In this Friday, June 22, 2012, pho[auth] to, Charles Mitchell,46, works on the T-5 XR assembly line at the NuStep plant in Ann Arbor, Mich. NuSteps exports some of its exercise machines to Europe and has seen a slowdown in European sales this year. (AP Photo/Detroit Free Press, William Archie) DETROIT NEWS OUT; NO SALES
ANN ARBOR, Mich. (AP) — As the U.S. economy makes a steady, if slow, recovery from the recession, Michigan businesses still face challenges from Europe’s struggling economies.
Michigan’s 20 largest companies received 22 percent of their revenues from Europe last year — a total of about $100 billion — according to the Detroit Free Press (http://on.freep.com/LWZ9ub ).
Uncertainty about the future strength of that demand is raising concerns for the state’s exporters.
The European financial crisis “is definitely going to have an impact on Michigan and the country as a whole,” said Noel Nevshehir, director of international business services for Automation Alley, a technology business association. “Europe is going to really be a difficult market to grow and prosper in for the foreseeable future.”
Europe’s slowing economies “are impacting our sales,” said Steve Sarns, vice president for sales and marketing at the Ann Arbor-based exercise machine producer NuStep Inc. He said NuStep’s European sales rose 60 percent last year, but are forecast to rise at half that pace in 2012.
In response, Sarns said NuStep is now looking to Japan, China and elsewhere in Asia for sales growth. The company has 85 employees and makes cross-training equipment for rehabilitation centers, hospitals and private customers.
General Motors Co., Michigan’s biggest company, got 16.8 percent of sales from Europe in 2011. No. 2 Ford Motor Co. had 25.9 percent and No. 3 Dow Chemical Co. saw 34.7 percent.
European revenue accounted for 17.7 percent at Michigan’s fourth-largest company, Benton Harbor-based appliance-maker Whirlpool Corp. It made up 16.1 percent at the No. 5 company, Livonia-based TRW Automotive Holdings Corp., and 17.8 percent at No. 6, Southfield-based auto parts maker Lear Corp.
The share of revenue from Europe was 6.9 percent at the state’s No. 7 company, Detroit-based Ally Financial Inc.; 17.7 percent at No. 8, Battle Creek-based food-maker Kellogg Co.; 36.9 percent at No. 9, Bloomfield Hills-based Penske Automotive Group Inc.; and zero percent at No. 10, Detroit-based utility DTE Energy Co.
U.S.-made products cost more in Europe now because of the drop in the value of the euro compared with the dollar, said Terry Kalley, chairman of the East Michigan District Export Council.
But some factors protect Michigan from feeling the sting. Germany is the leading European customer for Michigan’s products, and is also the strongest country, financially, in the 17-member eurozone. And Michigan’s large agricultural sector does relatively little business with Europe — in 2011, only 4.3 percent, or $57.3 million, of Michigan’s $1.3 billion agricultural exports went to Europe.
The economic challenges aside, the 495 million residents of the European Union make it simply too big to ignore, one trade expert said.
“Despite the challenges, opportunities exist in Europe for many American companies, including Michigan ones,” said Richard Corson, director of the U.S. Export Assistance Center in Waterford. “There’s still room for good, high-quality products.”