By Brian E. Clark
The declining value of the American dollar is proving to be a boon for Wisconsin exporters.
Hans Melgaard, a sales engineer with the Orion Corp. in Grafton, said his company’s business has gone up in the past few years. His company makes bearings for power generation equipment and exports between 20 to 30 percent of its products.
“It definitely has become easier for us to sell our products in Europe,” said Melgaard, who declined to discuss sales figures for the privately held company.
“Over the past two years alone, there has been a 40 percent decrease in the dollar in comparison to the euro.“
Melgaard, who recently returned from a trip to Germany, said many Europeans are worried that the increasing value of the dollar in relation to their currency will slow their economic recovery.
“I guess that is the downside,” he said. “If their economies slow, they won’t be able to buy as much from us.”
Dick Keller, director of business development for Bruno Independent Living Aids in Oconomowoc, said his company’s sales in Europe have increased.
Bruno, a privately held firm, makes wheelchairs, scooters, stairlifts and vehicle lifts.
“We don’t export a lot there, but we see this as an opportunity to grow,” he said. “The question, of course, is how long this will last.”
He said the weak dollar is also helping Bruno domestically.
“It’s making our competitors products more expensive here, so its’ benefiting us that way, too,” he added.
For the Manitowoc Company’s crane division, the falling dollar is a mixed bag because the company has production facilities both here and in Europe.
“Generally, it’s a good thing for most U.S. manufacturers,” said spokesman Terry Growcock. “And 40 percent of our sales are outside the United States.
“But we are a different case because we manufacture a lot in Europe,” he explained.
That means products built here have a price advantage, while those made in Germany, Italy, Portugal and France are at a disadvantage.
“I think everyone would prefer a more even parity with the euro,” he said. “Three years ago, it was about one dollar to one euro. Now it costs $1.30 to buy a euro.”
James Buchen, vice president of government relations for Wisconsin Manufacturers & Commerce, said American products have become less expensive and easier to sell.
“For some Wisconsin companies, this is a big deal because they export 80 percent of what they make,” he said.
“And nationally, this has a major impact because the United States is the No. 1 exporting country in terms of value of exports,” he said. “People may not know it, but one in five jobs is tied to exports.”
Stan Phrang, an international consultant at the Wisconsin Department of Commerce, said with the declining value of the dollar, Wisconsin companies can either make more in profits or lower prices expand their sales.
“The dollar has fallen significantly against the Euro,” he said. “Our products are much less expensive in relation to those produced in Europe.”
Other currencies, such as those in China and Japan, are not moving as much, but the Canadian dollar is also rising in value, so U.S. exports to the north are less expensive.
Phrang said Wisconsin tourism could benefit from increased visitors from Europe and Canada.
“The downside is that we export a lot of products to other manufacturers,” he said. “So if their business suffers because their currencies are rising, they might not be able to buy as much.”
The dollar is down 50 percent against the euro since October 2000, and was at its lowest level since 1995 against a variety of foreign currencies last week.
Moreover, it has accelerated since President Bush’s reelection. Some economists say the timing reflects worries that the Bush administration, – with its concern emphasis on tax cuts – won’t be able to reduce record budget deficits.
In addition to a $412 billion budget deficit, the United States will have a $600 billion trade deficit in 2004.
A trade deficit must be financed by other nations willing to hold U.S. currency. And foreign investors have been buyers of federal debt in recent years, helping to keep U.S. interest rates low.
Economists say the trend in these deficits now looks unsustainable to many investors. If they sour on holding U.S. debt, the Treasury may need to offer higher interest on its bonds. The ripple effects, in turn, could dampen U.S. economic growth.