Industrial production in Uruguay Important transformations are taking place, which come even before the pandemic. Being a key sector in the economy, it deserves a deep analysis of the trends it is exhibiting and the threats and opportunities in the sector.
On the occasion of Industry Day being celebrated this week, the Chamber of Industries of Uruguay (CIU) made an exhaustive survey of the situation, highlighting its relevance to the economy. The industry directly employs more than 160,000 people, being the second sector generating employment behind the trade. As pointed out by Cr. Sebastian Perez (union advisor) in his presentation, the salary average in the industrial sector is clearly above the average of the economy, with levels of formality also clearly above average.
The Uruguayan industry It has peculiarities that make some issues particularly sensitive to it. On the one hand, it operates in a country whose energy costs are noticeably higher than in neighboring countries and others, with which it has to compete, both in the local market and in the global market.
Without fuels own fossils – which were the basis for the industrial development of Europe and USA, and now almost all the rest – the Uruguayan industry has a disadvantage in this area, which it compensates with specialization and based on another key feature: a good part of the Uruguayan industrial network (almost 80% of sales) corresponds to agroindustries, transformers of the products of the field. There are the very relevant refrigeration industry, the milling industry, the dairy industry – the regional leader – and many other industries that produce food or food ingredients.
Added to this in recent years is the impressive growth of the cellulose, which has already incorporated its third global scale plant, which will lead this product to lead the exports. It is this preponderance of agroindustries that means that almost 60% of industrial sales are made in the international market (exports).
The agribusiness Uruguayan companies manage to sustain their businesses, despite the difficulties imposed by high internal costs, which continue to rise in recent months. Added to these cost problems are the restrictions imposed by the commercial insertion of the Uruguay, a small economy between two large ones, partners in the Mercosur. The block was initially a first great step towards opening, but today it is an obstacle on the way to a broader and – surely – more virtuous opening.
Changes in the sector
The Industrial production Uruguay this year is very similar to last year, on average. However, relevant changes are being processed within the sector: in recent months the launch of UPM 2 It has implied a step up in production. The new plant is operating at 80% of its capacity and next year it will surely reach full nominal capacity. Likewise, the production of concentrates in the free zone of Cologne is also making notable progress, based on new investments that the company Pepsi performed at your location.
These large and specialized industries resort to the regime of Free trade zone, that offer important advantages when ensuring the investments, with tax exemptions. This is not the reality of the rest of the industries, despite the fact that the majority of new industrial projects – when investing – resort to the investment promotion regime, which also offers exemptions.
Leaving aside these large industries in free zones, the so-called Industrial Core shows a decline in production this year (-1.5%) and this may largely be due to the problems of competitiveness and costs of the Uruguayan economy. This year, furthermore, the impact of the Argentine crisis and the corresponding spurious competition from the smuggling, which particularly affects industries that sell in the local market.
They are challenges that remain on the agenda, beyond the advances and achievements of a dynamic and innovative sector. There are also pending tasks at the level of labor relations. The president of the CIU, Fernando Pace, recognized at the Industry Day event the incorporation into Uruguayan legislation of several of the requests that the business sector made in its historic proposal to the ILO.
But he warned that the demand persists that the negotiations be bipartite, as is the ILO’s own guidelines at the global level. This would surely open more room for improvements in work productivity, which is achieved with greater investment and training. It is the way to ensure more salaries and more quality in employment.
Source: Ambito
