There’s not much Jaspar Wyman & Son can do as one of its geographic markets — Europe — goes through economic gyrations.
“Doing anything about the crisis in Europe is above my pay grade, but I stay up on it,” said President and CEO Ed Flanagan. “I read the Wall Street Journal every day. I didn’t used to, but some of these global calamities can affect us.”
One thing the Down East wild blueberry producer has done to mitigate risk is refuse to take payment in euros — it’s U.S. or Canadian dollars only.
Some orders may come in now but the product may not ship for six or seven months. The value of the euro is up and down as countries approach insolvency, plans are floated and others disintegrate. The U.S. and Canadian dollars, he noted, are relatively stable.
“Who knows where the swings in the euro may wind up?” Flanagan said. “I’d rather take dollars we know, rather than euro we took in that lost 12 percent of its value.
“That’s the only change a little guy like us can [make].”
Flanagan wouldn’t share exactly what percentage of his exports go to European countries. But across the state and the United States, businesses continue to watch the Eurozone carefully, concerned about how problems there may affect the economy here.
In 2010, Maine companies exported $302.7 million worth of goods to Eurozone countries, a 43 percent increase over 2009. Overall, Maine exported $3.14 billion worth of goods in 2010, a record high.
Companies have been looking at other geographic areas to broaden their markets in the last few years, said Janine Bisaillon-Cary, president of the Maine International Trade Center.
“Europe remains a very important market for us, but the growth areas have definitely been in other parts of the world,” said Bisaillon-Cary.
Part of that has been a strategy for smart companies that have sought to diversify their geographic market areas, she said.
A Nov. 14 Wells Fargo Securities analysis of U.S. states’ exposure to a European recession put Maine firmly in the group of states with less risk. Maine’s exports to Europe represent only 0.81 percent of its gross state product, the report noted. All the other New England states were higher, with Connecticut and Massachusetts leading the way with 2.96 percent and 2.82 percent, respectively.
Across the nation, Utah’s exposure was highest, with European exports hitting 5.56 percent of its GSP, mainly because of silver and gold exports, the report noted. And on a national scale, only 1.97 percent of U.S. GDP is dependent on European goods exports, the report found.
Bisaillon-Cary said she didn’t think Maine exporters have been hit yet by the European crisis.
“Where we really would see it — and let’s hope it doesn’t happen — is if the euro weakens considerably,” she said. “That would basically make it a lot tougher for our exporters.”
The low value of the U.S. dollar relative to the euro makes exports from this country cheaper in Europe. If that changes, then Maine’s exports will be less attractive to the European market.
A European financial crisis also could cut down on liquidity there, reducing consumers’ purchasing, Bisaillon-Cary said. As consumers stop buying goods, that slows down other global markets.
For example, suggested Adrienne Kearney, a macroeconomist in the University of Maine’s School of Economics, a slowdown in consumer spending in Europe would affect Asia, which exports much of its goods to that region. Go back along the chain a bit, and China and Malaysia are two of Maine’s top trading partners, largely due to the semiconductors manufactured in South Portland at Texas Instruments (formerly National Semi) and Fairchild Semiconductor that are sent to Asia for back-end processing.
If Asia’s exports to Europe slow, then Maine’s exports to Asia also might slow, Kearney said.
Top U.S. trade and Treasury officials are in Europe trying to help stabilize the economy there.
“You’ve got to know they’re worried about how a lack of any clear dramatic move is going to affect the U.S. economy and the world economy,” said Kearney. “The point is really that we’re so really highly globally integrated in terms of trade and finance — that’s what they’re really worried about.”
Barbara Fraumeni, former chief economist at the Bureau of Economic Analysis and now a professor of public policy at the University of Southern Maine’s Muskie School of Public Service, said any new Eurozone treaty would take at least a year to get in place. And the bank bailout the European Union has agreed to is seen as falling short in terms of total euros committed.
All in all, the private sector is seeing the action as too little, too late, she said.
Fraumeni agreed that the global interconnectedness means the United States is at real risk.
“We used to export recessions, now we’re flipping it — they are probably going to export the recession,” said Fraumeni.