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Economic Indicators

Fall Line
posted: 03/17/2005

Skiers may be fretting that the high cost of gas will take a bite out of their weekend drive budget this season. But it could get worse. As the price of oil climbs, so, too, does the cost of plastic, a major component of skis and especially boots. "You could probably say 60 percent of boot componentry is related to oil prices," says Scott Russo of Dalbello, which manufactures its boots in Italy. "And 100 percent is related to energy: aluminum, steel, foam-all that stuff takes energy to make."

It's too soon to tell if skiers will see higher prices on the shelves. "We don't know how much it will cost to build a boot next year, but it's reasonable to assume it'll be more," Russo says.

That could spell double trouble for European manufacturers, who are battling a strong Euro, which makes their goods more expensive in the U.S.

Is there a bright spot? At Head USA, Product Manager Bill McSherry has been tracking-of all things-interest rates in China. A recent dip, intended to cool the Chinese economy, also cooled global demand for raw materials, including oil, aluminum and steel. "That could help us to compete," McSherry says.

JANUARY 2005

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