NEW YORK — The slide of the dollar against some key benchmark currencies over the past year has been a cause of concern for some U.S. importers and a particular worry for European luxury firms that rely on exports to the U.S. for a considerable chunk of their business.

The dollar has declined most precipitously against the euro. At the beginning of this month, it had slipped 20.7 percent against that currency over the past 12 months. Given that this time last year U.S. textile interests were lobbying in Washington to complain that the dollar’s strength was hurting domestic manufacturers by making it even more economical to import goods, one might think that the dollar’s slide would be a cause of relief for domestic manufacturers.

Not so, for one key reason. The dollar’s slide has been far less pronounced against currencies in the primarily Asian nations that are the U.S.’s leading sources of imported apparel. The Chinese government pegs the yuan’s value to the dollar to encourage exports, which has meant an extremely steady exchange rate for the past half decade. The dollar has also remained steady — changing less than 0.1 percent — against the Hong Kong dollar.

Among the 10 nations that were the U.S.’s leading source of imported textiles and apparel in 2002, the dollar has fluctuated most strongly in comparison to the Mexican peso, against which it has appreciated 6.7 percent over the past year, and the Canadian dollar, against which it has slipped 10.6 percent.

Compared with the currencies of the five other Asian nations that are leading suppliers of imported textiles and apparel, the dollar has ranged from gaining 1.8 percent on the Taiwan dollar to losing 4.6 percent against the Indonesian rupiah. It lost smaller amounts of ground versus the Indian rupee, South Korean won and Thai baht. The dollar also strengthened 4.5 percent against the Honduran lempira.

While the European Central Bank last week cut its benchmark interest rate by a half point, with the intent of slowing the euro’s rise against the dollar, it’s not yet clear how effective that move will be in achieving that goal.

Still, sourcing managers said the fluctuations have been small enough that they haven’t had a great effect on their decisions on where to place product. That’s largely because most U.S. companies place their orders for goods in dollars, which means that short-term fluctuations in exchange rates don’t affect the price of goods.At the U.S. arm of Hong Kong-based Li & Fung Ltd., which handles sourcing for scores of U.S. and European companies, president Rick Darling said, “All of our orders are placed in U.S. dollars globally, which brings some stability. When the dollar weakens, consistent order placement tends to stabilize the effect on local economies. Conversely, when the dollar is really strong, contracting in dollars means you aren’t able to take advantage of the local currency weakness. But most of our clients are in the business of making sure they have consistent supply chains and they’re making very few moves. The dollar would have to stay weak for a much longer period of time to have an impact on sourcing decisions.”

Some companies might take the dollar’s slide versus the euro as a signal that it was time to pull manufacturing operations out of Europe in favor of lower-cost regions in Asia or Latin America. But Darling and other executives pointed out that the broader economic forces — primarily the wide difference in cost structures — have been driving that trend for the past few years.

“Most of the moves being driven based on the strength of the euro have been made at this point,” he said.

He also pointed out that exchange rates are only one variable in the complex equation that companies use to determine where to produce goods.

“There are so many other extra issues that are facing people from a sourcing standpoint, between deflation and SARS and quotas and all,” he said, “that the actual value of the dollar is last on the list for most guys.”

Rod Birkins, director of sourcing at Plano, Tex.-based J.C. Penney Private Brands Inc., agreed there are a lot of other economic factors driving sourcing decisions. For instance, the price of cotton fiber has risen about 20 percent over the past year and stood at almost 59 cents a pound in May, according to the U.S. Department of Agriculture.

“Cotton is significantly more than last year, oil is more than last year. Pricing pressures are abounding everywhere,” Birkins said. “The dollar obviously always is a component in our decision making, so there are a few places where we have found advantages. But quite honestly, we’re finding more disadvantages than advantages.”Still, he said he couldn’t think of any particular instances of Penney’s moving sourcing operations into or out of a country purely because of the change in exchange rates.

At San Francisco-based Levi Strauss & Co., treasurer Joe Mauer said the company writes most of its sourcing contracts for North America in dollars and for Europe in euros, which tends to minimize the effect of fluctuations.

He said currency fluctuations on a larger scale serve to inflate or deflate the results of its overseas units, but that is an effect the company tries to minimize, through trading currency futures and occasionally shifting operations geographically.

“A general observation is that most of the impact comes through in reported financial results,” he said. “If the euro is 10 percent stronger, everybody’s European earnings are 10 percent higher, and they would have a similar effect on revenues.”

Bill Ghitis, president of global apparel and Wilmington, Del.-based DuPont Textiles & Interiors, pointed out that, from an exporter’s perspective, the slide of the dollar can be a boon, since it makes U.S. exports relatively cheaper.

However, he acknowledged, “It’s not that positive for Europe in that with a stronger euro, imports will come in at a faster pace….Asian exports toward Europe will find themselves even more competitive than they were.”

U.S. textile manufacturers said the slide of the dollar against the euro has meant little to them. While the U.S. and European textile industries to some degree compete, their cost structures are similar, which makes it easier for mills to overcome the difference. Also, U.S.-made fabric is typically made into garments in the U.S., Mexico or the Caribbean Basin under trade-preference programs that would lose tariff breaks if European fabrics were substituted.

“It’s the Asian currencies that matter,” said Keith Hull, president of marketing and sales at Graniteville, S.C.-based Avondale Mills Inc.

Similarly, Jack Matthews, president of Mission Valley Fabrics, a division of Lubbock, Tex.-based Plains Cotton Cooperative Association, said, “The European Continent isn’t really what we’re worried about.”

At the American Textile Manufacturers Institute in Washington, which last summer was lobbying strongly against the U.S. policy at the time to keep the dollar strong against other currencies, president Parks Shackleford said the slide against the euro has meant little for the domestic industry.“While we are encouraged that there doesn’t seem to be a concerted strong-dollar policy or effort, we have not really reaped the benefit of somewhat of a change against the euro and the yen, which are not primary competitors,” he said. “We still see the Chinese currency issues as a major issue for us.”

Over the past year, the value of the dollar has slid 3.9 percent against the Japanese yen.

Citing a commonly held industry belief that the Chinese currency is kept artificially low to promote exports, he said, “It’s a very difficult thing to compete against, when you’re competing against a foreign government and they have the currency 30 to 40 percent undervalued.”

The euro also has gained about 20 percent against the Chinese yuan this year, he noted.

“It will be interesting to see how the Europeans react,” he said. “With the euro strengthening against the dollar...that also means it’s strengthening against the yuan, and there may be a heightened level of concern on this issue.”

While writing contracts in dollars has largely insulated U.S. importers from the effects of the depreciating dollar, the companies that are filling those contracts haven’t been so lucky.

One company that has felt the pinch is New York-based Pressman-Gutman, which imports fabrics and garments, primarily from China and South Korea.

“In our Korean business, we faced a lot of price increases, some of which were due to the war and the spike in the price of petroleum. At the same time, the Korean currency is up,” president James Gutman said. Over the past year, the dollar has slid 1.1 percent against the dollar. But between currency appreciation and other cost increases, Gutman said his South Korean suppliers’ expenses have risen about 20 percent and their selling prices have risen from 6 to 8 percent.

“Needless to say, we were not able to pass those price increases along to our customer,” he said. “We do a lot of Korean business on piece goods, and we just had to absorb it...and try to offset it in other aspects of our business.”About 30 percent of the company’s merchandise comes from South Korea.

Several foreign exhibitors at last week’s NAMSB World Source trade show in New York had similar complaints.

Khawaja Haroon Ahsan, vice president with the Karachi, Pakistan-based sourcing company, Nexus International, said the slide of the dollar “has affected the business because our contracts are based on the dollar.”

He said the slide of the dollar has effectively lowered his company’s margins by 7 to 8 percent. His company also sets contract prices with U.S. customers in dollars.

“We couldn’t raise the prices with our customers,” he said. “Of course, when the dollar is strong, they can’t ask us to lower the prices.”

Similarly, Bart Spataro, a Toronto-based North American agent with Santo Tirso, Portugal-based fabric mill PortEuropa Textiles, said the slide has hurt his company’s business. He said it’s hard to manage the dollar’s slide versus the euro because the only obvious answer —?raising prices — would likely mean reduced volume. Cutting costs can only go so far in a capital-intensive business like textiles, he said.

“That is the solution, but it is difficult to achieve,” he said. “You do have fixed costs.”

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