By Brian E. Clark
The declining dollar is a two-edged sword.
Economists say it is making the price of gasoline, food, many imported goods and a trip overseas more expensive.
But for Wisconsin-based companies that sell products or services abroad, the shrinking value of the once-mighty greenback is proving to be a boon, analysts say.
Badger State firms that are benefiting from the drop include Snap-On Tools, Manpower, Sensient Technologies, Johnson Controls and Carver Yachts, a Pulaski-based company that is adding 450 positions to build 100-foot-plus luxury boats, many for foreign customers.
Increased international sales are one of the factors driving the Carver’s plans to build a spend $27 million on expansion of plants in Green and Pulaski, said Irwin Jacobs, chairman of Genmar Holdings, Carver’s umbrella company.
“If the dollar situation was back where it was three or four years ago, I think we’d be putting this project back on the shelf for a little while,” he said.
Russell Kashian, an assistant economics professor at UW-Whitewater, said the soft dollar makes U.S. goods cheaper and more competitive abroad.
“If a company sells a product for Euros and the Euro goes up in value by 10 percent, for example, because the dollar goes down, that means 10 percent more in profit on foreign sales without any other change,” he said.
And because the price of equipment made by firms in the United States is becoming less expensive overseas, sales are be going up, he said.
“If you’re a company like Bucyrus, and you are selling mining shovels to China, your equipment is less expensive than your competitors gear made in say, Europe,” he said.
Likewise, global firms such as Manpower that have offices around the world are showing increased profits because of the drop in the worth of the dollar, added Ken Macur, an accounting professor at Edgewood College in Madison.
“If you are going abroad, you are going to be spending a lot more than you would have a few years ago to buy the same things because of the weak dollar,” he said. “Conversely, Europeans love to spend money here.
“But that means that U.S. companies are selling a lot more to customers abroad, especially through the Internet,” he said.