North American companies that don't take advantage of the new euro currency could be missing out on a great opportunity.
European machinery suppliers appear universally excited about the euro. They say it will reduce costs by eliminating the need for currency hedging, and will make it easier for customers to compare prices between suppliers.
Krauss-Maffei Kunststofftechnik GmbH actually had a special exhibit devoted to the euro at its K'98 booth in Dusseldorf, Germany. Imagine that: Many firms struggle to squeeze as many machines as possible into their K-show booths but here was one that thought the euro was important enough to take up precious floor space.
On the other hand, North American machinery suppliers don't seem to have high expectations for the euro. Some U.S. firms price their equipment in U.S. dollars only, and don't plan to change that. Maybe there's no reason to change. But the Jan. 1 debut of the euro seems like an occasion North American firms should not ignore.
Look at it this way: The way it works now, someone — either the buyer or the seller — has to worry about exchange rates between dollars and 11 different European currencies. If sellers price their products in dollars, then the buyers take the risk. It has been problematic for a U.S. or Canadian machinery company to create separate price lists for every European country, and then to accept the risk of fluctuation in each one of those currencies.
But in one month, North American firms will be able to price their products in euros and sell to Germany, France, Italy, Spain, Portugal, Austria, Belgium, Ireland, Luxembourg, the Netherlands and Finland. Add to that the psychological benefit of conforming to the customers' culture, rather than forcing them to conform to yours.
The euro has the potential to do more than streamline cross-border trade. It appears likely to unleash a unified economy that will rival the United States' in size and importance. Is the North American plastics industry paying attention?