Firms feel pain of strong pound

Dec 12 2007 by Alistair Houghton, Liverpool Daily Post

Jaguar cars at Halewood

As Alistair Houghton reports, exchange rates are forcing manufacturing overseas

WHEN Airbus chief executive Tom Enders said the dollar exchange rate had gone “beyond the pain barrier” his words rang true with many Merseyside exporters, large and small.

In 2001, the pound was worth less than $1.40, but since then its value has soared.

Last month, the pound hit a 26-year high of $2.11, though today it’s down a tad at $2.05.

The strong pound means that many of the region’s manufacturers are feeling the pinch as their margins are cut to the bone on crucial transatlantic trade. Some big names have expressed the pain publicly.

As well as Airbus, Rolls Royce recently said the soaring dollar was partly to blame for its decision to close its Netherton turbine plant, with the loss of more than 200 jobs.

Meanwhile, Jaguar announced in October that it was to stop exporting its Halewood-built X-Type to the US as the soaring exchange rate was making sales unprofitable.

Large multi-nationals may be the worst hit because of the scale of their exposure to the dollar, but as the pound shows little sign of falling it is clear that anybody with a UK or eurozone cost base who sells to the US is finding life less comfortable.

Liverpool’s Orwell Engineering has been building specialised equipment for the float glass industry worldwide for over 40 years.

Many of Orwell’s key clients in countries such as Taiwan buy in US dollars – so the current exchange rate means its prices are no longer as competitive, and so orders are suffering.