The industry is on the chopping block. The auctioneer and owner of the eponymous firm Adrian Mercadohe told Ambit That from about 15 monthly auctions due to cessation last year, it went on to have around 65 every thirty days in 2024. While the crisis deepens in the sector, the Government is testing an opening combo with lower tariffs and exchange rate appreciation. In parallel, eyes are on the Large Investment Incentive Regime (RIGI) which allows imported equipment to be brought into the country with a lower tax burden. If the basic law is approved, businessmen will seek to soften its impact on regulations.
“The industry competes today but the Country Tax was raised on imported inputs, which increases costs and affects competitiveness with a potential impact on job creation,” he explained to this medium. Agostina Monti SalíasMaster in International Political Economy, specialist in Productive Development.
To the reduction in tariffs promoted weeks ago for food, products such as refrigerators, washing machines, tires, plastic supplies, fertilizers and herbicides were added in the last few hours. In items such as white goods, the drop in sales reaches 40% and in the case of tires it reaches up to 50% year-on-year in some parts of the country. In this last sector, they already anticipate that the measure could result in a “flood” of items from the Chinese market and that they will request anti-dumping measures.
But what caught the most attention of industrial leaders was the order of priorities chosen by the Government. “Sequentiality but in reverse. First lower tariffs, then lower taxes? When?”, the CEO of TN&Platex asked himself in his X account, Tomas Karagozianand concluded: “This deepens the problem, it attacks productive companies that generate private work in cities in the deep interior.”
Industry: a worrying combo
Everything happens at the same time: an unprecedented drop in sales, the exchange rate appreciation that, according to the Minister of Economy, Luis Caputo, is here to stay and the opening combo that contains tariff reduction and elimination of non-automatic licenses. The payment chain creaks in several sectors and many companies close their shutters.
The phenomenon is seen in the alarming growth of industrial auctions. Mercado told Ambit That from about 15 monthly auctions due to cessation last year, it went on to have about 65 every thirty days in 2024. “The number of clients did not change much, the difference is that before almost all of them were done for the renewal of equipment, today 80% are due to the definitive closure”he specified to this medium.
As for the sectors that suffer the greatest difficulties, road construction and logging appear due to the stoppage of public works, metallurgical companies due to the difficult situation of auto parts, manufacturers of white goods, footwear, textiles and plastics, among others, due to the low widespread consumption.
No one in the industry sees a “V” rebound like the one the Government imagines. They don’t find any argument for that to happen. The recovery of purchasing power does not seem relevant to supporting domestic consumption, the export output with a flat dollar and costs climbing daily seems a fantasy and investment continues to fall rapidly.
The RIGI in the spotlight
Javier Milei and Caputo bet all their chips on the Incentive Regime for Large Investments that could attract capital, especially for mining and hydrocarbons. But the project that has half the approval of the Chamber of Deputies does not contain a single line linked to the development of suppliers.
On the contrary, the Association of Metallurgical Industrialists of the Argentine Republic (ADIMRA) considers that it constitutes a scenario of unfair competition. “At the same prices and quality of machines or components, just by being in the RIGI, foreign manufacturers will have an advantage of between 15% and 40% due to the tax benefits granted to them”explained Elio del Re, president of the entity.
The industrialists consider that the field is being tilted against them. ADIMRA sent a letter to the senators warning of the situation and another group of businessmen is already working to soften the impact on the regulations, in case it becomes law. Unions are also on alert; they believe that some 300,000 jobs are at risk.
In all this, if the Executive wanted to reassure local manufacturers, it was not noticed. This Tuesday the deputy chief of staff, José Rolandi, presented in the Senate and said that they aim for the general regime to converge with the RIGI, yes, but “in about fourteen years.”
Source: Ambito
