Fleet Global Markets
For Gier Monsen, president of Sea Freeze Ltd., in North Kingstown, watching
the European currency (Euro) continue to fall is literally like watching his
bottom line drop.
With only 20 employees, more than 80 percent of Monsen’s business is exporting
frozen fish to both European and Asian companies.
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"It makes it hard to get good prices," Monsen said. "Everything
we sell to Europe needs to be in the Euro and when exchange rates are so low,
that normally means it’s not a good price for us."
Monsen isn’t alone. As more small business owners are finding it easier to reach
overseas markets through the Internet, they are also finding themselves more
susceptible to problems, which once only plagued large corporations.
"Small business is the engine of growth in this economy and with the advent
of technology and the Internet more small business owners are becoming a part
of the world economy," said Keith Cheveralls, managing director of Fleet
Global Markets. "Small businesses are now finding themselves in the same
position as larger corporations, but they often lack the resources and clout
to compete efficiently."
What makes it more difficult, Cheveralls said is the constantly changing exchange
rate of the Euro, which has dropped in value nearly 28 percent since it was
first introduced in January of 1999. For example, he said, if a business owner
bought 100 of something in the Euro the exchange rate was around $1.17, today
the rate for the same amount of product is close to .86 cents.
"Small businesses should never not be aware of what is going on,"
he said. "One quote that I do hear quite often is ‘Why should I worry about
currency exchange?’ I tell business owners that if their labor costs or their
interests rates fluctuated up and down wouldn’t they worry about that? This
is a similar thing."
According to Cheveralls, what also makes it difficult is that small business
owners tend to negotiate currency exchange in dollars, leaving themselves open
to exploitation.
"It’s very unlikely that European traders have been giving small business
owners the benefit of exchange rates on the import side," he said. "If
you have been paying U.S. dollars then you probably haven’t been receiving some
of the implied price reduction that comes from the exchange rate moving in your
favor in terms of imports."
When it comes to selling overseas, Cheveralls said small business owners are
facing an even greater concern – lack of competitive pricing.
"If you are selling in U.S dollars, the person you are selling to has to
use the Euro national currency to go and purchase the product," he said.
"In fact they have to use almost 28 percent more Euro to the U.S. dollars
and it clearly makes your goods or services appear to be very uncompetitive."
It’s the inability to remain competitive that has people like Monsen constantly
monitoring and watching for new markets.
"If we constantly get low prices in a market, we need to change to a market
where we can get more," he said. "Exchange rates play a huge role
in that and we adjust our actions all the time based on those rates."
According to Cheveralls, Monsen is doing the right thing.
"The world is expanding and shrinking at the same time," he said.
"Just because goods or services are uncompetitive in Europe doesn’t mean
it’s going to be that way around the world. While it could dampen the export
side for right now, business owners can always look for other markets."
And as the currency continues to fall in value, despite attempts to boost it
Cheveralls said, small business owners shouldn’t give up just yet.
"Over a year and a half it has really moved in one direction," he
said. "But if history teaches us one thing about foreign exchange, it’s
that fortunes do change."
