Some businesses feeling tremors from weak dollar
Monday, January 3, 2005 By ROBERT WANG Repository staff writer
The big drop in the value of the U.S. dollar abroad is having an impact on economies around the world, effects being felt by some Stark County businesses.
Cutter Equipment, a Canton business that sells refurbished golf course maintenance equipment, estimates its international sales are up 40 percent, largely because of a weaker dollar.
Golf courses in countries such as England, Poland, Australia and New Zealand have accelerated purchases of Cutter products such as used fairways mowers, said company manager Greg Moore. That’s because the weaker dollar makes buying American goods less costly for foreign customers.
If the dollar’s value had been the same as a year ago, Cutter’s sales abroad would be up less than 15 percent, Moore said.
“What they’re afraid of is if they don’t buy (now), the dollar will stabilize and increase in value, and they’ll have to pay more next year,” said Moore, adding that foreign sales make up to 20 percent of total sales. “We’re trying to do our best to turn around the trade deficit.”
Moore said the extra profits are helping the company expand. Cutter is doubling its facility space near the Skyland Pines Golf Course to 30,000 square feet and eventually plans to hire six to eight more people to its staff of eight during the next five years.
The sliding dollar also hurts local companies such as Power Transmission Options of North Canton that import products.
The company buys power takeoff units, which allow dump trucks to lift their truck beds, from its parent company in Madrid, Spain. Company executive Rich Renner said that because Power Transmission has to buy parts in euros, his company is selling them at a “significant” loss. The company has raised prices by up to 4 percent in line with competitors, but raising prices higher would risk losing market share, he said.
However, Renner said Power Transmission has gained market share, sales have been stable, and he expects the dollar will rebound, generating profits.
“In the long run, everything will be fine,” he said.
And so far, not all companies importing products have lost money.
Bob Gasser, owner of John Gasser & Son Jewelers in Canton, believes the rise of the Swiss franc against the dollar has played a role in a 5 percent rise in the retail price of Rolex watches imported from Switzerland. But he said, apparently because of a resurging economy here, Rolex sales have risen in the past year.
Plain Township-based Ohio Discount Merchandise pays Chinese factories to make its bobblehead dolls, little statues and pool tables and then ships the bulk of them here to sell. Company President Todd Bosley said his company has no choice but to outsource because the cost of making the products here would be up to 45 times more.
Luckily for Bosley and American consumers of Chinese-made goods and unluckily for Ohio workers, the Chinese government has pegged its yuan currency to go up and down in value with the U.S. dollar. A yuan that stays weak with the dollar helps keep the cost of Chinese labor much cheaper for American businesses than American labor.
Because the U.S. and others are trying to persuade China to revalue its currency, Chinese officials are widely expected to allow what is considered its artificially undervalued currency to rise up to 10 percent this year.
Any such increase would eat into Ohio Discount’s profits, making the cost of paying the Chinese factories more expensive in U.S. dollars.
Meanwhile, several Stark companies say the dropping dollar has had no noticeable effect on them.
Timken Co. spokesman Jason Saragian said while the company has factories around the world, it tends to sell it steel bearings to customers who live in the region of the factories. Timken could be benefiting from sales to American companies that use the bearings in products that they export. But Saragian said it’s difficult to say how much more in sales that generates for Timken.
Similarly, Maytag, which makes Hoover vacuum cleaners, also doesn’t see much of a benefit, with only 10 to 15 percent of its sales outside the U.S., said company spokeswoman Lynne Dragomier.
John Capocci, general manager of Barbco in Canton Township, said orders in Canada for his company’s underground earth pouring machines, which are used to dig underground tunnels, went up by about 30 percent in 2004. The sales are usually due to government projects that are planned years in advance, and sales in other countries have not gone up significantly. Canadian sales are only 5 percent of his business anyway.
“The falling dollar might not necessarily make someone go out and buy a horizontal earth pouring machine,” he said. “I think it’s just more work being done in infrastructure up in that area.”
Also, while foreign tourists flock to New York and Florida, the falling dollar doesn’t appear to have drawn many of them to Stark County, said John Kiste, executive director of the Canton/Stark County Convention & Visitors’ Bureau. Hotel sales in the county hit the highest level in years in 2004, he said, but the bulk of the county’s visitors are from within the United States.
And while Marilyn Nave, the owner of Vista Royale Travel is not selling many European vacations, she said more of her Stark County customers are vacationing closer to home. They are staying in the country by going to Alaska and Hawaii or going to Mexico or the Caribbean, whose currencies have not risen against the dollar as much as the euro.
You can reach Repository writer Robert Wang at (330) 580-8327 or e-mail:
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