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Weak US Dollar Impact on Ski Industry

post #1 of 17
Thread Starter 
With the US Dollar buying approximately 25% fewer Euros than it did two years ago, what impact has this had on the ski industry? Here are a few specific questions I have:

1) Since most skis are manufactured in Europe, it seems like European manufacturers would have to charge significantly more in the US to maintain historical profit margins. Have prices on European skis gone up roughly 25% over the last two years or are the manufacturers eating some of this to maintain market share?

2) It seems K2 would have a significant cost advantage exporting skis to Europe now. Has K2's market share increased in Europe?

3) Will European ski manufacturers start to push manufacturing to either the US or to Asia for product ultimately destined for North America? I believe K2 has already shifted a bunch of production to China. Have any of the European manufacturers gone this route yet? I believe Atomic acquired Volant recently. Was this perhaps done to move some production to the U.S.?

4) Did the weak dollar cause an increase in Europeans visiting U.S. resorts this past year? It might just be me, but I certainly ran into more Europeans this year on U.S. slopes than I did the previous year.

5) Did the weak dollar cause a decrease in Americans visiting European resorts this past year? Did any east coasters on this board who would normally frequent European resorts fly west to the Rockies this year?
post #2 of 17
I'll take a stab at 2 & 4...
2 - K2 lost out on ski sales in the UK this last season as their was no distributor for them. The ones who used to dropped them. They have now realised their mistake, and K2 skis will now be readily available in the UK.

4 - Many flights to and from the US are flying half full. Between the weak dollar, and a certain amount of fear, there is a large reduction in US passengers. The two ways round this are to reduce flights or to reduce prices. Since airlines don't want to give up precious landing slots, they reduce prices, so for a European to fly to the US is relatively cheap.
post #3 of 17
Third bullet below indicates answer to 4) maybe affirmative.
2003-04 stats
-Utah expects final tally will indicate 3.4 million skier days this past season (03-04), their best numbers ever, great snow conditions are given as the reason.
-Colorado ski resorts did not have a record breaking year, but still expect to record over 11 million skier days in 03-04, 3 times the Utah numbers.
-Aspen resorts expect a modest 3% gain in skier visits, the alleged reason for increase: lower dollar exchange rate and more int'l visitors.
-Winter Park, near Denver reported 100 less inches of snow than normal, but southwestern CO, particularly Durango, had a strong season and their best snow totals in 9 yrs.
post #4 of 17
Maybe I can illuminate a few corners...
-) I believe USD/EUR exchange is not a significant factor for European ski manufacturers to move production away from home. Retail prices for skis in North America are significantly higher than in Europe, so it seems everybody makes a buck here, more or less.
The school of thinking has cost considerations drive decisions, not so much retail prices or exchance rates.
As for snobs like I who want their equipment made in a developed country by a company which does not have Dannie Quale sitting on the board... that's an insignificantly small group. Paint'em red-white-blue and they will go as US product (cynical take), or let's take as an example the head of family who does not have room for considerations of the above nature.

-) I would be surprised if the numbers of Euros skiing in the US next season would be nearly as high as have been. The US deadline for the introduction of biometric passports abroad will expire in September. The majority of tourist skiers is from visa-waiver countries like Germany. None of these will have biometric passports any time soon, if at all. So Euro's will have to get in line with Brazilians and the rest of the non-visa-waiver countries starting October so they get their fingerprints and mug shots taken. Would you go through this just to go skiing? Well, it's all perception, and this immigration procedure is not well received overseas I tell y'all. So they will stay at home, or go ski Canada and enjoy an even better exchange rate (I believe I got EUR1-CAN$1.46 last week).
post #5 of 17
Re "4) Did the weak dollar cause an increase in Europeans visiting U.S. resorts this past year? It might just be me, but I certainly ran into more Europeans this year on U.S. slopes than I did the previous year."

I don't know about the Europeans, but there were two of us kiwis who came because of the dollar. In the past we always went to Canada, more affordable.
post #6 of 17
Sittin' on the other side of the pond and having skied both continents I might be able to clarify a bit:

-air fairs have not reduced at this end since major airlines just cut flight connections available to adjust to the lower demands

-due to the sluggish economy in the recent past many people suffered declining net incomes and simply cannot afford a pricey place especially like the US any more, no matter what the exchange rate is at. It would be a surprise if the numbers of overseas visitors from here really picked up significantly.

-Ski companies here are unlikely to relocate overseas, since looking at the history shows that the exchange rate isn't something to really bank on and shifting over the course of time. Second most of these companies are not that big and have a strong heritage where they are. Third as long as this market over here is still the biggest as per total sales, why should they move away to a place where they do not really gain such a big manufacturing cost advantage?

Most likely, if it comes down for this type of industry to reconsider their production site they most likely will go either to Eastern Europe or even China to take advantage of the low cost structure there.
post #7 of 17
i'll bite on the relocation of euro companies. it is unlikely that any of the austrian companies will move due to national pride and the heavy subsidies/money they get/got from the government when they were all going bankrupt in the 90s (except Fischer)
post #8 of 17
When I was at Whistler everyone was saying business was waaaay down, and they were citing lack of American visits as the reason.
post #9 of 17
As it happens I skied Tahoe and Whistler this year and I think it will be Canada next year if I fly west. No hassle about biometric passports and it is cheaper, by some way.
post #10 of 17
Keep in mind that the Euro ski companies are subsidised by thier governments. If people are late paying them (very common, especially in bad snow years), the government will loan them money to keep the factories going. This is not true in the US. K2 had no choice but to move thier production to China. This is a reality for many companies in the States. Look at Osprey backpacks, they prided themselves on being made in CO, and being the only pack made in the US. Than all of thier Native American (how PC) sewing machine operators got better paying jobs in a new Casino. They could not compete with the wages, and moved production over to Vietnam. If K2 was still made in the US, but cost more than the competition, people would not buy them. People like to spend less, regardless of consequences; Walmart vs. small local, Barnes and Nobel vs small indy store, Etc.
post #11 of 17

[ April 28, 2004, 05:10 PM: Message edited by: HaveSkisWillClimb ]
post #12 of 17
The moment I hear that my preferred manufacturers are moving their production to China will be the moment I will go and look for small local producers like Blossom (blossomski.it).
One has already done so, and for that reason I will not buy their products anymore.
post #13 of 17
Hmm, Heli,
. Euro ski companies are generally not subsidised. They are not part of the Airbus-Industries, EU-farming and heavy-industries club. They go out of business, or "merge" (take over or revive brand name) like everybody else.
. How come my Stoeckli Laser SC's come at a competitive market price? They are handmade in Switzerland, which is not known to be a low cost country, really.
post #14 of 17
Maybe subsidised is the wrong word. Try supported. Do hand crafted Swiss skis come at a competitive price? We have a tough time selling $800 AK's, and thier terms are not very shop friendly. Are AK's and Stoeckli's really handmade anyway? That's pretty debatable.
post #15 of 17
The smaller Euro companies do not have all the excessive layers of management that absorb profits, so they can be more competitive by not wasting money on people who are a waste of space.
They aren't "supported" by the governments either - no tax breaks, kick backs, etc.
They don't "support" the governments, neither do they run the countries by paying off the leaders.

I'd love to hear where you got your information from that they operated otherwise.
post #16 of 17
While Europe doesn't subsidize most of its businesses it does have tax codes that don't reward them for moving operations overseas. The US, on the other hand, has tax codes that encourage overseas investments & reward the moving of jobs overseas. 61% of US companies did not pay any income tax last year. Many of them got out of paying taxes by moving some of their operations out of the country. With all the automation in ski manufacturing K2 is probably not saving enough on labor alone to warrant its move to China, but the taxes they get to defer by moving there is probably helping justify the move. Talk about a counterproductive tax code.
post #17 of 17
The info about Euro ski companies not having to worry about shops paying on time came from a conversation with a couple reps. It was a fairly enlightening conversation.
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