Weak dollar, strong exports?

The dollar continues to show weakness against other currencies, falling to new lows against the euro today. Interestingly, most of the media coverage I have read talks about this development in terms of the inflationary effect. "Look at how expensive imports have gotten."

I have seen very little news coverage about how a weaker dollar boosts exports. My guess is that this is partly due to the fact that increases in export sales lag the drop in currency, while currency driven increases in import prices are immediate. When Mercedes imports cars into the US, they're paid in euros, so the price goes up in dollars almost instantly as the exchange rate shifts. On the other hand, if Cadillac wants to start selling cars in Europe to take advantage of a weak currency, it takes time to ship cars over, plan an advertising campaign, and start getting sales.

In the area of industrial components, the sales cycle can take a really long time. For engineered components, it can easily be eightteen months from first sales call to first production shipment. So for the kind of product that my company makes, it could be a long time before we pick up any sales increase due to a weak dollar.

In the meantime, prices for basic commodities (in my case, brass and steel) have jumped, because commodities are priced on global markets. This is true even though domestic demand is down. As a purchaser of those commodities, my costs have increased at the same time my sales volume has decreased. My company makes subassemblies for the major appliance industry, which is tied in to housing starts.

So far, the weak dollar has not helped at all.