As the financial crisis worsens in Europe and the euro continues to lose value against the dollar, Nashville could soon see more bargain prices on products such as Italian olive oil, French wine and cheese or even German luxury cars.
But not just yet, Nashville businesses and economic experts say.
The recent rise in the value of the dollar against the European currency has so far had little impact on commerce here — even though the euro is worth only about $1.30 now, compared with nearly $1.60 during its mid-recession high in July 2008.
“At the moment, I don’t think there’s much of an effect on purchases from Europe, and historically it has taken about six to nine months for exchange-rate changes to show up in Tennessee trade data,” said Steven Livingston, a professor at Middle Tennessee State University who tracks trade and currency fluctuations.
“We don’t get much from the eurozone, but what we do get tends to be high-end foods and furniture,” Livingston added. “It’s not going to be Walmart-type stuff. But there are some furniture stores in Nashville that buy from Europe, and they should be getting some price breaks once their current inventories are depleted.”
Jan Rasmussen, who with his wife, Lene, operates the 2 Danes furniture store on White Bridge Road, said he expects the more-favorable exchange rate might lower prices on some goods if the dollar remains stronger a while longer.
“There are no big bargains from Europe yet,” he said. “I don’t think the Europeans are quite to the point of being desperate, but they had lost a lot of business to the U.S. the past few years as the dollar was weakening.”
That’s the flip side of the coin. As the dollar strengthens, it’s more expensive for American firms to sell their products in Europe, compared with when the dollar was weaker.
Not much trade between here, there
But there isn’t much trade between Nashville’s major industries and Europe, in either direction, trade experts say.
LP Building Products, for instance, exports very little to Europe from the United States, and imports mostly from Canada, not Europe or Asia, spokeswoman Mary Cohn said.
“We don’t buy from Europe, and although we do export some to Europe, in proportion to the rest of our business, it is quite small,” she said. “The Canadian dollar has much more effect on us. We manufacture in Canada, and most of that is exported to the U.S.”
Likewise for Bridge-stone, the Japanese rubber company whose tire operations for the Americas are based in Nashville.
“We have Bridgestone Europe, so tires that are sold there are made there,” said spokesman Dan MacDonald. “We import very little from Europe. It’s more between Latin America and the U.S.”
But Bridgestone does have a building-products subsidiary, based in Indiana, that could feel some impact from a weakening of the euro, he said.
VW hedges its bets
Although the stronger dollar could make it more expensive for Germany’s Volkswagen to do business in the United States, that company has hedged its bets against big currency swings in either direction by building assembly plants in North America, including the new one that opened this year in Chattanooga, spokesman Tony Cervone said. The company also has a plant in Puebla, Mexico.
“Obviously there is impact” from the weakening euro, Cervone said. “But 70 percent of our vehicles sold here are produced in North America. That’s one of the reasons it’s imperative for us to have that local production.”
The new midsize Volkswagen Passat sedan made in Chattanooga has 80 percent North American content and is sold only in North America. VW makes a different version of the Passat in Europe for that market.
As for lower prices on other European-made consumer goods sold here, that might depend on whether a retailer buys directly from Europe or through a U.S. wholesale distributor.
Rasmussen said 2 Danes furniture used to buy container loads of goods directly from Europe but discontinued that and switched mainly to U.S. distributors when the dollar was weak.
European brands outsource to Asia
Another issue, he said, is that many of the major European brands have now outsourced their manufacturing to Asia, just as American companies have done. The dollar is still weak against Asian currencies, so there would be no savings in buying European-branded goods made in Asian countries.
Also, price changes attributed to currency swings often operate like gasoline pump prices, Rasmussen said. They’re quick to go up but slow to go back down.
“A lot of the Europeans sell to us in euros, so when it changes, the prices will go down a little, but not as fast as the euro goes down,” he said. “But when it goes up, they change very fast.”
At Marché Artisan Foods, which sells a variety of European items, there might be some bargains, said Perry Chen, the general manager.
“We will probably start seeing some changes in prices, but we haven’t quite gotten there yet,” he said. “We mainly get spices and other assorted retail items.”
As do many other local shops, Marché gets most of its European products from U.S.-based importers, and it would be up to them to pass along any savings, Chen said, adding that some might be reluctant to do so.
“A lot of European products are not very price sensitive,” said MTSU’s Livingston. “They are brand names. But we will see a marginal deterioration in the whole balance of trade, because exports (to Europe) will go down as imports go up.”
Currently, there are 17 nations in the eurozone, which means they use the euro as their official currency. They are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.
Some major European Union members have not yet adopted the euro, including Great Britain, Denmark and Sweden, and still maintain their own currencies. Switzerland and Norway are not in the European Union, and have their own currencies as well.
A plus for Tennesseans who travel as the dollar strengthens is that it’s cheaper to visit Europe now than it had been, Livingston said.
“It’s definitely a better time to travel to Europe, as you will get the full advantage of the stronger dollar,” he said.
tennessean.com
But not just yet, Nashville businesses and economic experts say.
The recent rise in the value of the dollar against the European currency has so far had little impact on commerce here — even though the euro is worth only about $1.30 now, compared with nearly $1.60 during its mid-recession high in July 2008.
“At the moment, I don’t think there’s much of an effect on purchases from Europe, and historically it has taken about six to nine months for exchange-rate changes to show up in Tennessee trade data,” said Steven Livingston, a professor at Middle Tennessee State University who tracks trade and currency fluctuations.
“We don’t get much from the eurozone, but what we do get tends to be high-end foods and furniture,” Livingston added. “It’s not going to be Walmart-type stuff. But there are some furniture stores in Nashville that buy from Europe, and they should be getting some price breaks once their current inventories are depleted.”
Jan Rasmussen, who with his wife, Lene, operates the 2 Danes furniture store on White Bridge Road, said he expects the more-favorable exchange rate might lower prices on some goods if the dollar remains stronger a while longer.
“There are no big bargains from Europe yet,” he said. “I don’t think the Europeans are quite to the point of being desperate, but they had lost a lot of business to the U.S. the past few years as the dollar was weakening.”
That’s the flip side of the coin. As the dollar strengthens, it’s more expensive for American firms to sell their products in Europe, compared with when the dollar was weaker.
Not much trade between here, there
But there isn’t much trade between Nashville’s major industries and Europe, in either direction, trade experts say.
LP Building Products, for instance, exports very little to Europe from the United States, and imports mostly from Canada, not Europe or Asia, spokeswoman Mary Cohn said.
“We don’t buy from Europe, and although we do export some to Europe, in proportion to the rest of our business, it is quite small,” she said. “The Canadian dollar has much more effect on us. We manufacture in Canada, and most of that is exported to the U.S.”
Likewise for Bridge-stone, the Japanese rubber company whose tire operations for the Americas are based in Nashville.
“We have Bridgestone Europe, so tires that are sold there are made there,” said spokesman Dan MacDonald. “We import very little from Europe. It’s more between Latin America and the U.S.”
But Bridgestone does have a building-products subsidiary, based in Indiana, that could feel some impact from a weakening of the euro, he said.
VW hedges its bets
Although the stronger dollar could make it more expensive for Germany’s Volkswagen to do business in the United States, that company has hedged its bets against big currency swings in either direction by building assembly plants in North America, including the new one that opened this year in Chattanooga, spokesman Tony Cervone said. The company also has a plant in Puebla, Mexico.
“Obviously there is impact” from the weakening euro, Cervone said. “But 70 percent of our vehicles sold here are produced in North America. That’s one of the reasons it’s imperative for us to have that local production.”
The new midsize Volkswagen Passat sedan made in Chattanooga has 80 percent North American content and is sold only in North America. VW makes a different version of the Passat in Europe for that market.
As for lower prices on other European-made consumer goods sold here, that might depend on whether a retailer buys directly from Europe or through a U.S. wholesale distributor.
Rasmussen said 2 Danes furniture used to buy container loads of goods directly from Europe but discontinued that and switched mainly to U.S. distributors when the dollar was weak.
European brands outsource to Asia
Another issue, he said, is that many of the major European brands have now outsourced their manufacturing to Asia, just as American companies have done. The dollar is still weak against Asian currencies, so there would be no savings in buying European-branded goods made in Asian countries.
Also, price changes attributed to currency swings often operate like gasoline pump prices, Rasmussen said. They’re quick to go up but slow to go back down.
“A lot of the Europeans sell to us in euros, so when it changes, the prices will go down a little, but not as fast as the euro goes down,” he said. “But when it goes up, they change very fast.”
At Marché Artisan Foods, which sells a variety of European items, there might be some bargains, said Perry Chen, the general manager.
“We will probably start seeing some changes in prices, but we haven’t quite gotten there yet,” he said. “We mainly get spices and other assorted retail items.”
As do many other local shops, Marché gets most of its European products from U.S.-based importers, and it would be up to them to pass along any savings, Chen said, adding that some might be reluctant to do so.
“A lot of European products are not very price sensitive,” said MTSU’s Livingston. “They are brand names. But we will see a marginal deterioration in the whole balance of trade, because exports (to Europe) will go down as imports go up.”
Currently, there are 17 nations in the eurozone, which means they use the euro as their official currency. They are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.
Some major European Union members have not yet adopted the euro, including Great Britain, Denmark and Sweden, and still maintain their own currencies. Switzerland and Norway are not in the European Union, and have their own currencies as well.
A plus for Tennesseans who travel as the dollar strengthens is that it’s cheaper to visit Europe now than it had been, Livingston said.
“It’s definitely a better time to travel to Europe, as you will get the full advantage of the stronger dollar,” he said.
tennessean.com
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