Weak dollar hurts seller of Scottish Goods

[Monkey@Arms]

January 18, 2008

Weak U.S. dollar hurts Boise businesses who depend on overseas products
Boise shops must pay more for items from Scotland, Basque Country

John McDade believes people will "always pay a little more for a taste of home." But how much more?

For 10 years McDade, owner of Wee Bit O' Scotland in Boise, has offered that feeling of home to shoppers who visit his store looking for everything from bagpipes and hand-made kilts to fish sticks and tea.

But like most Idaho businesses dependent on imports, McDade's is battered by an increasingly weak dollar. The weak dollar increases his costs because it takes more American dollars to buy products from countries whose currency values are rising.

U.S. companies that ship products abroad benefit from the weak dollar because it takes less foreign currency to buy U.S. goods. That creates a stronger market for exports.

The dollar has lost about 28 percent of its value against the euro in the past five years, and on Thursday, it took $1.97 to buy a British pound.

The result: McDade says a package of 16 British fish sticks, or fish fingers as they're known in England, now costs $15 at his shop. The kilts he once sold for $350 now go for $550. The Flake chocolate bar manufactured by Cadbury in the United Kingdom and that sells for $1.25 in his store can't compete with a similar bar of milk chocolate manufactured in the U.S. by Hershey's that can be purchased at Albertsons for as little as 80 cents.

"I don't know the answer to the question about how much people will be willing to pay," said McDade, who was born in Glasgow, Scotland. "I don't know whether to continue or just pick up sticks and move on."

He doesn't yet know how much the weak dollar affected his revenues last year, but "my gut tells me it's going to be down a little."

The future does not look bright for small specialty stores like McDade's.

The dollar will come under increasing downward pressure as the Federal Reserve slashes interest rates to spur a sputtering U.S. economy, said Don Holley, an economics professor at Boise State University.

Foreign countries that have been buying dollars because of the higher interest rates they were getting will be less inclined to buy the U.S. currency. They could even sell off their dollars, dumping more on an already depressed market.

And more countries will invest in euros as the promise of a single currency covering several European countries offers more stability, he said.

snip

Full article here.

Best regards,

Jake

[Coemgen]

That is truly unfortunate. I'd make some remarks of a less than savoury nature directed towards the person/government institution that I feel is responsible, but that would violate the forum rules.

[Sheep In Wolf's Clothing]

The Flake chocolate bar manufactured by Cadbury in the United Kingdom and that sells for $1.25 in his store can't compete with a similar bar of milk chocolate manufactured in the U.S. by Hershey's that can be purchased at Albertsons for as little as 80 cents.

I pay close to this at an import shop here. Half of our office staff is from England , so a lot of imported chocolate, tea and biscutes go through our place. The prices have risen in the last few months even though the Canadaian dollar has strenghthend.
I will say this, in the last 2 years I have come to love British chocolate and I would rather pay a higher price for it, than buy a cheaper chocolate from North America.
Sara
(who has been driven by this article to root out the last Galaxy Bar in the house!!)

[Ian.MacAllan]

The dollar has lost about 28 percent of its value against the euro in the past five years, and on Thursday, it took $1.97 to buy a British pound.

This is a great example of muddled thinking of the kind common among American journalists. What affects the cost of goods imported from the UK is not the US$/Euro rate but the US$/GBP rate which, between the mid-80's and the mid-90's floated around US$1.86/GBP. Anything from the UK which cost US$350 when the exchange rate was US$1.86/GBP should now cost US$371 barring other influences than the exchange rate.

But of course errare humanum est.

.

[BLAZN]

This is a great example of muddled thinking of the kind common among American journalists. What affects the cost of goods imported from the UK is not the US$/Euro rate but the US$/GBP rate which, between the mid-80's and the mid-90's floated around US$1.86/GBP. Anything from the UK which cost US$350 when the exchange rate was US$1.86/GBP should now cost US$371 barring other influences than the exchange rate.

But of course errare humanum est.

.

I recall that when I was in Scotland back in late 2000, I had to shell out about $1.60 per Pound Sterling.

Back in August of '06, I was in France (which was still on the Frank last time I had been there in 2000), where the Euro was costing me $1.30 each.

Sadly, I'll soon be traveling to far away lands once again (Panama, I do believe), which has me dreading the amount of US funds I'm going to need to have a halfway decent time.

[RockyR]

Many shops (like the shop in boise and mine) buy things from Scotland (gbp) and Ireland (euro) both, so both conversions are applicable.

One thing the article DIDN'T mention... The cost of increased fuels and shipping and stricter customs charges adds to the problems with importing goods. I've bought sweaters that cost me $300 for product and paid $200 for shipping and customs. Tell me THAT'S not a killer!

[TheKiltedWonder]

Well, it is good for US producers that are shipping abroad, since Europeans (and just about every other -ans) can buy our goods on the cheap.

That said, I'm a little disgusted that we (as in all Americans, in a non-political way) haven't done more to try and protect the dollar's status. I fear trying to buy foreign goods once more countries begin dropping the dollar in favor of the Euro.

And as Rocky said, the rising fuel costs aren't helping the seller either. Of course, the rise of the price of oil probably isn't unrelated to the decrease in the purchasing power of the dollar.

I dunno, I just have friends working at a Scottish store in Williamsburg and I know they say that the owner is trying to raise the prices gradually in order to avoid scaring off customers, but he is eating a lot of money on things such as kilts in order to keep from jacking up the prices overnight.

Just a question, but are any kiltmakers who post here noticing more orders from Europe or America? From Europe, because of their increased purchasing power and from America, because of the desire to stay at home with a weak dollar? I'm just a curious person.

[Galician]

Wonder, I think a lot of guys are dealing with local kiltmakers, who would have once upon a time considered a Scottish tailor as their first option. I'm one.

[Arlen]

Oh my god.
I buy things at Mcdade's shop, Wee bit o' Scotland, when I'm in Boise.
I've shared more than a dram with that bloke.

My wife was telling me how expensive things in his shop are getting and that he makes barely a profit on any of it, but I thought she was exaggerating.
Wow.


I'm going to have to buy a bit more from him!
Poor John.
And it's such a great shop, too!

[SFCRick]

things are getting expensive