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Declining Dollar Adds Value to Some Exporters’ Goods

As the value of the U.S. dollar continues to slide against foreign currencies, some local businesses that export products overseas are enjoying increased sales.

At Cange International Inc., sales of stainless steel kitchen appliances to customers in Brazil are on the upswing, although the firm couldn’t disclose actual numbers because of contractual agreements.

“Overall, our sales have declined this year except in Brazil, where there’s been a great deal of growth,” said Kim Benson, Cange’s vice president and co-founder.

Brazil must be doing something right. The nation that’s hosting the World Cup in 2014, and the 2016 Olympic Games in Rio de Janeiro, has seen its currency, the real, rise 24 percent against the dollar this year.

That means that U.S.-made goods are now much cheaper if purchased in Brazil.

Alan Gin, a University of San Diego economics professor, said the dollar has been declining for much of this year following the Federal Reserve Bank’s reducing interest rates to nearly zero, making dollar denominated investments less attractive. The value is also affected by the massive debt the nation has issued, and worries that the deficit will eventually cause inflation, Gin said.

But for those companies that sell to nations where the currency has gained value on the dollar, the effect should be higher sales, he said.

Higher Foreign Sales

Paul Stannard, chief executive of SmartDraw, said sales of his firm’s software to foreign customers have increased 22 percent from January 2008, and now make up 39 percent of its total sales.

That increase is probably the result of the gains by the British pound, Canadian dollar and Australian dollar — the currencies used in some of SmartDraw’s strongest markets — against the U.S. dollar, Stannard said.

The company’s sales this year will likely end at $14.5 million, or flat compared to 2008’s revenue. But without the dollar declining, it would have been worse, he said.

The higher export sales of SmartDraw’s software, which allows computer users to easily create flowcharts and organizational charts, is likely resulting in about $100,000 additional revenue per month, Stannard said.

“I’m not cheering about it, but the decline in the dollar has definitely helped soften the blow of the recession here,” Stannard said.

But a few local exporters said the dollar’s decline wasn’t a factor in their sales this year.

Carlos Arteaga, general manager at Labs Inc., a maker of raw materials used in the production of medical diagnostic kits, said he wasn’t sure how much the dollar’s devaluation contributed to his firm’s sales, which are running about the same as last year’s.

Arteaga wouldn’t disclose figures, but said the cheaper dollar allowed some foreign customers to gain a competitive advantage when buying products made here because these were cheaper than products made by Labs’ European competitors.

Most of Labs’ customers are in Latin America, said Arteaga, and only 5 percent of the company’s sales were in this country.

Despite San Diego’s natural harbor and other advantages, the region is far from being a big export hub. According to data supplied by the U.S. Census Bureau, the value of exports that flowed through the San Diego Customs district was $16.3 billion in 2008. In comparison, the Los Angeles district reported exports of $110.3 billion last year.

Practically all of the region’s exports, or about 98 percent, go to Mexico. The most common commodities shipped or trucked from here are electrical equipment, televisions and electronic parts, which made up about $3.6 billion of the total, according to the Census Bureau. The same report found the next largest commodities last year were computers, peripherals and appliances, with a value of $2.4 billion, followed by plastic items, which totaled about $1.6 billion last year.

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