In the late 1990s, about a third of the boats made at U.S. Marine's plants in Maryland were sold overseas. Today the number has dropped by at least a third, and the company largely blames the strong U.S. dollar.

"It has probably resulted in at least a 30 percent erosion of our export business over the course of three years," said George Armendariz, vice president of the international division of U.S. Marine, which makes Bayliner and Maxum boats at two plants in Cumberland and another in Salisbury. "It's a big deal."

Because a strong dollar makes U.S. exports more expensive to overseas buyers - and in turn makes imported goods cheaper - manufacturers in the United States say they have taken a beating as the dollar climbed. It rose 43 percent against major currencies between April 1995 and February.

But some relief for manufacturers appears to be in sight. Since its peak in February, the dollar has declined nearly 8 percent, and economists generally expect it to continue sliding for the next several years.

Maryland lost 6,500 manufacturing jobs - a 3.6 percent decline - between April 2001 and April 2002, according to the state Department of Labor, Licensing and Regulation. "An estimated 1,900 of those were due to export losses principally due to the [strong] dollar," said Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers in Washington.

That's because a dollar that has risen, say, 30 percent "is just like someone coming along and saying, 'I'm going to put a 30 percent tax on your exports' ... and on the import side it's like a 30 percent subsidy," Vargo said. "This really has had a dramatic effect in weakening U.S. manufacturing."

Steel industry hit hard

The impact is especially evident in the domestic steel industry, where more than 30 companies have filed for bankruptcy protection in the past four years - including Bethlehem Steel Corp., which has about 3,400 employees in Baltimore.

While the huge liabilities that steelmakers carry for retirement benefits have been a focus of the industry's plight, the strong dollar also helped make imports cheaper, pressuring prices of domestic producers.

The strong dollar "is one of the biggest culprits of the steel industry," said John Anton, a steel analyst for DRI-WEFA in Washington.

He said the strong dollar also hurts steelmakers indirectly when their customers, such as large machinery makers, face stiff competition. U.S. machinery firms will then pressure steelmakers for even lower prices while slowing their production and buying even less steel.

"It hits them both," Anton said.

Pradeep Ganguly, chief economist in Maryland's Department of Business and Economic Development, noted that the dollar is not the only thing driving U.S. exports. If economies in countries that are markets for U.S. products slump, consumers have less to spend on imported goods.

He also pointed out that a weaker dollar hurts Maryland manufacturers that import materials to make their products.

Still, he said that, overall, the falling dollar is a boon to the state.

"It could not have happened at a better time," he said. "Maryland and U.S. manufacturers are looking for a slight edge."

Yet even with a strong dollar, Maryland's exports have risen. Last year, when nationwide exports fell 6 percent, the state's exports grew by 8 percent to $5 billion. Maryland's largest exporting sectors last year were computer and electronics, transportation equipment and chemicals.

But exports have not kept up with imports.

"Exports have been rising, but imports have been rising faster," said Anirban Basu, director of applied economics at Towson University's RESI Research & Consulting. "Many Maryland manufacturers are not exporters. They serve domestic markets, and when they are undercut on price, they lose market share to other countries."

The dollar's strength, though generally bad for U.S. manufacturers, has been good news for others, mainly consumers and companies that buy imported raw materials.

"Consumers have benefited enormously and would be hurt by a weaker dollar," said Mark Zandi, chief economist at Economy.com. "There are clear winners and losers in an environment with a weaker dollar. The winners are U.S. manufacturers and multinationals with overseas operations, and the losers are you and I, the consumers."

But Zandi said the dollar is overvalued and has been "debilitating" to manufacturing, and that a sustained decline "would take a huge weight off manufacturing for the next year or two."

Boon to bottom line

For some companies, such as Becton Dickinson and Co., a maker of medical devices, the weaker dollar adds to profits. But, because Becton's products are so specialized, its customers do not typically switch to new suppliers when exchange rates make the company's products more expensive.

"I cannot say [such a switch has] never happened, but it's not that frequent," said Michael Meehan, vice president and general manager of the diagnostic systems division in Sparks.

U.S.-based companies that do some or most of their manufacturing overseas - such as Black & Decker Corp. - can also be hurt by a strong dollar. However, the impact on those companies is mitigated by those overseas operations. Their foreign-made goods sold in the United States benefit from a strong dollar the way foreign-owned companies' goods do, but the U.S. companies must also translate their profits back into dollars, making a weaker dollar more attractive to them.

Black & Decker, based in Towson, reported that because of foreign currency translations, its sales and operating income were about 2 percent lower last year than in 2000. The company's exposure to fluctuating currencies is reduced by its overseas operations, but the dollar "is still an important ingredient that we care about and watch," said Mark M. Rothleitner, treasurer and vice president of investor relations for the toolmaker.

Dixie Printing & Packaging Corp. in Glen Burnie buys its paper from U.S. companies and doesn't export its products. But the strong dollar can still hurt the 90-person company.

Dixie used to print boxes for a U.S.-based nail manufacturer. When the nail company moved overseas, as many manufacturers have done, the packaging contract went with it. "It happens slowly, a piece at a time," said Dixie owner and President A. Newth Morris III. "Sometimes you don't even know you're losing business, and the next thing you know you're in tough shape."

U.S. Marine officials want the White House to explicitly back a weaker, or more "normalized," dollar. Generally, the U.S. government has supported a strong dollar, although in Senate testimony last month, Treasury Secretary Paul H. O'Neill indicated that the government would not intervene to keep the dollar high. "If we could achieve a 1-1 parity with the euro, we would be viable competitors," Armendariz said. "But the dollar has been so strong for long enough that foreign competitors have achieved a [foothold] that they will not easily lose."

The company opened a plant in Belgium three months ago in direct reaction to the strong dollar, he said. That production otherwise would have gone to one of the Cumberland plants. Along with being troubled by the strong dollar, Armendariz said, U.S. Marine's business could be severely hampered if the European Union imposes retaliatory tariffs in response to the Bush administration's tariffs on steel imports.

The EU has asked the World Trade Organization to approve tariffs of up to 30 percent on many U.S.-made goods, including the pleasure boats made by U.S. Marine and items such as brooms, neckties, drums and xylophones. "That would kill our export business," Armendariz said. "That is, it would finish killing our export business."