Too Late to Ignore the World

For many years, most of the general population of the United States has had a ­domestic focus and perspective. We are surprised, and to some extent hurt, when other nations do not go along with our view of the world. Whether our international policies are right or wrong is not the point of this column; it is the fact that we no more control global development than we control the Internet.

Take money matters. Americans traditionally look at the U.S. dollar as the basis for all other currencies. The traditional media reinforces that perspective; when we watch the Today Show or even the nightly news, we are rarely reminded of how our currency is valued in the world. What we do hear is that major commodities such as gold, silver, and most important of all, crude oil are all priced in our familiar greenbacks.

Our perspective is quite unusual in the world. As someone who has lived a major part of his life abroad (and traveled significantly), I can report that most of the world is quite well informed on how their currency and domestic output fit into the rest of the global economy. Local news carries regular updates of foreign currency exchange rates. Businessmen understand that investment in goods will fluctuate in accordance with the value of their currency.

Few probably understand how much of our financial strength rests on our dollar serving as a reserve currency for so many countries and as a benchmark for so many goods. Further, beyond bombastic political speeches of jobs going overseas, it’s unlikely most Americans realize how much we depend on imported goods. As our purchasing power wanes, the country sleeps blissfully unaware of the risks of an eroding currency.

The current situation of the weak dollar may mark a lasting shift in global economic realities. Recently, it was suggested in some foreign circles that crude oil be redenominated into Euros. You can imagine how this would delight many of our overseas detractors. It would be a devastating setback to our business environment and would mark the beginning of the end of our dominance in global financial markets. Without substantial foreign holdings of dollars and investment in the United States, our small (and large) businesses will find cheap and easy credit harder to obtain. Starved of its easy credit monetary fuel, the engine of American entrepreneurialism will shudder to a halt.

For better or worse, I believe we are on a course for a permanent change in how we interact with the global economy. It may take some time for self perception to catch up with the realities, but there is a growing number of Americans who have a keen awareness that the rest of the world’s loyalty to the U.S. dollar is reaching a critical point. Nothing short of blatant protectionism and isolationism will stop the fact that more and more of what we need to buy is not going to be produced here. That’s why a weak dollar costs more jobs than it protects.

Short-term imbalances will always arise in business. When executing a business strategy, one must either ignore the blips or find a way to harness their energy. In that respect, it is refreshing to look at how a company like Toyota has demonstrated strategic vision in the United States. It has decided to focus on a long-term strategy that will likely result in some short-term losses in its “home” currency, but will allow it in 20 years to be the undisputed leader in automobile manufacturing. Too bad our domestic auto manufacturers failed to take such steps to penetrate more international markets when the dollar was overvalued some eight years ago. As a result, America lost global market share, and bad times now are getting worse.

Coming from the commercial printing sector, it’s painful to see how many of the products that were traditionally made in the U.S. are now printed overseas and imported to our shores. As a result, more than 20,000 printing companies disappeared during the last 10 years. They failed to invest in becoming more efficient and to focus on their customers’ real needs. Hopefully, package printers are smarter and can steel themselves to compete through service, long-term vision, and not taking the loyalty of one’s best customers for granted.

If your products only ship to North American customers, don’t get too complacent with the weak dollar. There are other such Toyotas out there—and in our sector of the printing industry. They are not concerned with short-term cash flows but rather in long-term growth and domination. It might appear counter-intuitive to traditional thinkers, but in the last three years I have seen more than just a few foreign-owned companies enter into the American market through acquisition or investment. In all cases, they chose to buy the most modern and efficient equipment with which to compete.

You have heard the old adage: good, fast, or cheap—pick any two. Sounds good, but I don’t think your customers are going to compromise much on the third these days. The good has to be better, and the fast simply faster. That is unless you want to see the cheap get cheaper, with all the bad news that comes with it. Good luck and good morning; it’s a brand new day. pP

Jon Guy is the president of Gallus Inc. Previously, he served as head of Heidelberg’s worldwide used equipment business. He has a B.S. Degree from the U.S. Military Academy and an MBA from the University of Warwick in Coventry, England.