It is Canada's problem, for example, that the U.S. dollar's fall is causing companies like Exco Technologies Ltd. of Markham, Ontario, to lay off Canadian workers while expanding U.S. production. The interior trim for autos and trucks that Exco makes in Canada has been getting priced out of the U.S. market in recent months, so the company decided to shift manufacturing to a plant in Huntsville, Ala., where it expects to hire 30 to 40 people by the end of this month.
"If the [Canadian] dollar stays consistently over 80 cents, or 85 cents, then I think we will all come to conclude that there are portions of our business where, if it's going to be sold in the States, you try to make it in the States," said Paul Riganelli, Exco's chief financial officer.
For Americans, a dinner in Paris or a stay in London is becoming more expensive, reflecting the rise in the euro from 86 cents in early 2002 to just below $1.35 yesterday.
(Remy De La Mauviniere -- AP)
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At Allegheny Plastics Inc. in Leetsdale, Pa., Clarke McGuire, the chief operating officer, said of the sinking dollar: "I'm trying to see a downside to it for us, and I can't."
Capital-goods makers such as Allegheny Plastics -- companies producing machinery, generators, computer chips, measuring instruments, engines and other items that are sold to businesses -- are America's biggest exporters by far, selling nearly $300 billion abroad last year.
The machines that Allegheny Plastics sells for use in manufacturing steel, which cost an average $100,000 apiece, are faring much better in international markets now that the dollar is down against the euro, McGuire said. When the dollar was peaking a couple of years ago, he said, "we weren't able to penetrate European mills much," and shipments across the Atlantic accounted for only about 5 to 10 percent of the company's sales. But now, exports to Europe have risen to about 30 percent of sales, and because most of the firm's competitors are European, "we can go into their home market and beat them up, and compete fairly in Asia," McGuire said, adding that the firm is actively trying to hire factory workers.
Allegheny Plastics is not alone; all told, U.S. capital-goods makers exported 14 percent more in the first 10 months of 2004 than they did in the same period last year.
The dollar's dip is also having a significant impact in the automobile sector, which accounted for $210 billion worth of imports last year, making it one of the biggest contributors to the country's ballooning trade deficit. In the sale of cars, trucks and sport-utility vehicles, "exchange rates really do make a difference," said Paul C. Taylor, chief economist of the National Automobile Dealers Association, who noted that the market share for European carmakers is falling now that the dollar has weakened.
British automaker Jaguar, for example, is enjoying brisk business in Western Europe, with new car registrations up 24.5 percent in the first 10 months of 2004. But in the United States, sales have fallen 15 percent, and losses have grown as revenue per vehicle, which is measured in dollars, sinks below manufacturing costs, which is measured in pounds.
Some foreign carmakers, the Japanese in particular, have responded by expanding production in the United States or at least considering whether to do so.
Honda Motor Co., for example, said in November that it will build a $100 million plant west of Atlanta to produce automatic transmissions, invest another $100 million to expand gear production at an Ohio factory and spend $70 million to increase production of parts at its Alabama engine-making facility. Koichi Kondo, Honda's chief operating officer for North America, said making more parts locally for autos built in the United States helps curb the impact of fluctuations between the dollar and the yen.
