Tote ‘Em Up

For a person making a living with nouns and verbs, numbers should be the dullest of subjects. Not at all; the figures interwoven in balance sheets and bankruptcy filings alike tell compelling stories. Give me a 10-K report and a few hours, and I’ll spot a company’s strengths, weaknesses and strategies.
It’s the same with statistics. Charts and tables bore a lot of folks, but a deft reading reveals a literal wealth of information. The results of a good investigation often offer some of the biggest surprises you’ll ever encounter.
A CPA friend once told me, with all sincerity, that I would’ve made a great auditor.
I took it as a complement.
The mother lode for a numbers guy is the absolutely mind-boggling story of our current predicament, where numbers – not good old greed and avarice, but incredibly complicated formulas and calculations – took control of the world’s economic engine and overreved it into seizure. Government regulators and prosecutors are still discovering numbers-related problems on an almost-daily basis.
We know the sum total of most of these numbers: red ink. It’s on our profit-and-loss sheets, retirement savings and most other personal and business financial statements. We’ve also seen some locked doors with vendors and competitors, and more will likely follow before things get brighter.
Finding a good-looking set of numbers – other than what’s on a winning lottery ticket in your hand – is a tough job. You really, really need to like nosing through columns and columns of data to find some good news.
As I said, I like numbers. After some digging, I think I’ve found some you’ll like. They won’t turn your business around tomorrow, but they’ll show that others in the world are having a hard time … and, in a strange way, you could benefit.
In the U.S. stone trade, prices for materials, machinery and tooling aren’t set by supply-and-demand alone. It’s a safe assumption that 75 percent of wholesale purchases by the industry involve an imported product.
The last time Stone Business took an involved look at the effect of currency-exchange rates, U.S. businesses clearly suffered a disadvantage. Foreign currencies were hitting historic high rates and whittling away at the dollar’s spending power.
Last month, I pulled together data on how many U.S. dollars (or cents) it took to equal one whole unit of currency for the major stone-producing countries: the euro (several European countries, the real (Brazil), the rupee (India, the peso (Mexico) and, as an old standby of comparison, the pound (Britain). As a starting point, I took July 1, 2006, when almost nary a discouraging word went out on sub-prime mortgages, and derivatives sounded like something morally unsavory.
The result is something akin to what your parents may have told you: “You think you got it bad, kid? Just look at these guys.”
Of all currencies of the major stone-industry partners of the United States, only China’s yuan is stronger against the dollar than in July 2006. The rest took a beating.
Consider the euro, where €1=$1.27 in July 2006. The European Union currency barged its way up to €1=$1.60 at the end of last summer; now, it’s at the €1=$1.27 level.
The exchange rate for one Brazilian real shot up from 46¢ to beyond 60¢ (the late summer peak came at 64¢). Now, it’s down to 42¢.
Turkey’s new lira also took a wild ride, going from 63¢ to, at one point, 86¢. At the beginning of March, that rate dropped to 58¢.
None of this looked possible before last September’s stock- and credit-market debacle, when the U.S. dollar looked to be in full nosedive. Now, it’s pulling out and dodging the fall of other currencies.
The parts of the U.S. economy that needs to move goods off the docks and across the borders find a stronger dollar as a trade obstacle. The import-dependent stone trade, though, goes the other way; suddenly, we’re gaining buying power.
The cold, hard truth is that stone-industry-exporting countries need us; we’re the biggest importers of semi-finished stone and assorted accessories. And the global aspect of the current recession means they can’t find other markets with better margins.
On the cable-TV series The Sopranos, financial wizards like Peter Paul “Paulie Walnuts” Gualtieri knew they could take the sports-betting imbalance on New York Giants games and lay off the risk by moving money to action in Philadelphia. For major stone-industry export countries today, however, there’s no Philadelphia.
The U.S. market isn’t exactly in great shape; overall demand remains down from the levels of the mid-2000s hot construction market (fueled by numbers and the sub-prime market). Credit is still tight. But, as we continue through 2009, it’s shaping up as a buyer’s market for U.S. companies as the dollar gets stronger.
For now, take good news where you can get it. For me, it’s in the friendly numbers.
Emerson Schwartzkopf can be reached at emerson@stonebusiness.net. His blog can be found at Stone Business Online and stonebusinesseditor.wordpress.com.

This article first appeared in the April 2009 print edition of Stone Business. ©2009 Western Business Media Inc.