”Without consumption we begin to die little by little“, summarizes Gustavo Ávalos, owner of an industrial ink factory in Avellaneda, with the machines stopped due to the collapse in sales in Argentina while costs do not stop increasing.
The situation of this businessman from the southeastern periphery of Buenos Aires is repeated throughout the vast Buenos Aires manufacturing belt, where the drop in sales is compounded by an increase of up to 500% in electricity and gas rates when annual inflation is close to 290%.
Economic activity has fallen for four consecutive months until February, the latest official data available.
Like Tintas Opalo, other small and medium-sized companies (SMEs) are in distress within the framework of the economic deregulation and opening of imports promoted by the government of the ultra-liberal Javier Milei.
“Some cannot pay salaries, others cannot pay rent. The outlook is discouraging. I can last a year, then we will see“said this businessman who thinks it has not been seen yet.”the worst, because people have savings”.
In their case, sales fell 70% in December, a decrease that was cut to 40% in March.
The few orders make it unnecessary to use the brand new automatic packaging machines that he bought in December and they remain sheathed like a jewel in the middle of the workshop.
“They package about 8,000 jars daily”, says Ávalos proudly. “But we went back to packaging by hand so as not to suspend anyone”he added.
To finish
Appraisals of auction machinery increased at a frenetic pace, Adrián Mercado, from the leading auction company of the same name, told AFP.
“We make a dozen a day for SMEs that get rid of machinery to weather the storm. There are no buyers, they end up liquidated as scrap“, he pointed.
Indec reported that the drop in activity was 3.2% in February compared to the same month in 2023. The drop hit industrial sectors especially, especially manufacturing and construction.
The chamber that brings together medium-sized businessmen, CAME, estimated that in March the collapse of manufacturing production reached 11.9% year-on-year. In the first quarter, the main manufacturing items fell 20% compared to the previous quarter.
“SMEs do not see a floor in the short term”, expressed CAME. Neither do large industries.
The Acindar steelmaker, of the ArcelorMittal group, stopped production at its four plants for a month in March to assimilate a 40% drop in steel sales.
The International Monetary Fund predicted that the Argentine economy will contract 2.8% this year and recover 5% in 2025.
Half machine
In Caseros, on the western outskirts of Buenos Aires, Dulcypas makes cookies at half-machine.
In their half-empty offices there are plenty of desks and on the plant two production lines are stopped.
However, Fernando Martínez, grandson of the founder and owner, is optimistic. The numbers are sustained by direct sales and exports to Uruguay.
“We have an idle capacity of 50%”, he detailed. “We are experiencing an important adjustment. There is little money, prices rise a lot and then there is consumption that is cut off. But the biscuits sell very well because they are cheap; the muffins, more expensive, not so much”, he detailed.
“To maintain profitability we had to remove personnel, lower salaries and production volumes.”, he recounted. They also relegated technology.
At Industrias Baigorria, which produces screws and fasteners for the automotive and agricultural sectors, sales have fallen 30% since last January. “It feels like there is a strong decline in the market. Many customers tell us that they are not selling anything”explained Belén Lo Russo, foreign trade manager of the firm.
More production, less adjustment
Daniel Rosato, owner of the paper mill that bears his name and president of the Industrial Union of Berazategui, southern outskirts of Buenos Aires, is pessimistic because in his opinion “there is no industrial policy”.
“Inputs increased in dollars. Compared to 2023, 600 industrial manufacturing SMEs that exported were lost“, said.
“The other side is an increase in informality (…) which represents less revenue for the State“, he pointed.
For Alejandro Bartolini, owner of Metalcrom, which produces oil pumps, the way out is to improve competitiveness for exports.
“The only way is to compete. We do not believe in closed markets but neither do we believe that an indiscriminate opening can lead us to success because labor and capital will be lost if the (entry of products from the) external market is not regulated, as even the most liberal countries do.“, held.
“In none of the measures did Milei refer to SMEs, production, work; The only thing we hear him say is adjustment, zero deficit, no money“, She complained.
Source: Gestion
Ricardo is a renowned author and journalist, known for his exceptional writing on top-news stories. He currently works as a writer at the 247 News Agency, where he is known for his ability to deliver breaking news and insightful analysis on the most pressing issues of the day.
