Argentina: Companies Reduce Local Production, Layoff Workers

Companies in Tierra del Fuego, in southern Argentina, that assembly electronic products have laid off workers or reduced their shifts in the context of decreased consumption and appreciation of the U.S. dollar.

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In Ushuaia and Rio Grande, businesses are reducing the local production content — by purchasing air conditioner and cell phone parts in Asia at a lower cost — as a means of cutting costs.

“They are reducing the level of local added value and dispensing with hundreds of jobs”  warned the Union Obrera Metalurgica (metallurgical workers’ union).

The reduction steps are driving towards the collapse of the Vaca Muerta Fueguino agreement between the electronics industry and the Metallurgical Worker’s Syndicate — which stipulates the freezing of salaries until 2020 as well as stopping worker layoffs. 

This crisis is effecting a gradual drop in the volume of assemblies which is directly related to an increase in financing costs and a fall in purchasing power, leading to an excess in stock.

The metallurgical workers’ union members expressed their discontent and disapproval, in a letter to the minister of industry for Tierra del Fuego, Ramiro Caballero, citing the ministry's alleged knowledge of the reduction plan and lack of consultation.

The document disclosed the following data: In the case of cell phones, the level of enforced disaggregation went from 80 to 70 percent, that is, 30 percent of the manufactured product can be already assembled at the time of import. Regarding the air conditioning sector, new parts are being imported. The union added that the reduction in production “impacts considerable over the number of jobs” available in the industry.

Specifically, 200 jobs would be lost in cell phone production and nearly 96 in the air conditioning areas. In the last few days, workers have been laid off at several firms.

Telecomunicaciones Fueguinas (cellphones) is working with five workers out of a total 45. While Leanval (cellphones) dismissed employees and Leaval (air conditioners) is delaying salary payments, causing workers to protest.

The Argentine Government recently received an increase to a US$50-million loan, in exchange for greater austerity measures such as cutbacks in public spending — which includes a reform in the pension system.