Question

READREAD THE ARTICLE BELOWBELOW. FROM THE WALL STREET.

describe all relevant informationinformation. telling the main thing you take away from the articlearticle and how it applies to globalization.

FREEPORT, Pa. The rising dollar is putting US. Manufacturers through the equivalent of a new year's fitness regime, causing pain for now but also promising long-term gains in efficiency.
After more than a decade of weakness, the dollar began surging in mid-2014 against the euro and many other currencies. That is making U.S.-made products pricier in other countries and imports cheaper in the U.S.-a combination that is likely to expand, the already gaping U.S. trade deficit. "When the dollar was weakening, it was a lot easier [for manufacturers] be a little sloppy," said Hal Sirkin, a Chicago-based senior partner at Boston Consulting Group. A rising dollar, which effectively raises prices, forces manufacturers to automate more production processes and redesign products to be lower cost and higher value, Mr. Sirkin said. US. manufacturers also will look for ways to buy lower-cost parts and materials in Asia or Europe.
Past periods of currency strength in Switzerland, Germany and Japan required manufacturers there to streamline processes and find niches that allowed them to charge premium prices.
Here in Freeport, on the fringes of the Pittsburgh metro area, Oberg Industries is striving hang onto its small share of the global economy. The family owned company, with 750 employees and annual sales of about $130 million, makes metal parts for a host of products, including oil production equipment and door locks.
Oberg is moving out of some markets where competition is based mainly on price. For instance, the company recently sold a plant in Mexico where it made doorknobs, competing with Asian manufacturers. Oberg is putting more focus on highly regulated markets, such as parts for medical devices and aircraft. Because quality standards are higher, there is less import competition, said Rich Bartek, Oberg’s chief operating officer.
Oberg recently bought another robot to help sort out parts as they emerge from a stamping machine. It also has invested in new computer controlled cutting machines that are easier to program and run. One operator can handle four of these machines. "In the old days, it was one operator, one machine," Mr. Bartek said. Manufacturers have long been under pressure from intensifying global competition, but the dollar's sudden ascent adds more urgency. Since mid-2014, the dollar is up nearly 19% against the euro and 17% against the yen. “
The challenge I gave to our team is use as an opportunity to get more costs out of the company," said Ron DeFeo, executive of Terex Corp., a Westport, Conn.-based maker of heavy equipment, including aerial work platforms used to hoist construction and maintenance workers. For instance, Terex is making more steel parts for some of its machines in China, where steel and labor are cheaper. The company is leaning on delivery firms to pass on some of the savings they are getting from lower fuel costs. Terex may also be able to shift some production of equipment to Europe, where the weaker euro has reduced costs in dollar terms.
The rising dollar already has forced U.S. poultry companies to accept lower prices for dark chicken meat, popular in over- seas markets, said Mike Cockrell, chief financial officer of Sanderson Farms Inc., the third-largest U.S. poultry processor. Bulk leg quarters of chicken, a top export that sold for 48 cents pound in mid December, now are selling for 88 cents, Mr. Cockrell said. Chicken processors still can turn a profit on those prices, along as sales of white meat the US, remain brisk. But if prices sink to very low levels, chicken processors may resort selling frozen bags of dark in US grocery stores at cut-rate prices, as they have done before. Prime Equipment Group Lnc. Columbus, Ohio, maker of poultry processing equipment, is using more Brazilian parts and materials for the products sells in that country, to help offset the effects of a weak real, The company also is delaying repatriation of profits from Brazil in the hope the real will regain value. "As long as the real doesn't collapse-a possibility we consider very remote--we can afford to wait," said Mike Gasbarro, chief executive. Global giants like Caterpillar Inc. or Ford Motor Co. long have had plants around the world, reducing their exposure to any one currency. Some smaller manufacturers are trying to emulate that global approach. Firstronic LLC, a Grand Rapids, Mich., maker of printed circuit boards used in cars and other products, serves its customers in North America mainly in production from its plants Michigan and Mexico, said John Sammut, the CEO. It has set up joint ventures in the Czech Republic, India and China it can produce circuit boards there as well, depending on customers' needs and currency factors.
For now, Firstronic is exporting from Michigan to Europe circuit boards used to control car seats. If the dollar stays strong. said Mr. Sammut, that production could be moved to the Czech Republic. By creating a global network of factories, “we have buffered ourselves from this issue” he said.
Ground Force Worldwide, Post Idaho, maker of used in mining, committed to manufacturing in the US even though about 75% of its sales are in other countries, said Ron Nilson, owner and CEO But he said the company can assemble portions of its trucks, such as fuel tanks, overseas to reduce costs.
FirmGreen Inc., based in Newport Beach, a maker of equipment used to purify biogas, having to "scramble for solu tions," said CE0 Steven Wilburn. The company, which sells most of equipment overseas, is being hit both by a strong dollar and by the drop in oil prices, which deters investment im alternative energy sources. Mr. Wilburn said he has had to cut his staff to 10 people- from 17 FirmGreen relies on other US-based companies to manufacture its equipment. Mr.Willburn said he doesn't want to shift production China fears his technological secrets to rivals. "Pius," he said, "Tm patriot. Woodward Inc., a maker of parts for aircraft and various types of engines, based in Fort Collins, Colo, is trying to help some overseas customers cope with the currency swings. On some contracts, it includes clauses that adjust the price of a large order depending on currency movements, so that the two sides share the risk.
Bob Weber, chief financial officer of Woodward, said the company could import more parts from countries with weaker currencies. But that is difficult in highly regulated markets such as those for aircraft. "it's extremely hard to switch suppliers midstream.” Mr. Weber said.

Answer 1

Key takeaways from the article

1. Rising price of dollar is giving a hard time to US Manufacturing companies which are selling their product in other countries as the price surge even by 5% will decrease their sales because of high competitiveness in the global market, but US companies are taking this in a positive manner by cutting down the costs by making process automated. They are also looking for more options in the production facilities in countries where the currency is weaker, also planning to import parts from countries which are having weaker currencies, but this is very difficult in markets like aircraft which are highly regulated and shifting suppliers is not so easy in midstream

2. Big manufacturing companies like Ford or caterpillar have production houses in different parts of the world which decrease their dependency on one currency and are better able to absorb the shock from dollar price increase. But smaller part manufacturing companies like Firstronic, FirmGreen are exploring new places where they can set their production factories so that they can buffer this dollar issue but it is not favourable to smaller companies as they are also feared of losing their technology to rival countries. It will have a positive impact on the globalization as companies move from one part of the world to another which increase technology sharing, skill sharing and more learning for human resource in that country. The number of collaborations between the companies for a specific or particular project is healthy for the global environment and also for the companies as it gives them the opportunity to become lean in manufacturing as well. the only issue that arises is how the company's top management is able to handle the scale of operations in other countries.

3. Companies which are selling their product in the global market are taking a hard hit from the weakening of currencies. Most US companies make the huge amount of money from overseas nations like Apple has near 20% of earnings from greater China and weakening of their currency cut their profit percentage to near 3% which is biggest for the company in last decade. Same is with other multinationals as their profits also take a dip by rising dollar prices against other currencies. But this situation gives company to redesign their strategy and become more efficient in manufacturing products.

The rising dollar prices might have the negative impact on US companies focussed on exports but it will have a more positive impact on the non-US economies globally.