Fri October 28, 2011
The Rising Cost Of Doing Business With Greece
As details of the Greek debt deal passed by the European Union Wednesday are worked out, some businesses in the U.S. continue to grapple with the ripple effects of the prolonged debt crisis.
The EU hopes the debt deal will contain Europe's debt problems, and the problem countries will now start their work of implementing fiscal reforms — which has proved troublesome, especially in Greece.
Uncertainty, strikes and currency problems in the country have upset the schedules of U.S. businesses that both import Greek goods and export their own products to the troubled country.
The Prima Foods warehouse in Maryland, for example, stocks olive oil from Crete by the drum, feta by the brick and Kalamata olives by the barrel, but has recently run into problems with its suppliers. The importer sits across the street from shipping containers that come into the port city of Baltimore.
Kosta Bouyoukas, Prima's president, is sturdy, wears a gold chain and greets clients with a mix of Greek and English when they show up to pick up boxes of frozen spanakopita.
The office Bouyoukas inhabits is filled with photos and posters that suggest fierce loyalty to family and heritage. Behind the small retail store in the front, there's a 46,000-square-foot warehouse, sparsely decorated in Greek blue and white.
"Here we have juices from Greece," Bouyoukas explains. "Like apricot, and peach. ... [And] this is pasta. It's orzo."
Prima mostly serves Italian and Greek restaurants. Normally, it receives 50,000-pound shipments every other week, but that's less reliable these days.
"The Greek government, it's a mess," he says. "We place orders — usually it takes 19 days to get here, and now it takes about 40 days because they have strikes in the port, they have all these things happening every day."
In addition, Prima Foods is getting squeezed by the exchange rate. Its suppliers, especially in Greece, are changing the terms of contracts.
"Instead [of] 60 days, they want to get paid in 35 or 40 days now," he says.
He doesn't have a problem with the billing change; it's a product not showing up at all that upsets Bouyoukas.
"I get mad because I depend on those products," he says.
As shipping is becoming less reliable, it also costs more, with fuel prices on the rise. This gets passed along to customers, whose gripes fall back on Bouyoukas. He says it's stressful seeing his business buffeted by the Eurozone's problems.
"We don't think two years down the road anymore; it's just what happens today, next week, a month from now ... that's about it," he says. "Because we don't have [any] control over what happens in Greece."
Export Deals Fall Through
It's not just importers like Bouyoukas who have struggled; U.S.-based exporters also face problems.
Sharon Doherty is the president and chief executive officer of Vellus, a small business in Columbus, Ohio, that manufactures and exports shampoos for show dogs. Doherty has distributors she ships to in dozens of countries, including Japan, Singapore and around Europe. She expected to start with her first Greek distributor last year.
"[The distributor] was so excited. ... I received so many emails from her, telephone calls, [and] we were going to order her banners," Doherty says. "And it was going so good. It's like it just happened all of a sudden."
What happened was Greece's debt became unsustainable, it requested a bailout from the rest of Europe, and the chaos led the distributor to cancel the deal. That wasn't all: The currency fluctuations prompted other European buyers to start buying in smaller quantities.
"I mean, to be honest with you, I was worried about it. I didn't know how it was going to go," Doherty says. "When they're hurting, you're hurting. So you need to find out what you can do to help them."
To do that, she has offered discounts, which have helped her sales recover. She's now following the news and hoping for the best, because what's good for Europe is also good for her.