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2007-12-03 Winners, losers in dollar slide (By ERIC ANDERSON)
| The window shades and shutters that Comfortex Corp. makes at its plant here are getting more popular north of the border.
"We're seeing large growth in Canada," said John C. Fitzgerald, executive vice president of the locally based manufacturer. "It's directly attributable to the weakening U.S. dollar." Products from the United States are becoming cheaper overseas as the dollar loses value -- the Canadian currency has gained about 17 percent so far this year against the U.S. dollar while the euro is up 12 percent since Jan. 1 -- but not every U.S. manufacturer is benefiting. At Blasch Precision Ceramics in Menands, President Dave Bobreck said exports to the United Kingdom are up 40 percent this year alone, and to Germany they're up 25 percent. But about 50 miles north, Clint Binley of Pallets Inc. in Fort Edward is paying more for the Canadian lumber that goes into his pallets. Many of the sources he depended on in the Adirondacks are no longer in business, thanks to the Canadian competition when that country's currency was far less valuable. Now, higher gasoline prices would offset any savings realized from buying lumber from U.S. mills farther away, Binley said. Somewhere in the middle lies Gurley Precision Instruments in Troy, where the weaker dollar is "helping and hurting," said Martin Gordinier, chief operating officer at the 160-year-old manufacturer. "We have joint ventures in St. Petersburg, Russia, and Vilnius, Lithuania, and we bring in raw materials and parts priced in euros," he said. "It's a double-edged sword, always has been." Gordinier said U.S. companies have spent the last decade "offshoring" and "outsourcing" -- moving production overseas and finding less expensive foreign suppliers -- to reduce costs. Now, with even the Chinese renminbi beginning to edge higher against the U.S. dollar and shipping costs climbing, companies like Gurley are looking at other ways to control expenses. "One of the benefits of our business model is we can produce a good number of components in-house as well as at our overseas" plants, Gordinier said. At Gurley's massive red-brick headquarters in downtown Troy, 100 employees work with precision tools to assemble a range of test instruments, digital readouts, positioning sensors, scales, optics and optical components. The privately held company has sales of $12 million to $15 million annually, Gordinier said. While individual companies are constrained by existing supply chains, the weakening dollar has helped the state's overseas trade. "The weakening dollar definitely boosts exports," said Richard Deitz, chief economist of the Buffalo Branch of the Federal Reserve Bank of New York. "It's like a discount for the products. "For manufacturers selling to Europe, the weakening dollar has been a boost to be able to be competitive in these markets," he said. Comfortex's Fitzgerald said less than 20 percent of the company's window shades are exported. But that's changing. "We're seeing a pretty substantial increase in our export sales," he said, adding that it was also easier to increase prices with overseas customers, thanks to the stronger currencies. |
"Some manufacturers are sitting in a sweet spot," Deitz said. "They're importing inputs from China, and they're selling to markets in Europe."
But even that arrangement can go awry.
LB Furniture Industries in Hudson buys supports and bases for tables and chairs for the hotel and restaurant industry, said President Les Lak. But the country has been in disarray, he said, not knowing "where their currency will end up," and orders can be delayed as a result.
A lot of Chinese manufacturers aren't even willing to give a delivery date, Lak said. "They don't know what to price their product at."
LB Furniture recently had to turn to a Canadian supplier when it couldn't get the necessary parts from its Chinese contractor. That ended up erasing the profit on that particular order, but it kept LB's customer satisfied, Lak said.
Domestic U.S. companies that draw their raw materials locally will benefit more from the weak dollar than companies that import some or all of their raw materials, economists say. And over time, manufacturers can tweak their supply chains to take advantage of the lower costs here.
Of course, other factors also play into location decisions.
Wood frames for LB Furniture's chairs come from Poland and other East European countries because there's a plentiful supply of beechwood, "which takes a stain well," Lak said.
But the dollar's decline has given small business and major industry alike a new competitive edge.
Among the biggest locally is GE Energy, which produces generators and massive steam turbines at its Schenectady plant.
GE Energy will export 80 percent of its Schenectady output, said spokeswoman Jan Smith, and, yes, the dollar helps make these machines more competitive in the European market, she added.
Deitz, of the Federal Reserve's Buffalo Branch, said the state's agriculture industry also is likely to benefit from the cheaper dollar.
One concern: American agricultural exports could drive up prices here. The Port of Albany exported more than a half-million tons of wheat this autumn as drought and floods decimated the European harvest. U.S. Department of Agriculture economists said the overseas demand and tight supply were helping push domestic bakery prices up 4 percent to 5 percent this year.
Meanwhile, LB Furniture's Lak said the stronger Canadian dollar has given him more breathing room here.
"At one time, the Canadian dollar was 65 cents, so it was easy for Canadians to come into the U.S. and compete with lower chair prices," he said. Now, "it's an opportunity for us to compete in Canada."
Eric Anderson can be reached at 454-5323 or by e-mail at eanderson@timesunion.com.
Growing exports New York companies are selling more overseas, as these figures for the first nine months of each of the past four years show.
JAN-SEPT.
DOLLAR VALUE OF ALL EXPORTS
2004 = $32.3 billion
2005 = $37.4 billion
2006 = $41.8 billion
2007 = $51.1 billion