Automobile Component Suppliers Migrate Operations from Argentina to Brazil

RIO DE JANEIRO, BRAZIL – Over the past two weeks, at least three automotive OEM (Original Equipment Manufacturer) component suppliers have announced the closure of plants in Argentina and the migration of their operations to Brazil. Basf and Axalta, companies that produced paints and resins for cars, were the first to announce the migration last week.

Now, Saint-Gobain Sekurit, of French origin, has signed a dismissal agreement with its 150 employees. The plant operations, specialized in the production of windshield glass, will be taken over by the Brazilian subsidiary.

The decisions call into question the industrial policy of the current president of the country, Alberto Fernández. Saint-Gobain set up its plant in 2016 at a cost of US$200 million, in an agreement with the former Casa Rosada occupant, Mauricio Macri.

In November 2019, President Jair Bolsonaro hastily said that the government knew of some companies that were willing to trade Argentina for Brazil. On Twitter, he said that the Honda, MWM, and L’Óreal multinationals had decided to cross the border, mentioning a “new investor confidence” in his country that will help create new jobs.

Given the post’s negative repercussion, it was deleted about an hour later. L’Oréal stated that it “produces with a local manufacturer in Argentina and that there are no plans to change this”.

Argentina is not experiencing the crisis it suffered between the 1990s and 2010. However, the deterioration of local economic fundamentals remains. At the start of this decade, one dollar could be bought with fewer than four pesos. Ten years later, it takes 71 pesos to buy a dollar, representing a depreciation of 1,675 percent in the period.

After the employee agreement, Saint-Gobain Sekurit sent a note. According to the company, the temporary suspension of production for the OEM (automotive glass) segment, required to ensure the company’s sustainability, does not put an end to the French company’s operations in Argentina and maintains “its industrial assets in Argentina, expecting a potential market rebound”. “The company continues to operate in the country, serving the aftermarket.”

In addition, part of the production volumes for the OEM market in Argentina have been temporarily transferred to Brazil. Sekurit assures the continuity of its operations in Argentina, preserving the unit’s activities located in Tortuguitas, as well as its commitment to the local market,” it stated.

Source: Veja

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