This is a typical paradox for American businesses right now, particularly manufacturers. They’re stuck in the middle between European companies that want a discount to make up for the strong dollar and American companies that want a discount because European suppliers are able to make them a better offer. What’s a U.S. CEO to do?
The New York Times presents a raw story of Eastman Machine, a 127-year-old family business in Buffalo that is caught between a rock and a hard place when it comes to selling overseas.
Confronted with a steep drop in the value of the euro against the dollar, customers in Europe warn that they can no longer afford to buy Eastman’s American-made cutting equipment without deep discounts, the Times reports. Buyers in America, meanwhile, are demanding lower prices from Mr. Stevenson, too, as European-based rivals take advantage of the suddenly stronger dollar, which allows them to reduce prices on the machines they export to the United States without squeezing profits.
What’s a company to do in a situation where they’re damned if they do and damned if they don’t?
Larger companies can afford to take a short-term hit and ride it out. McCormick & Company, the spice producer, said the robust dollar would hurt results in the months ahead; other well-known American companies like Tiffany and Oracle made similar pronouncements last week. More warnings are expected as companies begin to report earnings for the first quarter of 2015, which ends on Tuesday, the Times says.
How is your company handling this situation? Tell about your experience in the comment section below.
Read more: The New York Times