The strong dollar may be good news for Americans buying cashmere sweaters in London, but for most U.S. exporters trying to compete in foreign markets, it has caused nothing but trouble. Many companies have seen foreign sales drop by 20% a year or more, with no end in sight. Some businesses are scaling back their exports; still others are pulling out of foreign markets altogether.
Fire King International Inc., of New Albany, Ind., is no exception. From 1982 to 1983, the $11-million manufacturer of fire-resistant filing cabinets and disk storage units saw revenues from exports plunge more than 60% in one year. Unlike most small exporters, Fire King decided to do more than wait out the volatility in international markets.
The company stopped promoting items that were available at a lower price from foreign competitors. "We didn't want to compete head-on with them, because we couldn't," notes company president Van Carlisle. Instead, Fire King began to promote quality, emphasizing such top-of-the-line items as a fancy wood-covered cabinet.
In addition, Fire King held firm on price. "If someone wants an American product now, they are prepared to pay more for it," Carlisle says. "We don't have to cut prices as much as we used to in order to make a sale." The company also lists its product prices in U.S. dollars. That way, its prices remain stable, while those of its foreign competitors fluctuate with currency values.
Fire King shifted its emphasis away from such difficult markets as Europe, to those where the strong dollar was having less of an impact, including the Far East, the Middle East, the Caribbean countries, and Canada. And within those markets, the company began selectively to target buyers that were favorably disposed to U.S. goods. "There are still businesses, such as banks, that prefer American-made products," Carlisle says.
At the same time, Carlisle saw the strength of the dollar as an opportunity to boost Fire King's own imports. The company added a line of such complementary products as fire-resistant safes from Japan and data storage units from Sweden to sell in the United States.
Finally, officials from Fire King attended more trade shows and increased their contact with foreign distributors and customers. "International travel," Carlisle notes wryly, "is a lot more affordable now."