipped about 15 percent off the price of a popular computer.

“The current fluctuations are having no immediate impact on prices, although they could over the longer term,” said Morgan Stewart, spokesman for Circuit City Stores Inc. He added that the majority of his company’s goods aren’t from Asia.

He said Circuit City stores haven’t reported any holding-back on buying by American consumers who are anticipating lower prices.

One sensitive area for Asian imports is automobiles. But M.H. Juhn, president of Hyundai Motor America, said at this month’s Detroit auto show that there were no plans to cut prices on the Korea-made cars.

“We never thought about lowering our prices,” Juhn said, adding that he’s confident the Korean economic problems are temporary.

Geno Effler, spokesman for another Korean carmaker, Kia Motors America, said there were no immediate plans to tie prices to the South Korean currency, which he said “would create havoc for dealers.”

However, he added that with domestic sales flat, Kia does hope to continue increasing exports to the United States, where it sold 55,325 cars last year and had already planned to expand from dealerships in 32 states now to all 48 contiguous states by year’s end.

“We’re studying the devaluation to see if there’s other ways we can pass along savings to consumers,” Effler said.