Cascade Designs in Midleton, Co Cork is a subsidiary of a Seattle-based company founded in 1972, following the invention of the world's first self-inflating camping mattress. The Irish outpost was established in 1985 to manufacture for the European market.
In 1994, according to Cascade's managing director, Mr Joe McSwiney, the company's Irish operation pioneered the development of the JetRest range of cushion components for the commercial seating market. Today, the Midleton company employs 80 people involved in the manufacture of a range of camping products.
Up until 1995, said Mr McSwiney, the company's price lists were issued in Irish pounds only. From that time, however, considerable pressure was put on Cascade by its European agents to price in local currencies: "Currency risk and foreign exchange transaction were discouraging some customers."
Despite the pending advent of the single currency, the company succumbed. For 1996 it issued retailer price lists in Irish pounds, sterling, Dutch guilders, French and Belgian francs and Spanish pesetas. The Italian lira was added last year, along with the deutschmark. Cascade purchases its raw materials in Irish pounds, sterling, dollars and guilders. Its distributor price lists, however, remain in Irish pounds.
The advent of the euro, said Mr McSwiney, will impact on the company in a number of ways. One of these is price transparency. Currently prices differ between countries in Europe due to differing discount rates, exchange rate drift and the fact that some regions are serviced indirectly via distributors. "Multiple European retail price lists in euros will make this situation very visible and cause a potential customer problem," according to Cascade's MD.
As regards the accounts systems, the functional currency will need to be changed to euros and historical data may need to be "re-expressed" as well, at some stage, prior to 2002. In addition, advent of the euro will dissolve the competitive advantage brought about since 1996 from pricing in multiple currencies.
On the sterling front, a considerable proportion of Cascade's raw materials is sourced in the UK: "The advent of the euro will potentially cause much greater fluctuations on the cross-channel exchange rate. The fact that sterling receipts are comparable to expenditure, however, should alleviate this situation somewhat."
The Midleton company envisages few problems if some customers or suppliers request conversion of their accounts to the euro, in the shortterm, since it already operates a full multi-currency system. As regards interest rates, the cost of financial contracts would remain unaltered after conversion, said the Mr Higgins: "It is unlikely that rates may fall. All renewals need to be considered in this light, especially in the case of medium-term leases."
In line with the best available advice, Cascade has set up a euro steering group - led by the company's business administrator - which is responsible for the development and implementation of the conversion plan. A survey is currently underway to determine the euro requirements of all customers and suppliers.
Price and discount structure alignments will begin in 1999 so that a single euro retailer price list is in place by 2000. And as regards sterling: "Despite the natural hedge against sterling, a decision has been made to source away from the UK - and to add an exchange rate risk factor to sterling prices."
Finally, on the crucial IT front, Cascade is currently negotiating the purchase of a new integrated computer system that will enable it to change both functional and historical currency data.
"Fortunately, the year 2000 problem helped focus the parent company the need to change systems," said Mr McSwiney. "The plan is to change functional currency in 2001, provided the regulations allow this."
Mr Joe McSwiney, managing director of Cascade Designs, Midleton, Co Cork. The euro will impact on his company in many different ways. Photograph: Valerie O'Sullivan
