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U.S. Multinationals Get Boost From Weak Dollar

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U.S. Multinationals Get Boost From Weak Dollar


U.S. Multinationals Get Boost From Weak Dollar

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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Despite the sluggish economy, some major U.S. corporations are making solid profits this year. These companies share at least one thing - they are finding their success abroad.

Chicago Public Radio's Adriene Hill has that story.

ADRIENE HILL: Listen in on the recent earnings report conference calls of major companies and you'll notice a couple of things: number one, big profits; and number two, a jump in international sales.

Unidentified Man #1: We're pleased to report that our solid business performance continues, and every area of the world is contributing to our growth.

Unidentified Man #2: Despite all the headwinds and obstacles, commodities and the U.S. economy threw at us, the fact is that we still make our numbers and delivered the bacon.

Unidentified Man #3: In the international segment, revenue grew 47 percent to $1.89 billion.

HILL: Those were conference calls from McDonald's, 3M and Amazon. They are just a few of the domestic companies that sell products overseas and are doing very well this year, in spite of the troubled economic situation in the U.S. For some, the weak dollar has been a good thing. Why? Well, imagine that you own a hypothetical widget factory.

(Soundbite of construction equipment at work)

HILL: Everyday, you build widgets at your factory in the U.S. You pay your employees in dollars, you buy your raw materials domestically, and you sell your widgets in Europe.

Professor JOHN HUIZINGA (Economics, University of Chicago): Now, suppose the dollar depreciates, and instead of $1 to the euro, suppose it's $2 to the euro.

HILL: That's John Huizinga at the University of Chicago's Graduate School of Business.

Prof. HUIZINGA: The price to Europeans went from 2 euros down to one. They think in euros so to them, wow, I can now buy those widgets at half the price I used to.

HILL: So when the dollar declines, you, the widget tycoon, make more money. It's a good time for companies to have an international reach. Again, Huizinga.

Prof. HUIZINGA: It's easier to expand your sales when you've already established a footprint in a foreign country. But there will be new companies that haven't ever exported before that can now turn into exporters.

HILL: The weak dollar means good business for companies like Amazon. It announced a 47 percent increase in international sales in the second quarter. Pharmaceutical companies like Pfizer and Abbott saw better-than-expected results, buoyed by overseas sales.

But it's not all about the weak dollar. These days, there are more foreign consumers with more money to spend. Construction equipment and engine maker Caterpillar reported record sales in revenues this week - it's best quarter in 80 years.

Company spokesman Jim Dugan says there are a couple of reasons it did so well. The company benefits from high commodity prices, and also...

Mr. JIM DUGAN (Spokesman, Caterpillar): Strong growth in emerging markets in Latin America, across Asia Pacific as well as in the Middle East.

HILL: Caterpillar's geographic sales mix is shifting. Sales outside North America increased 30 percent from a year ago. Exports to China have jumped 200 percent in the last five years. Dugan says that has an impact here at home.

Mr. DUGAN: A big part of the increase in employment in the United States for Caterpillar is related to trade.

HILL: Caterpillar has upped its expectations for the year, so had many other domestic corporations, as their overseas sales strategies - many of them put in place years ago - are looking better and better. Those sales are giving the sagging U.S. economy a little lift.

For NPR News, I'm Adriene Hill in Chicago.

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