FREEPORT, Pa.—The rising dollar is putting U.S. manufacturers through the equivalent of a new year’s fitness regime, causing pain for now but also promising long-term gains in efficiency.
After more than a decade of weakness, the dollar began surging in mid-2014 against the euro and many other currencies. That is making U.S.-made products pricier in other countries and imports cheaper in the U.S.—a combination that is likely to expand the already gaping U.S. trade deficit.
“When the dollar was weakening, it was a lot easier [for manufacturers] to be a little sloppy,” said Hal Sirkin, a Chicago-based senior partner at Boston Consulting Group. A rising dollar, which effectively raises prices, forces manufacturers to automate more production processes and redesign products “to be lower cost and higher value,” Mr. Sirkin said. U.S. manufacturers also will look for ways to buy lower-cost parts and materials in Asia or Europe.
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