- The Washington Times - Monday, March 3, 2008

DUBLIN (AP) — Hugh Quinn has seen the ever-weakening dollar shatter his ability to sell hand-cut Irish lead crystal to American customers.

Ingolf Haas says profit at his family-run cuckoo-clock business in Germany has dropped at least 10 percent since the U.S. currency’s latest decline began. Roberto Anselmi now sells more of his Italian white wine to Canada than to the United States.

Times are tough for small and artisanal businesses across Europe that traditionally target Americans as their No. 1 buyers, since the swooning dollar shrinks their revenues from U.S. sales but their costs remain in expensive euros.

The problem is compounded by economic worries that may make Americans think twice about buying the products they coveted and consumed in more prosperous days.

With the euro topping $1.52 last week — up from $1.18 when it was introduced in 1999, and from 82 cents at its lowest in 2000 — economists say all euro-denominated exporters have reason to be worried. But tourism-oriented producers of luxury goods are hurting the most.

These niche manufacturers are often too small to engage in the complex, risky hedging that protects larger companies from shifts in the values of different currencies.

“They can get into trouble if they have their eggs in one basket, particularly these days if it’s an American basket,” said Alan McQuaid, chief economist of Bloxham Stockbrokers in Dublin. “They have to broaden their horizons.”

Irish crystal offers a glittering example. Five years ago, both Mr. Quinn’s employer, Galway Irish Crystal Ltd. in western Ireland, and its much bigger Irish competitor Waterford, relied on Americans for about half of their sales.

Both have now been hammered by the dollar’s decline — but Waterford has maintained its U.S. sales volumes by slashing Irish production and shifting output away from the euro zone to cheaper locations such as Eastern Europe and Brazil.

That is no option for Galway Crystal, whose work force has nearly halved in the past five years to 80. Americans today account for just 20 percent of its sales, a figure that keeps falling with the dollar.

“It will probably continue to decline until the dollar resurrects itself,” said Mr. Quinn, the company’s sales and marketing director.

Galway Crystal began retreating from the U.S. market two years ago, he said, after the euro reached $1.40 and the company started taking a loss on each piece of crystal it sold in dollars. That forced Galway Crystal to raise prices, which only hurt sales.

Galway Crystal has survived by shifting its designs in tune with European tastes, which favor simpler and lighter glassware. This also means less labor-intensive pattern cutting.

That is not an option for German makers of wooden cuckoo clocks, who count Americans among their best customers.

At Rombach & Haas Schwarzwalduhrenmanufaktur, or Black Forest Clock Manufacturers, they craft more than 100 different wooden clocks — most of which have the traditional little bird peeking out of the door and chirping on the hour.

In general more than half of the company’s customers are Americans — either tourists or online shoppers — who buy products that sell from about $120 for a small clock to $6,000 for a 5-foot-tall model.

“Making cuckoo clocks has never been a very lucrative business, but now this drama with the weak dollar is really giving us trouble,” said Mr. Haas, 45, who runs the company along with his wife, father and three employees. “I think we’ve suffered at least a 10 percent drop in profit since the dollar’s latest decline started a few months ago.”

Mr. Haas has started to broaden his range of offerings, and customers who pay extra can design their own clocks over the Web.

“I hope the Americans will take advantage of this offer,” he said. “Like it or not, they are our main customers and most of the cuckoo clocks end up on living room walls in the U.S.

He also has been looking into selling his products in new markets, particularly Asia and Russia. “However, that’s not so easy either, since we don’t have an additional few hundred thousand euros that we could invest in advertising,” Mr. Haas said.

Mr. Anselmi is seeing sales go elsewhere than the United States. The maker of premium white wines said his U.S. sales have fallen by about 20 percent, or 50,000 bottles, over the past year. He also had to raise prices up to 20 percent on U.S. store shelves.

As a result, Canada has eclipsed the United States as Mr. Anselmi’s largest export market.

“We can’t recoup this market,” said Mr. Anselmi, who is based in the northern Italian town of Monteforte near Verona. “In the United States, there is a lot of competition from domestic wines, and consumers are also looking for wines that are more competitively priced from other regions of the world that have lower costs.”

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