The US is Looking More and More Like a Low Cost Country

In late January, I posited that the US was beginning to look like it was becoming a low-cost exporter of choice. Of course the only thing we have to thank for this situation is a weak dollar which is otherwise wrecking havoc with the savings models that many US companies used to evaluate global sourcing import opportunities in the not so distant past. It turns out that now I'm not alone in my thinking that the US is emerging as a low-cost exporter. According to a recent Supply and Demand Chain Executive article, Europe is increasingly evaluating US sourcing options.

BrainNet, the consultancy quoted in the article, suggests "the continuing low exchange rate for the dollar is encouraging many to look across the Atlantic. This is especially true of industry sectors that are heavily dependent on exports to the dollar area, such as the automotive industry, the aircraft industry and machine construction." In other words, sourcing from the US is one of the only ways to defray the reduced profits of selling into the US or as BrainNet puts it, "a currency-related fall in revenue could be at least partly offset by shifting more procurement to the dollar area". The article also suggests for European companies that the "dollar crisis also brings benefits for purchasing transactions in Asia, if contracts are based on the U.S. dollar". A solid theory, perhaps, but good luck finding suppliers who aren't raising their prices in US dollars.

- Jason Busch

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