New wave of shutdowns and layoffs puts Argentine industry on alert

[MikeRoss]

And the losses seem like they just keep piling up. Any end in sight?

Nearly 22,000 companies lost under Milei, construction hit hardest

Official data show a net loss of 21,938 employers since November 2023, alongside a fall of almost 291,000 registered jobs; Construction bore the brunt amid public works freeze, while a third of recent closures involved firms less than three years old.

www.batimes.com.ar

 

[MikeAnton]

I just heard of Argentina's only domestic tire manufacturer, FATE (Fábrica Argentina de Telas Engomadas) going out of business after 80 years. I realize that protectionist policies probably helped but 80 years is a long time only to go out of business now after Milei. Were there really that many companies in Argentina that only made it with protectionist policies? Or is there something more going on?

 

[import export]

I just heard of Argentina's only domestic tire manufacturer, FATE (Fábrica Argentina de Telas Engomadas) going out of business after 80 years. I realize that protectionist policies probably helped but 80 years is a long time only to go out of business now after Milei. Were there really that many companies in Argentina that only made it with protectionist policies? Or is there something more going on?

All of these tire manufacturers in Argentina have been struggling for years. Bridgestone, FATE, Pirelli. All of them have had problems and a lot of subsidies over the years. Argentina has had some of protections for most of the last 80 years. Companies didn't need to compete directly with Brazil or Chinese prices and products fairly.

Argentina is just not competitive period under Milei on many items with the inflated peso value, high labor costs relative to productivity, very high taxes, tough labor laws, frequent strikes, and the small domestic market which has contracted with people not spending money.

Under Milei there were too many shocks all at the same time. Peso devaluation, collapse in domestic purchasing power, falling real wages against inflation, opening the floodgates of imported products.

All of these companies that only survived due to the protected market are all failing or will fail soon. These companies haven't invested in equipment or technology or infrastructure because they never had to before.

But you can see from this article these tire manufacturing companies have had problems being competitive long before Milei.

 

[CraigM]

All of these tire manufacturers in Argentina have been struggling for years. Bridgestone, FATE, Pirelli. All of them have had problems and a lot of subsidies over the years. Argentina has had some of protections for most of the last 80 years. Companies didn't need to compete directly with Brazil or Chinese prices and products fairly.

Argentina is just not competitive period under Milei on many items with the inflated peso value, high labor costs relative to productivity, very high taxes, tough labor laws, frequent strikes, and the small domestic market which has contracted with people not spending money.

Under Milei there were too many shocks all at the same time. Peso devaluation, collapse in domestic purchasing power, falling real wages against inflation, opening the floodgates of imported products.

All of these companies that only survived due to the protected market are all failing or will fail soon. These companies haven't invested in equipment or technology or infrastructure because they never had to before.

But you can see from this article these tire manufacturing companies have had problems being competitive long before Milei.

Makes a lot of sense. Argentina never had any competitive edge in tires, nor most other things under protectionism. One thing that really stood out during my visit was the dichotomy of prices. Things like property, ubers and food were extraordinarily cheap whereas clothes, cars etc were absurdly expensive, particularly with local salaries being so low. The whole economy needs a reset and getting rid of protectionism is a painful but very necessary move.

The main reason I am not optimistic about Argentina's economy is that the damage is so severe after decades of bad government and corruption, that the pain and sacrifice involved in turning it around is going to prove too great. There will be a lot of job losses in the short to medium term, and many aspects of Argetinian lifestyle (i.e. holidays) will have to change. Some socialist charlatan will come along and convince voters that the old way was better, and the cycle starts anew.

 

[import export]

Makes a lot of sense. Argentina never had any competitive edge in tires, nor most other things under protectionism. One thing that really stood out during my visit was the dichotomy of prices. Things like property, ubers and food were extraordinarily cheap whereas clothes, cars etc were absurdly expensive, particularly with local salaries being so low. The whole economy needs a reset and getting rid of protectionism is a painful but very necessary move.

The main reason I am not optimistic about Argentina's economy is that the damage is so severe after decades of bad government and corruption, that the pain and sacrifice involved in turning it around is going to prove too great. There will be a lot of job losses in the short to medium term, and many aspects of Argetinian lifestyle (i.e. holidays) will have to change. Some socialist charlatan will come along and convince voters that the old way was better, and the cycle starts anew.

Correct Craig. The great reset is being done right now and it is painful but very necessary. There is a lot of damage like you mentioned. Corruption too. Agree with you totally. It's tough to change things long term here so the best is to enjoy the ride whichever huckster is in office.

 

[oil rush]

The main reason I am not optimistic about Argentina's economy is that the damage is so severe after decades of bad government and corruption, that the pain and sacrifice involved in turning it around is going to prove too great. There will be a lot of job losses in the short to medium term, and many aspects of Argetinian lifestyle (i.e. holidays) will have to change. Some socialist charlatan will come along and convince voters that the old way was better, and the cycle starts anew.

Corruption has been going on for 100 years and it hasn't stopped with this one. It takes more than great ideas and changing the law to turn a country around. Milei and sister and their associates have already gotten caught in many grifts already. Who knows how many more are out there. I doubt you can turn around a country when you have that kind of thing going on.

The boom and bust cycles isn't something that I think ends with Milei.

 

[VINO]

I'm not sure even with the labor reforms how they are going to increase employees with no economic growth.

Santiago Bulat: “No habrá creación de empleo sin crecimiento económico, por más reforma laboral que haya”

El economista analizó en Infobae a la Tarde los límites de la reforma laboral, el impacto de la apertura comercial y la crisis del empleo formal. Advirtió sobre la transición dolorosa para los despedidos tras el cierre de Fate y el avance de la informalidad en la economía argentina

www.infobae.com