DETROIT — While the stock market crash has meant disaster for many of the financiers who push paper and computer buttons on Wall Street, it has inadvertently brought some good news to American workers who actually make things in the industrial heartland.
That's because the latest plunge in the value of the dollar--brought on largely by Washington's decision to ease credit in order to avert a recession--has further enhanced the ability of American manufacturers to compete with their Japanese and European rivals in world markets.
Today, in fact, exports, while still no match for imports, are booming for the first time in the 1980s, creating thousands of new factory jobs.
"The one positive thing we've been able to come up with since the crash has been that we don't think manufacturers will be affected by it very much, because we see strong export growth," said Allen Grommet, an industrial economist with Merrill Lynch Economics in New York.
"Exports will be driving manufacturing over the next few quarters."
Indeed, exports are already on the rise--they were up 7.7% in the first three quarters of 1987, according to the Commerce Department. Moreover, 108,000 new manufacturing jobs have been created in the last two months, according to the Bureau of Labor Statistics, which gives much of the credit to export growth. Now, economists are forecasting that exports will grow even faster over the next year; Grommet predicts that the fourth quarter of 1987 will show a 16.6% increase over the third period and expects similar growth in 1988.
This export revival has been a long time coming, however.
For two years, the dollar has been tumbling, gradually restoring much of the competitiveness that U.S. industry lost in the early 1980s, by putting upward pressure on import prices and downward pressure on the prices of American goods sold overseas.
Competitors Cut Costs
Still, until recently, economists and industry executives worried that the dollar's decline would be temporary, and so many businesses delayed making major investment decisions based on the highly volatile exchange rates.
Overseas, their foreign competitors initially responded to the lower dollar by cutting costs and profit margins, hoping to delay price increases and thus hold onto their lucrative American markets. Japanese producers in particular were also aided by the fact that the prices they paid for imported raw materials declined in yen terms, helping them keep a lid on the prices of goods manufactured in Japan.
Additionally, foreign demand for American products remained sluggish as international customers, faced with long lead times when ordering big-ticket products, waited to see how long the dollar would continue to fall.
But the latest plunge--to new postwar lows against the Japanese yen and West German mark--seems to have finally convinced many in the United States and abroad that a cheap dollar is here to stay, at least for a few years. That point was clearly underlined when the Reagan Administration appeared to abandon the multinational effort to stabilize the dollar in the wake of the crash.
So, while others may view the dollar's subsequent collapse as a sign of the nation's economic malaise, U.S. industry sees it as an opportunity.
Thus, American companies are now in the process of readjusting their investment patterns on a broad scale; many are bringing a major manufacturing operations back home, while others are cutting down on their purchases of foreign-made components.
Meanwhile, more and more foreign firms have been forced to sharply raise prices, giving their U.S. competitors a breather from tough import competition. Many of those same foreign producers are also rapidly building American factories, creating jobs here, in order to avoid punishing exchange rates.
"I think it is fair to say that people all over the world are looking at their sourcing patterns and are looking to change," said George Eads, chief economist for General Motors.
At the same time, foreign demand for American-made goods and raw materials has started to surge.
The resulting export revival is now visible in almost every major manufacturing industry--even those, like the auto industry, that still find themselves under enormous pressure from imports.
Late last month, in fact, Ford announced that it will soon begin exporting its U.S.-built Taurus models to Japan for the first time, with other American-made Ford cars to follow. Ford also recently began exporting American cars to Sweden, as well as seven Middle Eastern nations; the company says that its total auto exports should double this year to 22,000 from 11,000 in 1986.
"Today's more reasonable value of the dollar makes the cost of these products attractive in foreign markets," Ford Chairman Donald E. Petersen said in a recent Tokyo press conference.