Cambodia economy: Exposure to US economy is a concern

September 6th 2011
FROM THE ECONOMIST INTELLIGENCE UNIT

As economic data coming out of the US continue to get worse, Cambodia's heavy exposure to the US economy represents a major risk to growth prospects. The US is Cambodia's most important export market by far—representing almost half of all receipts—and a US slowdown or descent into recession could substantially reduce Cambodian export revenue, with implications for the broader economy.

It is a cliché that when America sneezes the rest of the world catches cold, but in Cambodia's case the statement is apt. The US imports more Cambodian goods than any other country, making sales of key products such as garments vulnerable to fluctuations in American demand. In 2010 Cambodia's merchandise exports to the US amounted to US$2.2bn, equivalent to 47.1% of its total export earnings, according to IMF figures. Exports to the EU's 27 member states stood at US$1bn. Together these two markets accounted for 69.6% of Cambodia's exports in 2010. Although Cambodia's exports to mainland China rose by nearly 430% last year, they still stood at only US$86.1m, equivalent to 1.9% of total exports.

Cambodia is therefore substantially exposed, via the US and the EU, to the global economic cycle. It is little surprise that the 2008-09 global crisis took a heavy toll on Cambodia, which suggests that economic prospects could darken again if the US and/or the world head towards recession. The Cambodian government has tried to downplay the extent to which Cambodia was affected by the 2008-09 crisis—the Ministry of Economy and Finance maintains that the country escaped recession in 2009, stating that real GDP expanded by 0.1% in that year—but all other observers estimate that the economy contracted for the first time since records began in the early 1990s.

Garment Orders Plummet as Factories Close

By Sok Khemara, VOA Khmer
Washington
10 December 2008

Click here to listen to the Khmer audio program

The global economic downturn has led to a drop in orders for Cambodia’s garment industry by nearly a third, a worrying statistic, industry leaders said Monday.

The economic downturn, which has hit the US—Cambodia’s top purchases of garments—as well as the EU and Asia, resulted in the fall of orders by 30 percent, along with lower bids for the orders that do come in, said Cheat Khemara, a representative of the Garment Manufacturers Association of Cambodia, as a guest on “Hello VOA.”

The $2.6 billion industry is one of Cambodia’s main economic engines, employing more than 300,000 workers.

Chea Mony, president of the Free Trade Union, said Monday that at least 10 factories have closed down and six or seven have suspended operations in the wake of the downturn, which began in earnest in September.

“Until today, we do not know what is the real problem of these closures or suspensions, the crisis, or no buyers?” he said, also as a guest on “Hello VOA.”

Careers in transition [The case of Cambodian-American Genevieve Brown]

Genevieve Brown, center, who was laid off after working seven years at Medtronic, waits in the hallway between classes at Empire College in Santa Rosa. She is taking courses with the help of the company's retraining program for a new career as a medical assistant. (Photo by MARK ARONOFF / The Press Democrat)

When layoffs hit, Job Link offers workers way to broaden skills, appeal

Sunday, August 17, 2008
By STEVE HART
THE PRESS DEMOCRAT (USA)

Genevieve Brown thought she'd found her dream job when she was hired at Medtronic in Santa Rosa eight years ago.

Brown, who immigrated to the United States from her native Cambodia at age 13, had held low-paying retail jobs and even done embroidery to help support her family.

Now, she was working for the world's largest medical device company, making advanced technology for treating vascular disease.

Brown assembled coronary stents, tiny implants that keep blood flowing in heart patients' arteries. She also worked in quality control, packaging and labeling. Soon she was training other Medtronic employees.

"I liked learning different things," she said. "I liked moving around."

But her job ended last year when the biotech giant shifted much of its Sonoma County manufacturing to Galway, Ireland. More than 100 workers were laid off.

Today, Brown, 37, is preparing for a new career as a clinical medical assistant. She's part of a government-funded retraining program for Medtronic's displaced Santa Rosa workers.

"These are skilled workers, but their skills were specifically designed for their jobs at Medtronic," said Patrick Henning, director of the state Employment Development Department. "They need additional training to help them find new jobs with comparable wages."

The demand for retraining has soared with job losses because of the faltering economy, said Karen Fies, who oversees Sonoma County's employment and training programs.

More than 1,100 new clients contacted the county's Job Link service in July, compared with an average of 204 during a typical month last year, she said.

"We've seen a huge increase in the number of people seeking help," Fies said.

In response, Job Link is offering additional job-search workshops and one-on-one counseling.

The retraining for former Medtronic workers is backed by a $205,000 state grant to Job Link. Many of the workers aren't fluent in English, so the program offers classes in English as a second language.

There also are GED classes for workers who haven't received high school diplomas.

Participants attend workshops on job search skills, resume-writing and interview tips. Clients then meet with a counselor to discuss their interests and abilities and adopt a training plan.

So far, 22 former Medtronic workers have received training, while six others have signed up.

Genevieve Brown is enrolled in the medical assistant program at Empire College in Santa Rosa, one of Job Link's partners. She chose medical assisting because it will keep her in the health care field.

"I want to help people," she said. "And I want to get good pay and benefits for my family."

Jesse Villarreal, another ex-Medtronic manufacturing employee, is taking accounting classes at Empire College through Job Link.

Villarreal, 59, worked at Medtronic in Santa Rosa for eight years before the 2007 layoff. Job Link helped him find a new career, he said.

"I really wanted to look at all my options before I jumped into something," Villarreal said. "I like working with my hands, but I'm getting too old for that."

Villarreal had lots of job experience, but not enough education, he said. The accounting program will give him a professional degree in a field where there are lots of jobs, he said.

Brown and Villarreal are collecting unemployment benefits while they train for their new careers.

Not all former Medtronic workers received training, according to Job Link coordinator Kathy Young. Some just received counseling or help with job searches. Others left the area or found new jobs on their own.

Earlier this year, 47 of the workers returned to Medtronic as temporary employees. About 1,200 people work for Medtronic in Santa Rosa, the headquarters for its global vascular business.

Nearly 80 percent of all laid-off workers who used Job Link over the past year have found employment, according to the program. Of those, 94 percent were still employed after six months.

The health care, business services and hospitality sectors still offer good prospects for job seekers, Fies said.

Laid-off workers who are serious about finding new jobs shouldn't delay contacting Job Link, she said.

"We recommend people come in while they still have unemployment (benefits)," Fies said.

You can reach Staff Writer Steve Hart at 521-5205 or steve.hart@pressdemocrat.com.