Is the dollar too weak? Or too strong? Smart, nimble plastics processors need to keep an eye on the debate in financial and political circles and be prepared to take advantage of the outcome.
It's amazing how quickly the dia-logue has reversed in recent months. In January, with Mexico's peso devalu-ation and Canada's dollar crashing to new lows against the U.S. dollar, pundits talked about how expensive U.S. goods were becoming in those countries - which are, by far, the United States' largest trading partners.
U.S. manufacturers would suffer, the economists said, because U.S. goods were becoming too expensive, and because Canadian and Mexican competitors had strong incentive to export to the United States.
Then, suddenly, hand-wringing about Mexico and Canada was replaced by hand-wringing about Japan. The yen, which soared to record levels against the dollar, instantly became too strong. What would Washington do?
Here's a suggestion: Do nothing.
Well, not exactly nothing. But achieving a ``soft landing'' - is anyone else frightened by this phrase? - is difficult enough without trying to please all the special-interest groups that, for one reason or another, want to change the dollar exchange rates.
The Federal Reserve System, Treasury Department and Congress need to focus on the nuts and bolts of guiding the U.S. economy - keeping interest rates low, inflation within reasonable limits, and reducing the budget deficit - instead of fixating on currency exchange rates. North American processors should prepare to take advantage of today's currency situation:
Do you count Japanese original equipment manufacturers among your customers? They should be, now more than ever. With the yen high, Japanese-made goods are becoming more expensive, so those OEMs will expand their transplant assembly plants in the United States, Canada and Mexico.
Are you doing everything possible to insulate your firm against competition from low-wage or weak-currency nations? Now is not the time to give customers an excuse to comparison shop. Stay efficient and customer-focused.
Interested in selling your business? North American firms are a bargain to investors in strong-currency countries like Japan and Germany. Many certainly will be looking for opportunities, and some will land in the prosperous plastics processing industry.
Loepp is news editor of Plastics News.
