In short-term, Brexit could hamper some businesses in ND, MN

FARGO - When Britons voted to exit the European Union, it came as a shock to John Sandbakken, especially when the value of the euro plunged in reaction.He's head of the National Sunflower Association in Mandan, N.D., and Europe is where his membe...
A board above the floor of the New York Stock Exchange (NYSE) shows the current standing of the British Pound sterling in New York, U.S., June 24, 2016. REUTERS/Lucas Jackson

FARGO - When Britons voted to exit the European Union, it came as a shock to John Sandbakken, especially when the value of the euro plunged in reaction.

He's head of the National Sunflower Association in Mandan, N.D., and Europe is where his members sell most of their confection seeds, the kind sold as snacks. When the euro loses value relative to the dollar, that makes U.S. exports more expensive and less attractive, he said Friday June 24, the day after the vote.

North Dakota farmers produce more than a third of the U.S. sunflower crop and some will get hit. Minnesota farmers produce about 6 percent.

Currency fluctuations are one of the clearer impact of what's been dubbed "Brexit." For the most part though, trade officials said the impact is very unclear, which itself is a problem.

"It creates a lot of questions and the biggest challenge for businesses is uncertainty," said Heather Ranck, director of the U.S. Commercial Service office in Fargo, which covers North Dakota and northwest Minnesota.

Last year, North Dakota exported $266 million worth of goods to the 28 countries of the E.U., 7 percent of all exports. Still, those countries together are the state's third-biggest trade partner. Minnesota exported $4.1 billion to the E.U., 21 percent of all exports. Together, the E.U. is the state's second-biggest trade partner.

The impact of Brexit on North Dakota businesses is hard to generalize, said Dean Gorder, executive director of the North Dakota Trade Office, an industry group based in Fargo. For most farmers, it might not mean a great deal because the E.U. blocks a lot of U.S. crops that compete with European farmers. Sunflower seeds are an exception. It might not mean a great deal to some manufacturers either because the E.U. also blocks industries that compete with European manufacturers.

The same is true in northwest Minnesota, which Ranck said has an economy that is very similar to North Dakota's.

One company that may have some exposure to Brexit is Bobcat Co., which has plants in Gwinner, Wahpeton and Bismarck, as well as a plant in Litchfield, Minn. It also has two factories in the E.U.

"As a global company with a significant European presence, we are certainly watching the activity closely," said spokeswoman Laura Ness Owens in an email. "Like many in the construction equipment industry, we've been monitoring the European debt crisis for several years and the impact it has had on our industry. We'll continue to do so with the recent activity in Britain."

The debt crisis refers to the bailout of Greece, an E.U. member with a faltering economy.

Ranck and Gorder saw the bright side of the Brexit upheaval as well.

"Uncertainties and challenges also create opportunity," Ranck said. "There are some E.U. policies that may not be favorable to North Dakota businesses. For those companies it may present new opportunities."

Gorder said the U.K. will have to renegotiate many trade deals, which would include a deal directly with the U.S. Given the special relationship between the two countries, he said he expects it would be more favorable than the trade deal with the E.U. that now covers the U.K., though it could take years to hammer out.

Currently, the U.K. is North Dakota's 15th-largest trade partner, behind even the tiny Dominican Republic, and Minnesota's ninth-largest.

"I have learned over the years though that business does go on," Ranck said. "It's sometimes quite amazing how businesses continue to do deals regardless of the geopolitical circumstances."