Originally created 05/28/03

Drop affects tourists, retailers



Those busy packing their bags for that long-awaited overseas summer vacation might find it worthwhile to pause and peruse the business headlines.

Although the dollar's record low against the euro probably isn't the big topic buzzing around the office water cooler, for those traveling abroad it means that a sip of an authentic cappuccino in Rome or a plate of sushi in Tokyo will cost a good deal more than it would have a few months ago.

At the same time, a declining dollar provides a boon to companies relying on exports to spur sales because it makes their products relatively cheaper than the foreign competition, economists say.

Sales to Europe are a real "bright spot for us at E-Z-Go," said Bill Robson, an executive at the company, whose local plant is the world's biggest maker of golf carts. Though hesitant to cite a specific percentage of overall sales, Mr. Robson said a "significant chunk of business" stems from sales abroad.

"We see a strong outlook for this year and the year to come," he said.

Early Tuesday, the exchange rate saw the euro reach $1.19 after the dollar saw seven straight weeks of free-falling against the European currency.

Mark Vitner, the chief economist with Wachovia Securities in Charlotte, N.C., said that slide could benefit a slew of local businesses.

"Lumber and paper companies, as well as chemical concerns in the Augusta area, could see a shift in production swing their way from manufacturing bases overseas because it costs them less to make the products here," Mr. Vitner said.

That includes area mainstays from International Paper to Prayon Inc., a maker of chemicals used in everything from Crest toothpaste to Wheaties cereal.

On the flip side, a weaker dollar makes parts more expensive to import, somewhat hurting Waynesboro, Ga.-based battery maker FIAMM, which relies on raw materials from Italy and France.

"We don't depend on imports so much anymore now that we built a plant three years ago," said Ken Amick, the plant manager. "We do feel it (the higher cost) a bit, though."

Still, it's not so clear-cut that any significant changes will affect local operations right away, especially because the currency fluctuations may turn out to be short-lived.

"We tend to lock in exchange rates with our customers and - unless the swings are exceptionally wide and long-term - it won't really affect the way we do business," said Russ DeLuca, vice president of Solvay, a maker of high-performance chemicals that help hospital instruments and cooking ware resist high temperatures without burning.

"Of course, we make more money in the short run," said Mr. DeLuca from his office near Atlanta. He estimated that some 30 percent to 40 percent of the business is made up of exports. "But it's better overall for us and our customers when things stay stable.'

If Craig Crockard, the corporate vice president for Avondale Mills, had his way, he would like to see the dollar plummet to new lows.

"We compete mostly with Asian textile plants, and the dollar is still overpriced against those currencies," making shirts and pants from those countries cheaper for consumers, he said.

In the apparel industry, he said, "the lower the dollar, the better."

Reach Matthew Mogul at (706) 823-3352.