Idris Hydraulics and the Thai Baht. Idris Hydraulics of Kuala Lumpur, Malaysia purchases all of its hydraulic drills from manufacturers in Thailand. The company has recently completed a corporate-wide initiative in six sigma/lean manufacturing. Completed oil field hydraulic system costs were reduced 5% over a one-year period from RM900,000 to RM855,000.

The company is now worried that all of the hydraulic drills that goes into the systems (making up 30% of their total costs) will be hit by an increasingly stronger Thai baht due to the robust Thai economy. If the current exchange rate is THB7.18/MYR, how would a 14% revaluation of the Thai baht against the Malaysian ringgit impact total systems costs?