Dr. Lawrence Chimerine, a longtime consultant to AMT, recently represented the manufacturing technology industry while chairing a press conference at the National Press Club on the problems created by the overvalued dollar. AMT covered this conference in the April edition of AMT News. Excerpts from that article follow.
The press conference was sponsored by the AFL-CIO and had a broad array of labor organizations, as well as manufacturing and service sectors, represented among its participants. The AFL-CIO's assistant director of public policy, Tom Palley, was there, as were representatives from many groups as diverse as the American Textiles Manufacturing Institute and the Screen Actors Guild. "Never, in all my years," says Mr. Chimerine, "have I seen labor and business so united on an issue as they are on this hugely overvalued dollar in foreign trade markets issue."
The dollar, which has appreciated by approximately 30 percent since mid-2000, has caused problems for almost every sector of the American economy, not just the machine tool industry. The National Association of Manufacturers has estimated that the overvalued dollar has cost approximately 500,000 industrial jobs since August 2000.
The participants at the press conference painted a bleak picture. The Federal Reserve's interest rate cuts have not had the desired downward effect on the value of the dollar. The currency traders are still betting that the dollar will stay strong. The participants felt that it was critical for President Bush to begin to address this problem immediately.
All the press conference panelists agreed that, first and foremost, the president and the secretary of the treasury need to declare that the dollar ought to reflect the underlying strength of the economy. That is not true today, with the dollar out of line with the economic conditions in America for the past 2 years. The consensus was that such a declaration alone would convince the foreign exchange markets that the direction of the dollar is not going to be forever upward.
But the group also suggested that an international economic conference be convened along the lines of the 1985 Plaza Accords, which began to reduce the value of the dollar the last time it was at an all-time high.
The group argued that the overvalued dollar needs to be addressed at the earliest possible moment, before more plants are closed and more people are added to the unemployment roles.