ROTHENBURG OB DER TAUBER, Germany - Harald Wohlfahrt can fulfill the wishes of just about any collector of German Christmas ornaments, from a blown-glass Santa at euro8.50, or $10.25, to music box tinkling out Verdi arias at the tune of euro2,500, or $3,000.
But he has his own unanswered wish this year: A stronger U.S. dollar to bring back some of his longtime U.S. customers.
Like many in Europe, Wohlfart is toughing out a steep drop in the U.S. currency. It's a group that includes exporters, those doing business with tourists, and even the U.S. military.
Across the euro zone, business are searching for coping strategies, made harder by the speed of the dollar's fall, some 5 percent since the beginning of November. The euro hit another high on Friday, at nearly $1.23, up from 86 cents in February 2002 - representing a 40 percent slide in the dollar's purchasing power in Europe.
Wohlfahrt's company, named Kaethe Wohlfahrt after his now-retired mother, has decided not to pass on every last cent of the dollar's fall to his loyal customers on U.S. military bases, where the company's ornaments are priced in dollars in PXs.
He also refuses to cut costs by shifting production to Asia, away from German woodcarvers and the craftspeople at his own workshop - who are paid in costlier euros.
"We would rather go the harder way and keep our philosophy," Wohlfahrt said in his glittering flagship store, dubbed Weihnachtsdorf or Christmas Village in this fairy-tale town made popular by its medieval architecture.
Americans represented about 35 percent of Wohlfahrt's sales as recently as March. Now it's around 20 percent.
Others also are weathering shrinking profits instead of losing customers. Momessin, among the most popular labels of Beaujolais wine in the United States, had to hold the line on its dollar prices for this year's shipment of Beaujolais Noveau. Fears of anti-French sentiment stemming from French opposition to the war in Iraq played a role, too.
"We wouldn't have dared try to raise prices in the United States, especially this year," said spokeswoman Joelle Bleton. "It's already a difficult market."
To ease the blow, companies big and small are engaged in hedging strategies.
Italian wine exporter Chianti Trambusti also is holding prices steady. Spokeswoman Veronica Trambusti said it also is shelving its dollar revenues for now, hoping the exchange rate will improve before converting them to euros.
For companies that have moved some production to the United States, like BMW, a stronger Euro can help as much as hurt. The exchange rate shift means the euros it has go farther to cover its dollar costs in manufacturing its X5 sports car.
High-end sports car maker Porsche is going to currency futures markets to hedge its dollar earnings several years ahead.
For the U.S. military, the slumping dollar means higher costs for keeping personnel in Europe as the dollar equivalent in rents and cost of living adjustments rise.
The increasing cost of living adjustments and housing allowances have meant real problems for the schools for military families in Europe, whose 6,100 employees are all civilians paid in local currency.
"There's a very large increase in our payroll budgets - we're talking $30 million for this fiscal year if the euro and dollar stay at this level," said Diana Ohman, director of Department of Defense Schools-Europe.
Servicemen and women, paid in dollars, can dodge the effect by staying on base to shop, where everything from fried chicken to gasoline can be purchased with the greenback.
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