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To: long-gone who wrote (24084)	12/10/1998 6:17:00 PM
From: goldsnow	Respond to of 116912

Corporate Europe isn't 'euro ready' By Suzanne Miller, CBS MarketWatch Last Update: 12:43 PM ET Dec 10, 1998 LONDON (CBS.MW) -- The euro may be coming in just 22 days' time, but it will probably have little impact on the private lives of many European workers until 2002. That, anyway, is when most companies will start forking over wages in the new currency. For months, consultants, analysts and politicians have bemoaned how ill-prepared British companies are for the euro -- and the United Kingdom's not even joining in the first round. Now, according to a survey just published by KPMG, it's clear Britain is far from alone. The survey encompassed 307 companies employing more than 5,000 people that have European headquarters in one of the member states of the European Union or Switzerland. KPMG has warned that Europe could be enmeshed in "turbulence" during the transition period because so many companies are delaying the transition from national currencies to the euro. The survey discovered that most companies won't be paying their employees in euros until 2002 -- when it will be compulsory for all "eurozone" companies to do so. As far as the average worker is concerned, that's probably just fine because many have sentimental attachments to their domestic currencies. Mismatches? But companies may find that their reluctance to make the leap is itself a source of trouble. KPMG said the euro will be adopted as the major currency at a pace that differs from sector to sector and country to country, "indicating significant mismatches that threaten to cause confusion and impact on trade," the consultancy warned. Manufacturing, one of the more international sectors, will make the quickest pricing leap, with most companies in the sector expecting to make the transition by 2000. The retail and wholesale distribution sectors, which tend to be more insular, will be slower off the mark. Some companies, especially smaller ones, may be forced to speed up their pricing changes in order to stay competitive with those that make the transition quicker. Laggards include France, where the number of companies planning to use the euro as the major currency for purchasing will exceed 20 percent only by 2000. In Italy, that figure will remain below 10 percent through 1999. In Germany, on the other hand, more than half will be using the euro as the major currency for purchasing by early 2000. Possible pitfalls Many companies, moreover, have not yet tested the potential pitfalls of the conversion process with their suppliers and customers -- perhaps a cause for worry. "Pricing is one threat companies face. Another is from wages. If prices go down and wages go up, companies and their profits will be squeezed in the middle," KPMG warned. Companies seem happily oblivious to the pitfalls ahead, still choosing to believe that their profits will improve thanks to the magic wand of European Monetary Union and the vast single market it will create. Oddly enough, while 77 percent of the companies that responded to the survey believe their profits will benefit from EMU in the long run, 40 percent of the companies in question have not yet calculated the cost of adapting to EMU. If companies don't know what their EMU costs are -- or conversion's pitfalls, for that matter -- talking about potential profit may be premature or, as KPMG puts it, "little more than a guess." cbs.marketwatch.com