It’s bad, but it could be worse – or being in Argentina. In just two weeks, Basf and Axalta announced that they will migrate their operations to Brazil. Saint-Gobain Sekurity will fire employees at its factory and transfer operations to a Brazilian unit. The three companies operate in the automotive sector, supplying paints, resins and tempered glass, respectively.
The coronavirus crisis is not so striking in Argentina, but the country has cash problems, is viewed with great suspicion by international investors, renegotiates the remuneration of its bonds to mature in the short term and lives the possibility of nationalization of exporting companies linked to the agribusiness. These components hamper the attempt by the new president Alberto Fernández (image) to reinvigorate the industry.
Evidence of emigration was already in the air. At the end of 2019, President Jair Bolsonaro had already stated that, in the event of the victory of the opposition list formed by Fernández and Cristina Kirchner, important companies could move to Brazil, further affecting Mercosur’s trade balance. The statement caused discomfort and is now partially confirmed.
The departure of Saint-Gobain Sekurity is the worst example. The company settled in Argentina in 2016, during the term of ex-president Mauricio Macri. US $ 200 million was invested in the factory, thanks to an agreement with the government. In addition to the 150 skilled employees laid off, the entire supply chain will be disbanded.