Business As Usual
GRAND RAPIDS — U.S. businesses had a lot to cope with in the aftermath of the Sept. 11 terrorist attacks, and companies involved in global trade were no exception.
In a just-in-time world, temporary closures and long delays along U.S. borders with Canada and Mexico, for instance, hurt many U.S. manufacturers, particularly automakers who generally maintain low assembly plant inventories and depend on parts being shipped as needed.
Jeffrey Meyer, executive director of Grand Valley State University’s Van Andel Global Trade Center, said that based on what he’s seen so far, he’s confident that in the long-term U.S. trade will resume at the same level it was before the attacks.
“I think we can continue to be a strong global exporter and a good partner,” Meyer remarked. “I don’t see that changing.”
A medium- to long-term impact of the attacks will be their effect on the U.S. dollar — whether it gets stronger or weaker. The strength of the U.S. dollar versus other currencies makes American products either more competitive or less competitive, Meyer said.
“Right now we’re in a strong dollar situation. If the dollar weakens, American exports could actually become more competitive,” he noted. A cheaper dollar could help domestic manufacturers recoup some of the market share they’ve lost to foreign suppliers over the past several years.
However, with a weaker dollar there’s the worry that imports will get more expensive and the country’s inflationary environment will worsen.
The terrorist attacks also could affect the amount of face-to-face business Americans are willing to do. More companies could turn to teleconferencing, video conferencing or Web casting as a means of reducing the need to travel, though Meyer doesn’t think cutbacks in travel would likely be a permanent situation for most global companies.
“I think there is going to be a set percentage of individuals that probably don’t like to fly anyway that are going to find this a good reason not to fly,” he said.
One of Meyer’s concerns is that both consumers and businesses will step back from the market somewhat, just based upon general fear of the unknown, anger or something else.
“This is something new for all of us. The problem is you can’t separate the political from the business in this one. China, as have many countries that we do a lot of business with, has been recognizing these governments and trying to establish economic ties,” he pointed out.
“If those political impacts come into play, it could quite easily affect our business, whereas on a daily basis the political side doesn’t affect business that much. In this case, if we’re sending people overseas and engaging in military activities, that can cause a ripple because all of these economies are so closely ground together.”
The U.S. has the soundest currency, and many countries have a lot invested here. If there’s fear in the markets, it could trickle down and adversely affect the amount of products the U.S. exchanges with other countries.
But Meyer sees more impact on the financial market side than on the business trading side.
On the two days following the attack, the Van Andel Global Trade Center held two previously scheduled, full-day workshops on export procedures and import compliance that were fully attended, but none of the participants voiced concern about their companies’ trade activities in foreign markets.
Meyers said he sensed that the more than 50 program participants recognized they had businesses to run and that they had to continue what they were doing to help their businesses grow stronger.
“I was rather encouraged. I certainly didn’t sense from those particular companies that they would be pulling back from any markets any time soon.”
He recommends U.S. exporters keep a close eye on exchange rates, the strength of the dollar and how money is moving because there could be some opportunities for their products to become more competitive in certain areas of the world based upon recent events.
At this time, more than ever, companies serving worldwide markets have to get control of their international sales processes, including communications, documentation and global sourcing, he said. He advised strengthening relationships with banks, brokers and freight companies to ensure those relationships are as efficient as possible.
“Shore up those relationships and fix any problems that have been hanging out there,” Meyer added. “Dot your I’s and cross your T’s. It’s going to take some time to work out logistically some of the security and processing issues, so it’s important for companies to take control of those processes.”