Between 2014 and 2023, SMEs and micro manufacturers lost almost a quarter of their exporters and large manufacturers only 5.4%, with the latter showing greater stability.
Last year’s export performance was the result of a historic drought, persistent macroeconomic imbalances, and restrictions on export activity; a combination that generated the largest year-on-year drop in Argentine exports in 70 years: -24% and US$22 billion less than in 2022. But, perhaps, its true macro impact – employment, foreign exchange, taxes, etc. – is seen more clearly when observing the drop in the number of exporting companies, which fell from 10,383 in 2014 to 9,457 in 2022 and 8,798 in 2023, the lowest figure since 1994 and far from the peak of 15,075 reached in 2006.
The Chamber of Exporters (CERA) analyzed the sector’s performance over the last decade with special emphasis on the world of small and medium-sized exporting companies (SMEs), particularly industrial ones. These are data that the Government should undoubtedly consider if it really wants exports to be a genuine source of foreign currency. for what is to come, while the sector seeks the elimination of export duties on industrial goods, the regularization of VAT refunds and freight payments in Argentina, and the management of waterways and ports. What did you observe?
First of all, it is worth keeping in mind that manufacturing exporters accounted for 75% of the total value of exports and 82% of the total number of exporting companies. Thus, on the one hand, the number of manufacturing exporting companies rose from 9,176 in 2014 to 8,213 in 2022 and 7,172 in 2023, also being the lowest value since at least 1994 and far from the peak of 2006. But Of the 7,172 manufacturing companies registered in 2023, 654 were large, 3,707 SMEs and 2,811 micro, a smaller number in all cases compared to 2014 and 2022“In particular, the number of manufacturing SMEs increased from 4,813 in 2014 to 4,131 in 2022 and 3,707 in 2023,” the entity notes.
In this regard, it is noteworthy that the decline in manufacturing exporting companies exceeded the decline in total exporting companies, both in 2023 and in the 2014-202 period: last year Argentina lost 7% of its total exporters and 13% of its manufacturing exporters, while between 2014 and 2023 it lost 15% of its total exporters and 22% of its manufacturing exporters.
Pymex: mortality vs. birth rate
CERA considers that the “large” manufacturing exporters are the oldest firms, having been in the export business for between 20 and 25 years, while SMEs are somewhat younger, between 15 and 20 years old, and micro-exporters are those with the youngest exporting age, between 10 and 15 years. In this regard, they observed that in 2023, the mortality rate of SMEs (firms that stopped exporting) exceeded the birth rate (they started or returned to exporting).
Another relevant issue is that the size of the exporter is a determining factor when defining the scope of its exports: the average distance of exports of large companies (8,879 km in 2023) is greater than that of SMEs (6,202 km), and even within this segment, medium-sized firms (6,579 km) send their products over greater distances than small companies (4,928 km). In 2023, the main destinations for SME exports were Mercosur (33% of the total), Chile (12%), the EU and the US (both 11% of the total).
At the regional level, in 2023 the highest participation of SMEs in the total number of companies was observed in NEA (72%), NOA (63%) and Cuyo (60%), and the highest participation in the total exported by each region was recorded in NOA (33%), Cuyo (21%) and Patagonia (11%).
Other data from the CERA 2023 study:
- In 2023, large companies exported more than US$9.5 million, while SMEs exported between US$50,000 and less than US$9.5 million, and micro companies exported less than US$50,000.
- Large companies accounted for 9% of the total number of companies, but 92% of the amount exported. The “top 10” of large companies accounted for 33% of the total FOB amount of US$66.8 billion (4 points more than in 2022 and 7 points more than in 2014). The amounts of goods exported by these ten large companies belong to the following sectors: agroindustrial (75%; 8 companies), automotive (11%; 1 company), and mining (6%; 1 company).
- SMEs accounted for 53% of all companies, but 7.6% of the amount exported. The proportion of SMEs in the value of exports from Argentina is lower than the average for least developed countries (7.9%). The average for developing countries is 11.5% and for developed countries 35%. Microenterprises accounted for 38% of companies, but 0.4% of the total amount exported.
- The amounts exported by manufacturing companies increased from US$50.8 billion in 2014 to US$58.6 billion in 2022 and US$49.9 billion in 2023.
- The proportion of manufacturing exporters in relation to the total remained relatively stable in 2014-2022, around 88%, but fell to 82% in 2023 due to the impact of the economic situation and the restrictions that affected SMEs and micro-enterprises to a greater extent, which, as a result, stopped exporting.
- In 2023, manufacturing SMEs recorded exports of US$3.9 billion, which implies an average annual export per company of 1.05 million.
- In 2023, large companies represented 9% of exporting companies, but 92% of the exported amount. SMEs represented 52% of companies, but 7.8% of the exported amount.and microenterprises account for 39% of companies, but 0.1% of the total. In particular, the share of SME exports in relation to the total has been falling for 30 years, when it was 15%, reaching its worst figure (6.9%) in 2022 and rebounding moderately in 2023 (7.8%).
- As with total exports, during the decade there was a change in the structure of manufacturing exports, with a loss in the participation of SMEs and microenterprises in the total number of exporters and in exported manufactures, explained above all by the retractions.
- Of the 3,707 exporting SMEs registered in 2023, nearly 80% (2,938) were “stable” firms, i.e. they were classified as SMEs in both 2023 and 2022, and the remaining 769 were considered “new”. Of the latter, almost half (375) corresponded to companies that did not export in 2022, which would be the true “new” SMEs. As for the remaining 394, there were 328 that did export in 2022 but as micro-exporters, and a minority portion (66) did so as large exporters.
- On the other hand, there were firms that left the SMEs group in 2023 and that did join it in 2022. Of these, just over half did not show any export activity in 2023 – one could say that they are the SMEs that died – and others continued with their export activity but outside the SME segment. Most of them went on to export through the micro-export segment, and a small group (5%) went on to export in the large group.
- When analyzing the percentage of exports from each sector that were made by SMEs, it can be seen that in 2023 there was an increase in participation in all sectors. This was mainly due to the fact that the fall in SME exports was less than that of large companies, with the exception of Leather and Footwear, which was the only sector that also registered an increase in its exports, while large companies fell.
- In the decade, the participation of SMEs improved in Textiles and clothing (+10.3 points), Leather and footwear (+9.4 points) and Wood and paper (+5.4 points), due to the fact that their exports fell less than those of large firms.
- In the case of Metalworking and Chemicals and Plastics, the share of SMEs fell (their exports fell more than those of the large companies), while in Food there was almost no change, with their exports having grown (19%) more than those of the Large companies (5%). Meanwhile, in the decade the Large companies only increased their share in Metalworking (+2.2 points), and to a lesser extent in Chemicals and Plastics (+1.0 points), despite their exports having fallen.
Source: Ambito
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