Strong US dollars make products expensive overseas

Global Business

Today’s GDP number comes just days after a report that U.S. durable goods orders dropped 3.4 percent in December. American manufacturers are seeing weaker sales and earnings these days and a big reason is the strong U.S. dollar makes their products and services more expensive overseas. The trend has been going on for quite a while now. CCTV America’s Hendrik Sybrandy reported from the U.S. state of Colorado.

Strong US dollars make products expensive overseas

Today's GDP number comes just days after a report that U.S. durable goods orders dropped 3.4 percent in December. American manufacturers are seeing weaker sales and earnings these days and a big reason is the strong U.S. dollar makes their products and services more expensive overseas. The trend has been going on for quite a while now. CCTV America's Hendrik Sybrandy reported from the U.S. state of Colorado.

Geotech production technician Candice Parvus is more like a surgeon as she assembles a borescope, a groundwater measuring device. Business at this Denver environmental manufacturing firm has been steady in the New Year, but not spectacular. Geotech’s president said his foreign customers are pulling their wallets out a little less often these days.

Merrick & Company, which specializes in geospatial services, is also battling sluggish international markets, according to senior vice president Bob Berglund. “It’s certainly a consideration for us when we’re pursuing new work, and it has an impact on our existing work,” Berglund said.

The culprit is the almighty U.S. dollar, at least it is right now when compared with foreign currencies. The dollar has jumped 19 percent in value since last May.

Rob Bolle with the foreign exchange specialist AFEX said the relative strength of the U.S. economy, and the likelihood of an interest rate increase have made the dollar more attractive. That’s made U.S. exports more expensive and weighed down the ability of American businesses to make money beyond their borders.

“Quite honestly, there’s no cut and dried answer. There’s no obvious solution to U.S. manufacturers. The dollar’s got stronger, their product by default gets stronger and it’s an issue for them,” Bolle said.

Geotech’s strategy is to manufacture products even more cost effectively and perhaps also let their overseas customers change the way they pay for their orders, no more cash in advance.

“You know stuff that’s out of your control, it’s hard. All we can do is control what it is that we do here,” Geotech President Jeff Popiel said.

Meanwhile, it’s a more relaxed time for another segment of the U.S. business community. The stronger dollar has helped boost this distributor’s profit margins.

“As a result, we have more money to pour into marketing, product development and dealer support,” Fius Distributors Finance Director Brad Tompkins said, “These are good times, that’s correct.”

Importers and exporters all wonder how long these good and could be better times will last.


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