From German wineries to Chinese factories, US dollar echoing

Workers fill barrels with product at the GMM non-stick coatings factory in Zhuhai, Guangdong province

For Americans, there are cheaper vacations in Europe and lower-priced imports. A Chinese factory is selling fewer goods in Europe. A U.S. toymaker’s exports are being squeezed. A German winery says overseas demand is up.
In the months since the U.S. dollar began rising in value against other currencies, the consequences have reverberated, for better or worse, around the world.
Who wins and who loses isn’t always obvious.
In Europe, many exporters have benefited because a stronger dollar tends to make their products cheaper in the United States. Yet in practice, some companies can’t expect a boost in sales whenever currency values shift.
German winemaker Schloss Vollrads, housed in a castle with a 14th century tower overlooking the Rhine River town of Oestrich-Winkel, regards the stronger dollar as a welcome but temporary blessing.
“A weaker euro always means that we have bigger demand from our export destinations,” says Managing Director Rowald Hepp. “But we also have to take into consideration that we have a very, very high volatility of currency exchange rates right now, and it can change very quickly.”
Since 2015 began, the dollar’s strength has moderated. Its value against a basket of currencies has risen about 3 percent so far in 2015 after surging nearly 12 percent in 2014.
Against the dollar, the euro is valued at just USD1.13. A year ago, it was $1.37 — an 18 percent plunge.
Yet wine drinkers may not see much price difference. Importers are billed in euros. It’s up to them to set dollar prices. And if there’s any currency windfall, wineries like Hepp’s may pocket it to make up for thinner profits or losses when the euro was strong.
“We only have one crop per year, one yield per year, and our customers are looking for reliable prices over the long term,” Hepp says.
“I cannot influence it,” he says of the exchange rate, “so I don’t spend too many thoughts on things I can’t change.”
In China, where the yuan has risen in tandem with the dollar because of Beijing’s tight control, manufacturers are losing some overseas sales.
“We’ve lost some business in Europe,” says Ravin Gandhi, Chicago-based CEO of GMM Nonstick Coatings, the world’s third-biggest maker of nonstick coatings for cookware and electrical appliances. It has a factory in the southern Chinese city of Zhuhai and another in India.
“The fact that the euro has become weaker has absolutely hurt us in the sense that our European clients, they come to us and say, ‘We may not be able to afford your product’,” Gandhi says.
As a result, he’s considered establishing a factory in Europe.
Smaller companies tend to be more vulnerable to currency fluctuations, notes David Stockton, a senior fellow at the Peterson Institute for International Economics.
“Big multinational corporations with production locations all over the world simply have more levers to pull in terms of adjusting their own production patterns across these countries,” he says. Kelvin Chan, Business Writer, Hong Kong, AP