After some time of not posting news, here’s some!

Industrial Sector Falling Off A Cliff As Activity Shrinks 14 percent in May

A report by the UIA Argentine Industrial Union accounts for a year-to-year collapse and a contraction compared to the slight monthly growth it had shown in April. The June advance showed similar results. The claim by industrials to the government.

Industrial production has suffered a year-to-year collapse by 14.3 percent in May and, in the opposite direction of what happened in April, recorded a deseasonalised monthly 0.6-percent fall. Thus, the sector had a new slowdown after the incipient bounce-back by 4.5 percent from the previous month. In addition, over 21,000 jobs have been lost since August.

The data come from a report by the UIA Argentine Industrial Union, which explains that the performance of the sector “was influenced by the lower demand level and increase in costs in some sectors”. It was also the twelfth month running with a year-to-year fall and so far in 2024, it accumulates a year-to-year 12.8-percent contraction.

In the meantime, the report by the entity headed by Daniel Funes points out that the anticipated June numbers reflect a persistent collapse compared with 2023 and forecasts that the monthly series would also show a decrease, thus prolonging the recessive valley.

Nevertheless, the analysis highlights that the information provided was “partially affected by the lower number of working days due to the holidays. Besides, deducting that effect, major falls were observed”, the authors of the text warned.

Widespread collapse

In the sector analysis from last month, there were dives in the automotive sector (-40.2 percent), cement dispatch (-32.8 percent), and patents of agricultural machinery (-36.6 percent). In addition, the demand for electricity of major industrial users fell (-13.3 percent).

As for trade, imports from Brazil declined by 50.8 percent, whereas exports increased by 8.8 percent. In the opposite direction of what happened in April and March, the settlement of foreign currency in the foreign exchange market grew by 25 percent.

“Even though the performance of the month was partly affected because there were fewer working days, industrial activity continues facing difficulties due to the low demand, as well as higher costs. In this context, in April, recorded wage-earners in the industry plummeted. 5,074 jobs were lost in that month and a decrease by 21,285 jobs is accumulated since August 2023”, industrials warned.

In most sectors comprising the UIA’s index, the downward term prevailed. The most significant falls were in non-metallic minerals (-28.8 percent), and in the automotive sector (-27.9 percent), where the decline was driven by a lower level of sales both to the domestic market (-36.2 percent) and the export market (-24.1 percent).

At the same time, the production of basic metals was contracted (-19.5 percent), affected by the drop in steel (-29.4 percent), whereas the production of aluminium grew from May last year (+3.5 percent). Metal-mechanic also gave in (-17.6 percent), accumulating twelve months running of decline, with a drop in all segments of the sector.

“In the case of the segment of chemical substances and products it fell once again year-to-year (-9.7 percent), with drops in all products comprising the indicator, and mainly by a lower performance in the production of paints, cleaning products and toiletries and medication. In the chemical and petrochemical segment the fall of intermediate petrochemicals(-21.9 percent), inorganic chemicals (-12.4 percent) and plastic raw materials and synthetic rubber (-8.9 percent) stand out”, the report holds.

As for the production of food and beverages, it experienced a -4.9-percent decline, offset by the increase in oils (10.9 percent). Deducting that category which grew year-to-year, the variation of the rest of the food sector was -7.1 percent.

The manufacturing of paper and cardboard, in turn, declined year-to-year by -12.6 percent, with a slowdown prevailing in nearly all sub-sectors. It was driven by the general fall of production of paper for packaging, printing and tissue, whereas paper for newspapers grew.

Energy

The only sector in the index which had an increase was oil refinery (4.4 percent), after five months of consecutive fall. It is one of the sectors which grew most in the Milei era, along with a greater exploitation of Vaca Muerta.

Given the data which expose the deep crisis the sector is going through, representatives from the industry within the UIA expressed their concern over the fall in activity, the rising costs of supplies, the impact of the economic context in the production sector and the rise of energy rates, which especially affected SMEs. In addition to alerting about job losses, industrials agreed about the need to drive an “agenda of measures to gain back the dynamic of the internal market (focusing on the development of local production consumption and formal employment), promoting added-value exports (increase of reimbursements, lowering of duties) and countering unfair competition (anti-dumping and customs values, among others)”.

They also seized the opportunity to insist on the SME law grounded on six axes: tax simplification, creation of a regime to incentivise industrial SME investment supplementary to the RIGI Big Investment Incentive Regime; an automatic update of categorisation parameters; tools to internationalise companies; simplification of the creation of new companies and access to financing.

RIGI

Regarding the RIGI, the Industrial Union asked Javier Milei’s government to regulate the initiative approved in Congress within the fiscal reform contemplating a series of points favouring national industry.

In this vein, they claim that any local suppliers declaring VPU single project vehicles be a local industry; establishing for 20 percent to be for the development of national industrial suppliers with the same benefits as the rest of those entering the RIGI, among other relevant points for the national industry. “The objective is for RIGI benefits to generate more local suppliers and employment”, they explained from the UIA.

RIGI is a law approved by the Senate and Congress that is basically an “incentive regime for large investments”. You know what that means in the neoliberal capitalist hellworld: Say a mining company like Barrick Gold comes in, buys an entire area that is known to have X mineral, makes an “”“investment”“”, takes the mineral out (using local cheap manpower without regulations) and fucks off leaving nothing but devastation behind. Almost all natural resources are now free for the taking, they’re “investments” apparently. Not all provinces are going to apply the RIGI, some are in open conflict about it, others are more than willing to give everything away for some money.