The competition between Oceania and Eurasia intensifies

Dollar's Fall Drains Profit of European Small Business
By MARK LANDLER

FRANKFURT, Dec. 1 - To get a sense of how fast the falling dollar can ruin a European businessman's day, talk to Udo Pfeiffer, the chief executive of a small German machinery maker in the industrial Ruhr Valley.

Mr. Pfeiffer's company, SMS Elotherm, builds machines that forge crankshafts for cars. He exports many to the United States and Mexico, selling them for dollars to manufacturers like DaimlerChrysler.

In recent weeks, the euro has been rising so rapidly against the dollar that Mr. Pfeiffer lost $10,000 in profit in the three days between shaking hands on a $1.5 million deal for a machine and signing the contract. The profit on these machines, he said, will be no more than $30,000.

As the euro and other currencies climb into rarefied territory - the euro reached another record on Wednesday, settling in New York at $1.3319, and the British pound rose to $1.9327, a 12-year high - exporters are expressing more and more fear about how it will affect their businesses.

For every familiar name like Mercedes-Benz or Louis Vuitton, there are scores of much smaller enterprises, making everything from crankshafts to concert pianos, that are being buffeted as shifting currency values make their products more expensive in the American market.

Some are even more dependent on the United States and other dollar-dominated markets than Daimler or LVMH of France. And they do not have the financial resources of these big companies to engage in complex currency hedging.

Posted by Prometheus 6 on December 2, 2004 - 1:49am :: Economics
 
 

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