Strong Euro, Weak Dollar: Germans Want More Dollar-Based Parts
The U.S. dollar has been weakening compared to the Euro. German automakers have taken notice and want to buy more American-built parts. It’s also the reason why Volkswagen is looking to build a plant stateside.
Caspar Baumhauer, CEO of the seat heating supplier W.E.T. Automotive Systems AG, told Automotive News, “Currently, there are inquiries from German manufacturers such as Daimler, BMW, Audi and VW asking whether we can increase the share of parts produced in North America.
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Auto News » Strong Euro, Weak Dollar: Germans Want More Doll
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dante
Cool, we can be the new China.
Jonathan Fung
Well, actually the principle here is a bit different, Dante. We like outsourcing our labor to China because they simply have low wage rates compared to the US. It has little to do with the foreign exchange market.
But in the case described in this post, our wage rates are probably about the same as those in Germany. HOWEVER, when the US dollar goes down, and the Euro goes up, the RELATIVE VALUE of the US dollar goes down, and the exchange rate changes so that the each Euro can buy more US dollar. Therefore, for each Euro, they can get more of our goods and services. And that's why they want more dollar-based parts.
=)
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