US Companies: Should you Get Ready for an Export Boom? (Part 2)
I spoke to D&B's Jim Lawton about this subject at Purchasing's Smart Sourcing Summit and he suggested that: "What we're seeing is a permanent -- or near permanent -- change in underlying supply market capacity. Unlike previous recessions, many suppliers that survive will simply not be able to finance rapid growth based on available credit not to mention the fact that producers and various supply markets could very well limit capacity to drive up prices." In other words, even though we could very well see export demand grow materially, our supply chains may not be able to scale as quickly as our customers want. Because of this, companies should focus on building and nurturing supplier relationships that will give them a leg-up on the competition in any potential allocation situation.
Second, the falling dollar could drive up the cost of raw materials and related inputs (especially in those commodity areas where there is limited domestic producer capacity). For those markets in which companies both buy and sell in US dollars and can pass on the cost of materials, there won't be much if any impact (buying and selling in local currency is a natural hedge in any market). But for those organizations selling in local currencies and buying in dollars, the impact could be significant, hurting margins along the way.
Companies will also need to consider the battle for contingent labor and contracting talent if orders pick up faster than their operations can scale. But few organizations have in place company-wide services procurement solutions that can support this type of demand outside of a handful of functional areas. Procurement organizations can do their part today to prepare to support this type of growth infrastructure by standardizing on global VMS system and managed services partners capable of creating a scalable virtual talent model in their business.
- Jason Busch
But here's the rub. They do it to LOWER the value of their currency so they can further boost exports, most notably their own labor. Krugman goes on to say that even if they unloaded massive amounts of their dollar reserves they would be HELPING the USA because it would lower the dollar.
This all reminds me of the browser wars early in the dot com boom. Early browser leader Netscape cost money until Microsoft destroyed them in the market by giving away Explorer for free, quite illegally I might add. So what is China doing to us?
This reeks of an attempt to use viral marketing in the currency wars. The dinosaur economists who don't understand technology would not recognize these new realities in the age of the internet. Not that China would ever give away their currency but one wonders if they would for a time if they could to flood the world with their goods and currency then raise the stakes later after severely damaging the western world at a time of great weakness. Has the use of bait and switch advertising, loss leaders, and viral marketing taken a strange new twist in the global trade wars?