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Manufacturers seek to weaken dollar

The National Association of Manufacturers said it will lobby members of Congress and state governors for a weaker dollar after failing to convince the Bush Administration that the currency's strength is hurting the economy.

The association said US manufacturers are losing customers and moving factories overseas because the dollar has appreciated 14 percent against the yen over the past year and about 4 percent against the euro.The rise makes US exports more expensive than products from overseas rivals.

The group will ask lawmakers in Washington and around the country to pressure Bush Administration officials because Treasury Secretary Paul O'Neill, former chairman of aluminum maker Alcoa Inc, has resisted their push to take steps to weaken the dollar.

"Nobody makes decisions on their own in this town on big issues," association President Jerry Jasinowski told reporters yesterday. "The way to get the Treasury secretary and others to pay more attention is to educate a broader range of policy makers about how significantly adverse the impact is."

O'Neill has maintained the Clinton Administration policy favoring a strong dollar, arguing the value of a country's currency should reflect fundamental forces driving its economy, such as rates of productivity.

"We have the ability to keep producing ever-higher levels of productivity, and therefore our currency will be strong," O'Neill told Congress on Feb. 14.

On Monday, President George W. Bush said he fully supports that policy. "Our government will continue to take steps necessary to make sure our dollar is a strong dollar, by good fiscal policy, good monetary policy and good regulatory policy," Bush said in an interview with the Asian Wall Street Journal.

The manufacturing group is sending Bush Administration officials, members of Congress and state lawmakers a study that it said outlines the effects of the rising dollar on job losses. At least 400,000 jobs have been lost in the US since August 2000 because of a decline in exports tied to the strong dollar, according to the study.

While O'Neill and Bush haven't actively managed the dollar, their stance amounts to a "de facto policy," Jasinowski said.

"As long as we've got statements from the Treasury which tend to suggest that there are no costs associated with an overvalued dollar, it tends to put a floor under that currency," he said.

Jasinowski said O'Neill's recent criticism of Japanese efforts to boost export growth by talking down the yen isn't enough to help.

"Secretary O'Neill's insensitivity to the enormous impact of the dollar makes it difficult to move forward in terms of what would be a more rational dollar valuation and forces manufacturers to broaden their campaign," Jasinowski said.

Earlier this month, chief executive officers of General Motors Corp, Ford Motor Co and Daimler Chrysler AG sent a letter to the White House asking Bush to tell Japanese officials to boost the value of the yen against the dollar.

One way to help deflate the dollar would be to have the Group of Seven industrialized nations agree that the dollar is "overvalued," as five of the seven did in a 1985 pact called the Plaza Accord, the National Association of Manufacturers said.

Member nations could then sell dollars for yen or euros, or try to talk the dollar down.

"Coordinated intervention is certainly an option worth considering, but it has to be done in the context of a fundamental currency analysis," Jasinowski said. "I don't think just intervention itself is adequate, but I think it's time for the finance ministers to meet and discuss the fundamental issues of why we continue to have this imbalance."

Some analysts said the association's argument doesn't account for the benefits of a strong dollar. Lower import costs keep inflation down, which means the Federal Reserve can keep interest rates lower than they might otherwise be. That helps create jobs -- US payrolls have risen by 14.4 million since the dollar touched a postwar low of ?80.63 in April 1995.
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