Factories at the "end of the world" struggle to adapt in Macri's Argentina
Like dozens of factories that have taken root in this sparsely populated land of penguins and glaciers, consumer electronics manufacturer BGH owes its survival to government tinkering.
Special tax breaks and high trade barriers have turned Tierra del Fuego, located at the southern tip of Argentina, into the source of 90% of the air conditioners, cell phones, TVs and microwaves sold in the country - the region's third-largest economy.
Now, it has perhaps the most to lose as President Mauricio Macri lifts some import restrictions and unwinds costly subsidies for electricity and other utilities, hitting electronics sales.
Tierra del Fuego, home to just 150,000 people, is feeling the sting. Amid a deep recession, it shed 6,000 jobs last year - a 13% drop that was the sharpest for any province.
Output has plunged at many of the area's factories, including BGH. The Argentine company's TV set-top box business has dwindled to a single assembly line, down from five a few years ago. Its laptop unit closed last year, and the air conditioner lines run a single shift per day - down from two earlier this year.
Emboldened by trade protections under Macri's center-left predecessor, Cristina Fernández de Kirchner, the company invested in new equipment and doubled its Río Grande workforce to nearly 2,600 people. Under Macri, BGH has slashed its payroll to just over 1,000 workers and begun importing some electronics from China.
"The government changed the rules of the game," said Diego Teubal, executive director of BGH's consumer division.
The company's woes are emblematic of the pain rippling across Argentina's wider industrial sector, where employment shrank by 4.6%, or 58,000 jobs, between November 2015 (the month before Macri took office) and May 2017, according to Buenos Aires consultancy Elypsis. Unemployment has since increased from 5.9% to 8.7%.
A 30% jump in machinery imports since last year helped push Argentina's trade deficit to a record $1.1 billion in August alone; for all of 2017, the trade deficit may exceed $8 billion - a new record.
Costly tax cuts for agricultural and mining exports, meanwhile, have pushed already-record budget deficits to over $30 billion this year; but have failed to stimulate these sectors despite rebounding global commodity prices.
At: http://www.dailymail.co.uk/wires/reuters/article-4819404/ANALYSIS-End-world-factories-struggle-adapt-Macris-Argentina.html
Ushuaia, capital of Tierra del Fuego and southernmost city in the world.
= new reply since forum marked as read
some of us learned for the first time how the economy has been structured to provide jobs.
So much damage in such a short time.
The world can NOT afford "leaders" like Macri and Stump. They are serving themselves at the tragic loss to the innocent citizens.
Was thunderstruck seeing that fantastic photo of Ushuaia, had to find another copy. I would think it resembles Northern Europe, for sure. Very, very interesting.
Surely hope Tierra del Fuego gets the last word about its own economy and regains its industrial strength, employment.
Thank you, sandensea.
