Also...
The weakened dollar appears to have some benefit too. Alas, you are too focused on DNC talking points to see this. So let me help you:
Dollar's Decline Is Mixed Blessing for Goods Makers
By Timothy Aeppel
Wall Street Journal
December 19, 2003
U.S. manufacturers are starting to see benefits from the dollar's slide, but the weakened currency is a mixed blessing for an increasingly global sector that buys and sells products around the world. U.S. exports of goods increased 8.9% in the third quarter, as the value of the dollar declined, according to the Commerce Department. Meanwhile, non-petroleum import prices are up about 1% over the past year.
A declining dollar means U.S. products exported to other nations will seem cheaper in those markets, while imports seem more expensive to U.S. consumers. "The best thing a weaker dollar can do is promote exports and weaken imports," and that's starting to happen, says Daniel Meckstroth, an economist with the Manufacturers Alliance/MAPI, an Arlington, Va., association of manufacturers.
At M.S. Willett Inc. a weaker dollar helped clinch a recent deal with a Danish food processor to buy Willett's special machines for putting easy-open tops on lunchmeat cans. "Europe is now our best market, and the dollar is one reason," says John McCaughey, president of closely held Willett in Cockeysville, Md. "It's easier for them to justify the project if the equipment is cheaper." But Willett buys a line of machines in Germany, for instance, which it then customizes in its factory. Mr. McCaughey says the price on those machines, when translated into dollars, has been adjusted upward "almost daily" in recent months.
Economists say it is too early for the dollar's decline to fully filter through the economy. That should happen next year, particularly if the dollar continues its gradual decent. But already, some economists say the dollar's fall has helped the bedeviled U.S. manufacturing sector. Nariman Behvaresh, chief economist at Global Insight, an economic forecasting and consulting firm in Lexington, Mass., says his own economic model finds that the manufacturing sector would have shed 700,000 additional jobs since late 2001 without the dollar's fall.
Likewise, he calculates that U.S. industrial production would have declined 2% this year, rather than risen an estimated 0.2%, if not for the weaker dollar. But the effect isn't all positive for U.S. manufacturers. For one thing, the dollar's value helps U.S. manufacturers in competition mainly with manufacturers in Europe and Japan. Most of the drop has occurred relative to the Euro and, to a lesser extent, the yen. It doesn't change the price of exports in places like China, which pegs its currency to the dollar, or in other global markets where the dollar has remained steady.
Also, for companies operating on a global basis, the dropping dollar helps in some places but hurts in others. Van Jolissaint, director of corporate economics at DaimlerChrysler AG, says a weaker dollar helps it in the U.S., but works against it in Europe and Japan. He says a weaker dollar should mean that "price competition [from imports] will be a little less vicious [in the U.S.] going forward." That, together with a strengthening U.S. economy, makes the company optimistic that it can regain market share and recover in profitability, he adds. "A weaker dollar will change some of our calculations on whether we buy components in the U.S., Canada, Mexico, or China," says Mr. Jolissaint. It won't change the attractiveness of China, he notes, where DaimlerChrysler is beginning to source more parts.
It isn't just industrial giants that face these tradeoffs. Tacony Corp., a small Fenton, Mo., maker of vacuums and sewing machines, builds some products in the U.S. but imports many products and parts. For instance, the company imports its Baby Lock brand sewing machine from Japan, which it pays for in yen. The company estimates the falling dollar translates into an 18% increase in the cost of the machines. But in the competitive U.S. market, Tacony has only been able to pass through a small portion of that, cutting sharply into profits. The obvious solution is to shift suppliers, which is time-consuming and costly. Tacony buys a wet-dry vacuum in Italy that it plans to buy from Asia. But it won't be ready to do so until next year.
globalpolicy.org
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