Dollar’s Rise Threatens Manufacturing

A strengthening dollar is re-emerging as a threat to U.S. manufacturers by making their exports more expensive and their foreign earnings less valuable.

The U.S. currency has strongly appreciated over the past two years. It surged to a 14-year high in the wake of Donald Trump’s election and the Federal Reserve’s decision to raise interest rates, which adds a wrinkle to the president-elect’s pledge to boost factory employment.

A strengthening dollar is a sign of rising optimism for the U.S. economy. While good for U.S. consumers and companies that purchase components abroad, the dollar’s rise promises to hit U.S. manufacturers reliant on sales in overseas markets. Many have started to dial back revenue forecasts and look for ways to cut costs.

Reaction is mixed. Some companies are responding by limiting domestic manufacturing and expanding production overseas. Others say shifts in the economy will balance losses.

Jerry Johnson, president of the farm, ranch and agriculture division of member company Blount International Inc., told the Wall Street Journal the strong dollar may be offset by declining import prices. About 50 percent of the components used in Blount’s products come from overseas, Johnson said.  Source: Wall Street Journal