The sliding value of the U.S. dollar is boosting financial results for some of Indiana's big exporters.
For instance, Hurco Cos., the locally based maker of computer-controlled machine tools, said in August that the weak dollar
was responsible for more than $700,000 of the $12 million increase in its fiscal third-quarter revenue.
Other exporters–from Eli Lilly and Co. to Cummins Inc.–also are reaping benefits, since the weak dollar makes American-made
goods cheaper in foreign currencies.
"When the trends of U.S. and foreign currency really start affecting purchasing patterns, that's when manufacturers
really start paying attention," said Pat Kiely, president of the Indiana Manufacturers Association. "That's
where we're at right now."
The dollar recently hit its lowest point in 15 years against an index of other major currencies, such as the euro, the Chinese
yuan and Canadian dollar. The U.S. Dollar Index now has declined 33 percent since early 2002.
The causes are many–including the nation's hefty trade and budget deficits, which force the United States to borrow
billions of dollars a day from abroad to balance its books. The nation's low interest rates also put downward pressure
on the greenback.
The pattern creates opportunity for Indiana manufacturers, many of which already are enjoying strong sales thanks to booming
global demand. Economies in many parts of the world, including China, Latin America and Europe, are growing faster over the
past two years than that of the United States.
Indiana exports top $22 billion a year, with about 44 percent going to its largest trading partner, Canada. About one-third
of the state's manufactured goods are exported to foreign countries each year. The U.S. Commerce Department says Indiana
ranks 13th among U.S. states and territories in exports.
But the impact of the falling dollar on the state's exporters isn't universally positive, especially if they purchase
products from overseas. The flip side of the cheap dollar is, it makes products imported into the United States more expensive.
Take Zipp Speed Weaponry, a maker of high-end bicycle wheels headquartered in Speedway.
On the plus side, 35 percent of its sales are outside the United States, including 23 percent from Europe. But it also taps
foreign suppliers for components.
"All of our bearings come from Switzerland, and our spokes come from Belgium, so that's a concern," said Andy
Ording, Zipp's president. "Fortunately, our carbon and machined parts all come from the U.S."
Ording said that if the U.S. dollar continues to fall, he may push his overseas suppliers for price relief.
Zipp's predicament is not unusual, said John Sullivan, director of Purdue University's Center for Advanced Manufacturing.
"The falling value of the dollar is a blessing and a curse," Sullivan said. "Many Indiana manufacturers are
hit by both sides of it."
Even so, Kiely said, "If you're an established company with established export markets, I think this could be a
real net plus."
It has been for Hurco, which relies on foreign markets for about two-thirds of its sales. Profit for the first nine months
of its fiscal year increased 41 percent, to $15.2 million. The weak dollar accounted for only a sliver of that. But in a competitive
world economy, every little bit helps.
Indeed, the devalued dollar gives exporters additional competitive flexibility, business experts say. They can maintain prices
and fatten profits. Or they can lower prices to gain market share.
Economists don't project a major rebound in the dollar anytime soon. That bodes well for companies like diesel-engine
maker Cummins, which is battling for market share in the explosively growing Chinese market. The company might more than double
its Chinese sales, to $3.3 billion, by 2010, Wachovia Capital Markets said in a report.
"Existing manufacturers like a weak dollar," said Matthew Will, associate dean at the University of Indianapolis'
business school. "The problem is, it hurts your economy long term."