The Economy

Now Is the Time to Prepare for the Euro

Dec. 21, 2004

...U.S. companies need to pay more attention to looming single currency.

For nearly a year now, several U.S.-based multinational companies have been trying to take a measure of the euro, the single European currency that's scheduled to debut on Jan. 1, 1999. But in talking with these and other U.S. companies doing business in Europe, one gets the impression that many of them are more than an ocean away from appreciating what's about to happen. Few companies fully understand that the introduction of the euro could dramatically change the way they price products in Europe, affect where they locate offices and factories, and alter their accounting and financial-reporting practices. The euro's promises to cut foreign-exchange and some other transaction costs doesn't clearly register. There's a remarkable absence of urgency. Perhaps more than geography is involved in the absence of urgency. New Year's Day 1999 seems a long way off. Why, we're not yet to mid-year 1997. What's more, mandatory use of the euro won't come until the new millennium. And France and Germany, Europe's most ardent boosters of the euro, may not fiscally and monetarily qualify to participate in its debut. So why not ease into the euro, which is exactly what some U.S.-based companies are doing? Why not go through the inevitable learning process at that future time when British pounds, German marks, and French francs are pass? There's compelling reason not to wait: The coming change is not small change. It is, at the least, a very big pocketful of (euro) change. Customers and suppliers of companies that do business in the European Union (EU), for example, already have concerns about the switch to a single currency. What are the executives and managers of those companies that do EU business doing now to identify customers' and suppliers' needs and to prepare to meet those needs? Similarly, how much thought have they given to their employees in the EU, whose pay and benefits soon will have to be calculated in euros? How much thought? That is the key question. And it goes beyond the euro. How much strategic thought do executives give to developments that seem remote in time or geography? More than 400 executives in a recent Strategic Leadership Forum/A.T. Kearney Inc. poll complained that too little attention is paid to the outside world in corporate strategic planning. Massive strategic-planning staffs have been absent from the headquarters of major multinationals for a decade or more. And many are gone with good reason: They weren't close to markets or culture; they didn't know manufacturing or technology or logistics; they were more interested in getting their hands into everything than in getting their bodies out of the way. But if the last decade is any illustration, executives cannot afford to not to think out of their present business box. Who anticipated the fall of the Berlin Wall fully enough to be able to capitalize on its business consequences? Who thought about what Russia might be like after Gorbachev and communism--and was ready to act upon his or her assumptions? How much thought is now being given to Germany after Chancellor Helmut Kohl leaves office (presumably not before he serves another term, however)? Or to China after the current leadership has passed from the scene? Or to Cuba after Castro? Or to the Middle East after Netanyahu, Arafat, and Hussein? Or to South Africa after Mandela? Or to the U.S. after Clinton? These are critical strategic questions, for they force (or should drive) fundamental examination of where and how business is done without regard to political personalities, while recognizing that such personalities help shape both the present and future business environment. This is the time to answer these critical questions--and to pose still others. But the process needs to begin right now. Today is tomorrow's yesterday and, ready or not, the euro, unlike Samuel Beckett's Godot, will arrive.

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.

      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).

      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.

      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”

      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.

      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.