We were asked recently by Ragtrader Magazine how the strong Australian dollar is affecting us as a supplier.  Tim Hennessy, the director of Eclipse Textiles, has contributed his thoughts below.

How is this affecting you?  Do you agree with Tim's thoughts?  We are interested to hear your comments.

Publication:  Ragtrader Magazine                                           
Issue Date: June 17th
Topic:  Question Time

PRESS RELEASE

Tim Hennessy - Director

The strong Australian dollar is certainly seen as a friend as the majority of our products are imported or manufactured from imported components and allows a lower cost of goods, allowing us to be more competitive in a highly competitive global market place. The strong dollar has allowed us to absorb, at least for now, rapidly and ever increasing raw material costs which would have increased prices dramatically had the dollar not been so strong.

We generally need to price our fabrics for a complete season to allow our customers security on pricing.  We suffered huge losses in exchange rates during the later part of 2008 and the GFC, and our lesson from that difficult period was to ensure we manage the dollar with forward exchange contracts to protect our pricing to customers for up to 12 months.  While we do this there is a cost involved and we don’t benefit from the absolute highs the dollar experiences, but we achieve a more balanced effective exchange rate which is important as the Australian dollar is highly volatile.

The high Australian dollar also presents challenges for our expansion programs outside of Australia and we have had to review these.  It puts pressure on our customers who export as well. The current exchange rate is also putting pressure on our local retailers as consumers are turning to the internet and taking advantage of the currency position to buy online from overseas, which has a trickle effect from retail to the garment manufacturer right through to us the fabric supplier.

The real position should be seen as a weak US$ and Euro rather than a strong Aussie Dollar. Currently I believe we have a window of opportunity with the dollar and smart businesses will be looking at 3 focal points towards the future: to improve quality, to improve efficiency and adapt to be globally competitive.  I believe we can expect to have our current position with the dollar reversed within 18 months and smart businesses will plan for the challenges to come.

Tim Hennessy
Director

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Let us know what you think by submitting your comments in the box below.  We are interested to hear how this is affecting you?

Until the next post.

Vanessa
And don’t forget …stretch your imagination…

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