The company develops, manufactures and supplies fluid storage, transport and supply systems for automobiles. The company serves the automotive aftermarket through the Bundy, Walbro and Marwal brands. The company’s headquarters, founded in 1922, are located in Oxford, England, with corporate offices in Auburn Hills, Michigan, USA. It is listed on the London Stock Exchange.
The local subsidiary, named IT Automotive Argentina, manufactures tube assemblies for fuel, for brake systems and for conducting other fluids. Among its main clients are automotive Ford, General Motors, Peugeot-Citroen, Renault and Volkswagenas listed on their website
“Over the course of the next few months, we will be reaching out to all of our vendors to discuss a transition/exit plan with each one of you” says the note.
This case joins other auto parts companies that have left the country in recent years which, according to a sector report, add up to more than 50 companies. The situation of the sector is affected by different factors such as the difficulties to recover investments (for not being able to issue dividends or for zero profitability), the difficulties to import parts and suppliesthe cost overruns that imply working in these conditions and a climate of uncertainty that discourages continuing to operate.
In this context, the associations that bring together car factories and auto parts manufacturers, as Ámbito announced, sent a note to the Central Bank to make the form of payment of imports for capital goods more flexible, tooling and spare parts since the existing obstacles are putting automotive production at risk and slowing down the development and establishment of national parts.
According to him ADEFA and AFAC claimthe impossibility of making advance payments abroad can have a negative impact on production in the short term, but in turn require more imports in the future and a drop in exports from the sector.
With the General Resolution 5271/2022 who established the SIRA (System of Imports of the Argentine Republic), last year, problems with international suppliers began to multiply. Until then, local companies could make advance payments for the purchase of machinery, spare parts or dies. However, that rule changed the regime and, from abroad, they began to cut shipments or reject orders due to the new rules of the game.
“In relation to this, we must express our concern about the current and future negative impact regarding the payment of capital goods and their spare parts,” the letter states.
The note from these entities states that “on October 12, 2022, the Federal Administration of Public Revenues and the Secretary of Commerce of the Ministry of Economy of the Nation issued a Joint General Resolution No. 5271/2022 through which they repealed the Integrated Import Monitoring System (SIMI) and replaced it by the new Import System of the Argentine Republic (SIRA).”
“The Central Bank of the Argentine Republic, for its part, issued communications “A7622” and “A7629” by means of which it modified certain provisions applicable to access to the exchange market for the payment of imported goods. This new payment system for imports of goods affects the operations of auto parts companies by limiting the possibility of accessing the exchange market to pay for imports of goods from operations associated with a SIRA. The new system no longer contemplates advance payments, which creates serious difficulties for companies in the automotive value chain; especially with regard to the payment of imports of capital goods and their spare parts” adds the communication sent to the president of the Central Bank, Miguel Ángel Pesce.
In the first case – the note highlights – because it makes impossible the advance payments required at each stage of the manufacture of capital goods, which is an unavoidable condition to advance with the following stages of investment.
In the second case – he continues – the situation is even more critical, since most foreign suppliers request advance payment of 100% of the value of the spare part, which is totally restricted, making it impossible to carry out the essential maintenance and repairs of the part. productive equipment, affecting its installed capacity and strongly increasing the risk of production stoppages and shortages.
For this reason, ADEFA and AFAC warn that “it is essential to import specific molds and dies, and other generic capital goods, the development of which may require up to two years.” Without these capital goods, it is not possible to carry out any process of localization of auto parts in this industry.”
“Without these locations, it could even be put at risk to comply with the rules of origin that facilitate access to export markets for vehicles without tariffs. The investments that are impossible to make today will be greater flows of imports in the future (and less exports)”, they argue.
Given this scenario, they requested “to analyze especially that for these situations the payment of advances of capital goods and their spare parts is possible.”
The note was sent on February 5 and, until today, these entities had no response.
To support the request, the letter notes that “the automotive sector is precisely one of the industries that faces the greatest need to attract investment and generate all the viable productive capacity in the shortest possible time in order to increase the productive levels that will take us to facilitate greater local integration and a lower level of future imports. At the same time, we are undergoing a process of strong technological change in products and processes that make it essential to maintain investments that sustain our country as a global player in this industry. During the process of launching a new vehicle there is a very rigorous planning of stages, where the development of parts is essential.”
Likewise, they warn that, in the face of any delay in the development of capital goods (mainly molds and dies), “automotive terminals are forced to depend on greater imports to maintain their export flow, so the process is truncated, with greater foreign exchange needs throughout the life of the vehicle of the new project, and therefore less generation of employment and local productive activity.”
Source: Ambito
