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Suenos Corp. Announces a Reduction in China Manufacturing Operations

Carlsbad, CA, February 15, 2005 - The threat of a revalued dollar, rising costs of Chinese operations, and increased freight and security costs at most major US ports are leading Suenos Corporation to reduce its current dependence on low cost manufacturing for many of its product lines.

CEO, Bruce DeBolt, announced today that Suenos will build a state of the art granite fabrication facility in Carlsbad, CA. The company expects to be able to maintain a competitive posture against Chinese imports in spite of the higher cost of bricks and mortar operations typically associated with domestic US manufacturing operations. "There has been a massive outflow of jobs and operations to low cost foreign plants, particularly China," said DeBolt. Suenos closed all of its domestic US manufacturing operations four years ago and moved them to China to remain competitive. But DeBolt cautioned, "The Chinese economy is changing fast. Most companies today are underestimating how fast the Chinese economy is developing. That development is important to US companies. As China's dependency on exports decrease, and its imports increase to support the readily expanding domestic economy, there will be enormous internal pressure for the Chinese government to upwardly revalue the Yuan against the dollar. When that happens, whole industries that have build business models based on access to low cost Chinese manufacturing will be adversely impacted in the United States. They will face substantial cost increases overnight. China pegs its currency to the US dollar instead of allowing it to float freely in the open market and it is widely believed by economists there and abroad to be a grossly undervalued relative to the dollar."

DeBolt says, "In addition to the foreign exchange exposure there are a number of hidden costs associated with offshore manufacturing that have been rising in recent months and show no signs of abating. Increased congestion at most US ports have resulted in substantial demurrage charges, port congestion fees, and rising ocean freight charges causing the landed cost of inbound freight containers to rise dramatically, in some cases double. There is no one culprit but rather a combination of rate increases and new port and security surcharges. All of this has led to increasingly long door to door transit times for freight and dramatically higher costs." As a result, many companies may have to rethink their offshore strategies.

"We have always been an early adopter of aggressive business strategies. We were one of the early companies to go to China for the manufacturing of our custom granite countertops. Today, with this decision we believe we will again be an early adopter as the financial pendulum swings the other way," said DeBolt. "We believe a 'Made in America' strategy is going to make good economic sense."

About Suenos building products - The Suenos group of companies manufactures and imports natural stone floor and countertop products as well as high end quality kitchen cabinets. Distribution facilities are located in Norfolk, VA, Miami, FL, Houston, TX, and San Diego, CA. Corporate headquarters are in Carlsbad, CA.

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