On Wednesday 5 October 2011 the Aussie Dollar fell to 95.3 US cents a drop of 11%. While we are still determining if this is a mere blip on the radar or a longer term trend let’s address a falling Australian Dollar and its impact on business and the HR implications.
When is a falling Australian Dollar good?
When we want to sell offshore. The cost of purchasing Australian made goods and services is reduced for foreign buyers and investors so more export activity occurs. Conversely, imports become relatively more expensive.
To determine the impact on the business community, we need to understand from where businesses obtain their materials and labour and where their end product or service is purchased. For companies that import materials (prices increasing) and export product (prices reducing) it will come down to the net affect. An example is mining where operators bring in overseas processing equipment but export heavily so the net affect is a positive one.
Inbound tourism becomes more attractive and will bring more foreigners back to our shores.
Retailing may again struggle, particularly if products are imported. A further increase in prices on the shelf will push more and more consumers towards online solutions – however the price of online will also increase and hence savvy consumers will do their research prior to purchase. Additional boosts in tourism will also have positive flow-on affects to the hospitality and retail trade.
Local companies who neither import or export will feel less of an impact.
The winners include:
- Oil and Gas (producers will gain but consumers are likely to pay more at the pump)
- Farming and Agriculture
- Tourism (and potentially retail and hospitality)
- Manufacturers (of exported product)
- Property and Real Estate (for foreign investors)
These will be the industries that will be recruiting.
Downturns can be expected in:
- Appliances and Electrical/Electronics
- Clothing and Footwear
- Miscellaneous Importers
As we wait to see what transpires on an international stage, we will inevitably feel the impact down under.