International Corner

Six months have passed since Europe's currency changed completely. It appears most European Union (EU) residents would say the changeover was a success.

Euro cash transactions began Jan. 1 in 12 European countries (Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain). At that point, the only new thing about the euro was the currency itself—many European companies that belong to the Economic and Monetary Union had been making electronic transactions and writing checks in euros since Jan. 1, 1999.

"Our price list, invoices and internal accounting systems already were in euros since the beginning of 2001," states Pierre Blondeau, sales and marketing director of Carrieres des Lacs Group, St. Thibault des Vignes, France.

The overall currency changeover went better than expected. A few weeks before Jan. 1, military troops helped move 50 billion euro coins and 14.5 billion bank notes across the 12 participating countries. (For more information about criteria for country participation, see "The euro: A step toward European unity," May 1999 issue, page 18.) And for the new currency to begin circulating on time, pay telephones, ticket machines, parking meters, motorway toll booths and automatic-teller machines were converted to the new currency during the early morning hours of Jan. 1.

The effects

For U.S citizens, the currency changeover has been positive. The obvious benefit is that travelers are able to use one common currency in 12 different countries. In addition, U.S. companies are able to handle one monetary unit and one exchange rate rather than trying to determine what losses or gains were incurred in the process of taking or making payments in Greek drachmas, for example.

To learn how the euro has affected its international members, NRCA surveyed a sample of its European members in April. A majority of those surveyed had similar responses to the euro's effect—their roofing businesses were not largely affected by the euro currency implementation. But all companies surveyed underwent changes mainly in computer software systems, accounting systems and internal company procedures. According to respondents, the changes did not significantly affect their businesses because they had sufficient time to prepare.

Survey respondents agree that since the implementation of the euro, price comparison has been easier.

"The euro makes competition between EU countries easier and transparent. It may appear at first that it is not good for the countries with higher labor costs, but it might help force necessary changes like flexibility with labor costs, reducing budget deficits, etc.," states Stefan Zuber, president of NRCA member Rudolf Zuber GmbH, Wiesbaden, Germany.

Price fluctuations

Consumers throughout the EU have experienced price increases in the commodities market. Many increases were caused by the changeover and retailers rounding up euro prices.

Although many believe it still is too soon to find trends, some Spanish survey respondents say they have experienced some negative fluctuations in material prices caused by the euro.

Richard Portes, a professor of economics for the London Business School, says the reason for possible price fluctuations is because " … manufacturers are pricing for a single market so people can compare pricing."

On a positive note, contractors in smaller countries, such as Ireland and Greece, mention they now have better opportunities to increase their businesses in other countries simply because their new currency is widely accepted. Moreover, for a country such as Ireland, which is located outside the mainland EU, the euro facilitates purchasing from the mainland because one currency can be used without extra expenses from currency exchanges.

Moving forward

Economists believe some complications will continue because of the three EU countries (Denmark, Sweden and the United Kingdom) that chose not to participate. On the other hand, they also believe that because of the high probability that the 12 Eurozone finance ministers will dominate EU economic decisions, this just might be what Denmark, Sweden and the United Kingdom need to follow suit in adopting the euro.

Olicia Hinojosa is NRCA's manager of international relations and work force programs.