European industrialists pained by the dollar’s decline

Europeans Toughen Line on the Dollar’s Weakness

Business / World Business
Europeans Toughen Line on the Dollar’s Weakness
By KATRIN BENNHOLD and STEPHEN CASTLE
Published: December 5, 2007
European policy makers hardened their tone this week on the decline of the dollar, as economists trimmed their growth forecasts for the 13-nation euro area.

Excerpt:

Louis Gallois, chief executive of the European Aeronautic Defense and Space Company, has become the most vocal among European industrialists who are feeling the pain of the dollar’s decline.

This week, Mr. Gallois said that over the next decade, the consortium’s Airbus subsidiary would be obliged to produce more of its planes outside Europe.

The plane maker, which sells its airplanes in dollars but incurs about 50 percent of its costs in euros, loses 1 billion euros, or $1.48 billion, in profit every time the euro gains 10 cents against the dollar. This places the company at a competitive disadvantage against its American rival, Boeing, whose costs are almost entirely dollar-denominated.

Latécoère, a major French subcontractor for Airbus, has already begun moving some low-value-added work to Morocco, Tunisia and Brazil.

Comment: Compare earlier Airbus post!