Economic Conditions: The Value of a Weak Dollar

The deepening U.S. economic slump is having an impact on the activities of many German messes, whose business interests span the globe.

Simply put, a weak dollar relative to the euro means it costs more for Americans to travel to and buy products from Europe. It means the exact opposite to Europeans interested in traveling to the United States or buying U.S. products.

U.S. exhibitors and attendees are most likely thinking twice about visiting tradeshows in Germany because of the expense. At the same time, the products and services U.S. exhibitors have to offer are the best value they've been in quite some time, giving them a competitive edge over European and other exhibitors at German shows, despite the higher costs of travel, housing and exhibiting.

Representatives of many messes said they are trying to lure both exhibitors and attendees to Germany by cutting costs and making the case for participating.

The weak dollar also is drawing Europeans to the U.S. According to Messe Duesseldorf North America President Tom Mitchell, foreign attendees, with their stronger currencies, are “overrunning” U.S. shows.

The expense of attending European shows has had Mitchell recommending caution to U.S. buyers at European shows this spring and summer. In some cases, there is really little choice.

For instance, drupa, for the printing industry, and interpack, for packaging, are the leading global exhibitions in their industries, yet neither is held every year. For many exhibitors, such shows are integral parts of their marketing plans and can't be ignored, despite the economic vagaries.

Even so, Mitchell acknowledged some U.S. companies would probably send fewer buyers to German shows because of the expense of hotels, airfare and meals. “Some will send only two people, instead of five, and for shorter stays,” he added.

David Audrain, president of Messe Frankfurt USA, said because of its size, whatever happens to the U.S. economy has an impact on the rest of the world. In fact, he pointed out, Europeans are having trouble selling products to Americans, both here and overseas, because of the 50-percent drop in the U.S. dollar, relative to the euro, during the past five years.

He also emphasized that American products haven't been as affordable as they are now in decades, making this a great time to make contact with buyers holding strong currencies.

“For many (in the U.S.), the temptation is to dig a hole and hide in it,” Audrain said. “In a downturn though, spending should increase, not be cut back. Exhibitors should try to increase market share since the market isn't growing.”

Having said all that, Audrain admitted tradeshows have been a harder sell because of anxiety in the business world. Still, he added, Messe Frankfurt had a good first quarter.

“We will probably not have that this year,” Audrain said. “There's no way to tell how bad things will get, but I foresee small drops at worst.” Messe Frankfurt isn't cutting back or doing anything differently to adjust to economic conditions, he added. Only one show, Hair & Beauty, has been canceled, but that was in the cards before the economic downturn.

The advantage for U.S. manufacturers also has been good for Koelnmesse (Cologne Intl. Trade Fairs). It's brought increased interest in exhibiting at Cologne shows, said President and Managing Director Mette Petersen.

“The low dollar has made U.S. products extremely competitive,” she added, “and companies that in the past would have never considered exporting are now showing much more interest.”

Petersen said Koelnmesse events such as IDS (dental), Intermot (motorcycles) and Anuga (food and beverage) continue to grow, even as exhibitors from countries with weak economies reduce their marketing budgets by sending fewer employees and taking smaller exhibiting spaces.

Art Paredes, president and CEO of Hannover Fairs USA, agreed that the downturn has both positive and negative effects. U.S. participation in some Deutsche Messe (Hannover) shows in Germany has decreased slightly, but he agreed that current opportunities to exhibit in Europe are positive.

“Some companies may not be exhibiting overseas but, as the dollar declines, look for more, not less, U.S. participation,” he said, “especially from small to mid-sized U.S. companies in U.S. pavilions or with turnkey packages.”

It is certainly more cost-efficient for European companies to exhibit in U.S. shows, but they may not be aware of the challenge of pricing their products for the U.S. market, Paredes added.

According to Paredes, Hannover Fairs is creating more value-added services and ROI opportunities for clients, at the same time reducing as many costs as possible, such as in the area of housing, to combat the effect of the weak dollar in Germany.

“We feel strongly that we'll see increases,” he added.