There is no doubt that with the strengthening dollar, costs for homecare products are set to rise in Europe. Most manufacturers and distributors of wheelchairs and other homecare products extensively source wheelchairs or components from China, where products are usually procured in US Dollars.
A quick glance at a ten year chart will show that a 10% or more swing in a relatively short time is not outside of the realm of possibility. It is also interesting to note the close linking of the Yuan (despite the US wish that that it will be allowed to float more in the future).
Of course with the largest revenues derived from Government reimbursement business, increasing prices is not going to be that easy. So it seems that the industry may be in for another round of restructuring, standardizing on lower featured products, or perhaps worse.
There are of course better ways to run sourcing and supply chain operations that are mostly dependent on China, but in an industry largely driven by cost, many companies have largely ignored these options – maybe at their peril.
Here is Business Week’s take on the fluctuating exchange rates.
Dollar Rises for Sixth Week Versus Euro After Fed Rate Increase – BusinessWeek.
Frank Barlin is Managing Partner at Sibaya LifeScience!
