In the “Cultural Battle”. Javier Miley One classic of Argentine historical debate cannot be overlooked: The costs and benefits of maintaining, supporting and protecting the import substitution industry. In fact, it is a periodic debate that has not disappeared, but rather gained momentum as a result of the Whirlpool case.
News that the multinational hardware company The manufacturing of washing machines at the Pillar plant will stop Due to falling consumption and imported competition, it has struck a chord: 220 workers may become unemployed, Not as an isolated case but as the “tip of the iceberg” of an industry in crisis.
Added to this situation are others such as ElectroluxWhich comes from implementing an extension of the periodic suspension system that was activated after agreement with the Mining Workers Union (UOM). Or one of Mabea company that has just begun a process to reorganize its operations in Argentina, which includes the voluntary retirement of part of its employees and the closure of its factory in Cordoba, which will be converted into a warehouse and distribution center.
Even the legendary pots and pans factory Essen This comes due to the dismissal of more than 30 workers due to low consumption and high imports.
Color Living, a furniture manufacturer, surprisingly announced Thursday that it will close production at its Pacheco factory. There they carried out tasks 40 workers. The company considered the fall of the industry and the slowdown in the economy to be the main reasons behind the cessation of production. The operators also suspect that there will be an alternative to importing part of their supplies such as mattresses.
The textile industry is another industry that suffers the most from context: the company Fig PlatexProTejer, whose former CEO Teddy Karagozian was the creator of ProTejer, has decided to close the sportswear and underwear manufacturing line that operated at the Monte Caseros factory in Corrientes province. As a result, The company fired 20 out of 36 workers who worked in that sector.
This news also coincides with the publication of the EMAE in September, which amplified the debate, as it made clear that The Argentine economy can grow even as industry declines.
That is why what is being discussed at the moment is If the industrial crisis is due to a passing phaseDue to a disbursement problem or a period of low wages or, on the contrary, It forms the core of the model Economic Miley.
Everyone, both supporters and opponents of the government, seems convinced that this situation is here to stay. First of all, because Toto Kabuto He indicates that he has no intention of changing the points that industrialists usually complain about – the devaluation of the peso and increased tariff protection.
Without mentioning the industry, but with a suggestive “timing” in the middle of the discussion, the Minister of Economy published a graph containing a historical series of exports, commenting sarcastically: “The first case in the world of an economic program that increases export quantities to record levels, with a “backward” exchange rate.”
With regard to Import openingIt became clear that this was not simply due to a liberal ideological position, but that it happened One of the pillars of reducing inflation. In the latest CPI report, the commodity with the smallest nominal price increase was, specifically, household equipment and maintenance, Which has become more expensive by 18.5% year on year compared to general inflation of 31.3%.
Imported model
Regarding household appliance consumption, INDEC information indicates that this year’s sales accumulated by 59% compared to last year, which means a real increase of 21% – discounting inflation -. Although it is also true that this sales rate slowed down and declined in the third quarter.
But of course, this INDEC data only refers to sales of large appliance chains. Then there is the phenomenon that worries many politicians keen on setting regulations: Imports “ants” through online purchases.
So far this year, these sales have accumulated US$700 million and already represent 20% of Argentine consumption in goods such as electronic products. The volume generated by these imports has quadrupled this year, thanks to the incentive of a tariff exemption for products costing less than $1,000 – a factor that is, of course, reinforced by the dollar’s underdevelopment.
As for the future, Everything indicates that the situation will escalate. Report on Analytical consulting It indicates that although volume has stabilized at around $100 million per month, There are indications that the ceiling of e-commerce has not been reached.
In the same trade balance report cited by Caputo, it is clear how final consumer products occupy an increasingly large share of total imports. If we add cars, they already exceed 24%, while a year ago these imports were 18% of the total.
Speaking of silver, those imports It represents approximately 1,740 million US dollars per monthIts growth rate reaches 40% on an annual basis, while the purchase of capital goods for the national industry is rising at a rapid rate of 18%.
Whose fault is it?
On the other hand, the national industry is still suffering. Scanning from Believers Foundation He noted that in October there was a new decline in manufacturing production year-on-year, which is indeed the case Fourth in a row. This decrease compared to last year – which was already bad – is 5.3%.
The branches leading the decline are those Automotive, metalworking, auto parts and chemistryall with several months of declining production.
Another discouraging indicator is factory installed capacity utilization, which in the third quarter averaged 59%, a level below the historical average. In some cases, such as the textile branch, the numbers were alarming: barely 37% of capacity.
In this case, the periodic question is reconsidered: What to do in the national industry? There are opinions for all tastes: from the application of taxes and customs duties to the re-application of quotas, through tax cuts and exemptions, all of which are seasoned with the controversy surrounding the lag in the price of the dollar.
The strange thing is that among those who criticize the government are not only economists associated with Peronism, but also many with extensive liberal experience.
For the case, Carlos Rodriguezformer Dean of Ucema and former Deputy Minister of Economy, points out this “Miley’s faulty model deepens.”. After a recent EMAE analysis, he made a statement that Kirchner economists can fully endorse: “You don’t need to know the statistics to realize that productive Argentina lags far behind financial Argentina.”
also Diego GiacominiMiley’s former partner, was decisive: although he made it clear that he was not against Commercial openingHe objected to doing so In conjunction with “One Dollar Under Balance”, In addition to rising interest rates and increasing tax pressures.
He adds: “All these errors in macro policy programming end up serving as a chainsaw for the private sector in the short term, which produces less, invests less, and shuts down and burns more.”
The eternal protectionist debate
In a strange coincidence, the same argument has been made before Gabrielle Rubinsteinformer deputy minister Sergio Massa. He points out that the rise in dollar costs affects construction, while the industry is affected by the decline in consumption, and this in addition “faces “A frustrating combination of the relationship between the dollar and external openness.”.
Among the politicians, the proposal of Miguel Pichito has emerged, who wants to impose a tax on the purchases of Shane and Timo. “One has to do it Stop random free imports now Representative Al-Biruni said: “And the uncontrolled entry of Chinese products through the platforms.”
A proposal that sparked controversy. So said the economist Jorge AvilaFrom Uusimaa he replied: “What do you propose, Congressman, to preserve the crude industrial protectionism and consequent international isolation of the last eighty years?”
On the other hand, the actor Diana Fernandez Mulerofrom the PRO bloc, in a debate in which they also participated Martin Lustow and Matthias Kollvas He criticized that proposals for “coordination between the public and private sectors” end in cSuch as SIRA import permitsThis allowed some sectors to access a preferential exchange rate.
“If there is no macro, there is no micro. Macro industrial policy that does not work is expensive corrections.“, argued the representative.
Trump: Unexpected brakes?
But the strongest voice regarding the state of the industry was that of… Paolo RoccaCEO of Techint Group, who accused Miley at the annual UIA conference Lack of understanding of the new global geopolitical game.
“A few years ago, industrial policy was just a labor and tax reform. Today the world is seriously discussing it, from the United States to the European Union,” the industrial leader said. Which criticized Miley because while other countries propose to defend strategic sectors, “Argentina continues the rhetoric of complete neutrality.”
Oddly enough, some analysts believe that the trade agreement being negotiated with the United States could have the effect of shutting down imports of many items, Given that Argentina is committed to supporting “the protection of internationally recognized labor rights”. One of the Trump administration’s slogans is that China and other Asian countries are engaging in unfair competition by using child labor or working without legal protection.