Villarruel breaks tie in Argentina’s Senate to approve Milei’s flagship Ley Bases

[Rich One]

Victoria President 2028

 

[Ronnie Hotdogs]

Manufacturing things domestically in and of itself is not helpful for market participants or the macroeconomic situation at large.

There are thing that are currently being manufactured/ exported currently and/or could be done so competitively in the medium term that should be focused on.

1. Automobiles- Argentina is currently a major manufacturer and exporter of pickup trucks (including the diesel engines in them) for the South American market. Toyota, Ford, Volkswagen and Nissan/Renault all manufacture and export mid sized pickup trucks for the South American market that are highly desirable and highly profitable.

2. Pharmaceutical manufacturing- this currently exists, is competitive and could be greatly expanded upon for the export market.

3. Copper smelting- The ore reserves are present along the entire Andres corridor and processing the copper domestically for export could become a major industry as copper will be much, much more expensive in the future. Keep an eye on Elon Musk with regards to this.

4. Lithium processing/ battery production- The lithium reserves are well known and discussed. Again, keep an eye on Elon Musk with regards to this.

5. Liquified Natural Gas- Petronas, a Malaysia company, already has a deal to start building the first LNG plant which would allow exports from the Vaca Muerta gas patch.

6. Oil refining- exports of gasoline and diesel; this has become a larger margin business in recent years as the environmental lobby has made building oil refineries in many countries almost impossible. Refined product is totally fungible and can be exported anywhere around the world.

What should not be manufactured is low end clothing, textiles, electronics , household goods, appliances etc that the entire population needs for survival and are simply non competitive with goods made in Asia. It doesn't make any economic sense to have the entire population overpaying for low quality overpriced crap so a relatively small niche can have jobs that shouldn't exist.

Bingo, the majority of which need large investments of foreign currency.

Anyone trying to calculate ROI at the moment is lost in a sea of uncertainty which the ley de los bases tries to remedy

 

[NoSoyDeAqui]

if you deduct the 1000 richest people in the USA from its "median" wage, suddenly the salaries there are not so rosy

lets agree in basic math at least.

Median is not average. Is defined in a way such as small changes/details in the tails of the distribution do NOT change its value.

The exercise you propose (1000 richest is less than 0.001% of the population) would not change the US median income, currently at around $36,000 nationwide.

 

[Brian_is_here]

I could not agree less. Having worked in and around manufacturing for 40 years, I can see what the post capitalist import laws have done to US manufacturing- and its not a pretty picture.
Argentina is still very strong in all kinds of manufacturing, and its mostly done pretty well about keeping up with technology- but targeted import duties and support for export are essential to keeping that manufacturing, and the middle class jobs it supports, alive.
I have seen textile plants with modern laser and cnc technology in the conurbano, and know of metalworking plants and appliance manufacturers in the provinces with cnc tech as well. But allowing in cheap chinese imports will kill them all quickly, and not replace them with any jobs.
"prosperous" can be defined in many ways.
People in the USA who earn more in dollars, but pay much more for everything are not more prosperous.
if you deduct the 1000 richest people in the USA from its "median" wage, suddenly the salaries there are not so rosy.
The manufacturing sector in Argentina is essential to it not becoming the next El Salvador.
It needs to be nourished and supported.

the question is- Who Benefits?

Median would not be affected. The mean would be.

Words have meaning and that isn’t correct. Median would be sorting all things regardless of value and taking the number where half the dataset is on either side.

I think your are confusing the statistics median with the mean. The mean is what many call the average. But in stats is known as the mean. Which is computed by summing the numbers and dividing by the count. In this case the highest thousand absolutely would be impacted.

Now the bigger question for me is how the lowest 25th percent are in relation to the top 25th and 1%. If there is a large disparity here then social mobility and democracy is strange.

 

[Ries]

you guys can argue about median vs mean. My point remains- the GDP is not describing the income of the average working person. Most of the wealth in the GDP, here, there and everywhere, goes to people like Musk and Bezos.

And in Argentina, raw material extraction would have the same effect as it has in Venezuela, Saudi Arabia, PNG, or Russia- concentration of wealth and power in the hands of the very few rich and powerful. (economies that depend on raw material export also tend to be military or hereditary dictatorships..)
It would not produce any significant amount of jobs. Chile produces 24% of the world's copper, which is worth around 50 billion dollars. A couple hundred thousand people, out of 20 million, work in the entire mining sector. Most are paid about double the average salary of Chile, which is great, but not a very significant amount of the population.
Lithium, Copper, and Oil all mainly employ single young men in remote rural locations.

There are over 1 million SME's in Argentina. somewhere between 5 and 10 million jobs. To lose those jobs would be "not helpful".
The macroeconomic situation and focus on it is the problem, not the solution.
Multinationals have a centuries long history of extracting profit and raw materials, not of providing jobs and a decent standard of living to the entire country.
The one million SME's do just that.
There are at least 300,000 jobs, in the areas where people actually live, not in remote mountain areas, in the textile sector alone.
Abandoning those to Vietnamese and Chinese sweat shops benefits nobody in Argentina. Cheap T shirts be damned.

And automobile manufacturing is very different- its something that really does do good things for the economy- and that Milei, like all his predecessors, is not interesting in helping, because the export tax is already in place, and actual tax reform is hard and slow.
A ford pickup made in Zarata is around $2000 more expensive in Santiago Chile than the exact same pickup made in Thailand and shipped across the pacific, and its due to regressive export taxes and fees in Argentina.
Fix that, not destroy middle class jobs in manufacturing. Auto manufacturing supports dozens of locally owned SMEs across Argentina. Mining does not.

 

[Ries]

I can think of dozens of companies that exist today in Argentina that could be exporting lots more.
Several already export, but due to the ridiculous taxes and rules for export, they have had to be very resourceful in doing so.

Darto is a company that exports 1 piece stamped steel frying pans (sartenes) all over the world right now, supplying restauants, chefs, and home chefs in Europe and the USA. Prior to the recent collapse of the economy by Milei, they were undercutting the prices of the fabricated aluminum frying pans many restaurants use, but with a product that functions more like cast iron. They have inspired a domestic competitor, Kaknay, which makes a less well designed knockoff. https://www.dartointernational.com/

Arbolito is the argentine factory of the german knife company Boker. Their chef knives are great, very high quality. They also make a full line of macho man everyday carry knives. https://www.bokerarbolito.com.ar/

Nomade and Palo Santo are Argentine eyeglass frame manufacturers who both already export to some degree. Even with today's crazy economy, their frames run 2/3 or so cheaper than similar designer stuff in the USA, and Nomade uses plastics from the same factory in Italy that every major designer frame manufacturer uses globally. https://www.nomadeanteojos.com/anteojos-armazones-para-lentes/?mpage=2

Ombu and Pampero make high quality cotton work clothes- I have been wearing Carhartt and Dickies all my life, both the Argentine brands are equal or better, with high quality Argentine cotton. I buy them and take them to the USA to wear in my welding and machine shop- cheaper and better made than the vast majority of work clothes sold in the USA. they are both starting to do design colabs with Argentine fashion designers, much as Carhartt does in the USA, and those product drops sell out fast.

There is no Rubber work boots manufactured in the USA anymore, and the chinese crap they sell at places like Tractor Supply are terrible. Proforce and Calfor make excellent quality in Argentina. Steel toed, tough as nails, and well designed. And several companies are starting to make "fashion" rubber boots here, again, no competition in most western countries til you get to brands like the english Hunter, whose fashion rubber boots retail in the US and Europe for $175 to $200 and up.

Shoes, in general are a vastly underrecognized argentine market segment. Everybody whines that they cant get Nikes here, but Nikes are made in gigantic 10,000 employee factories in China and Vietnam, and are marked up several hundred percent- like Iphones, not a reproducible product pretty much anywhere.
The argentine shoe industry has manufacturers of machinery, tanners and synthetic material factories, findings factories, sole and heel factories, an entire infrastructure supporting several hundred manufacturers of shoes. Quality is actually great, prices are globally competitive, and design, like all Argentine design, is competitive as well.

Agricultural machinery- Several established manufacturers who have been around for decades, who already export, but certainly could do better with better market exposure, including Gherardi https://www.gherardi.com.ar/maquinas-agricolas/ and Mainero https://www.mainero.com/en/about-us/. Argentina makes everything from shovels to tractors to drop forged wrenches and hammers.
Personally, I own a small japanese tractor, and, in the USA, the sources for small accessories like tillers that these companies make are not china- they are mainly italian, and not cheap. Argentina could absolutely compete, globally, in this market segment.
And hand tools as well- I probably own at least 50 hammers. I know hammers. And Gherardi and several of its competitors make excellent forged hand tools at competitive prices with the good euro ones (no real hammer makers left in the USA, so we get either cheap crap, or expensive Peddinghaus from Germany)

I could go on and on- many smaller market segments that each employ, now, tens of thousands of argentines, and, with proper government support, could employ many more.

Industrial design, in particular, is excellent in Argentina, and means that things like furniture, lighting, small appliances, clothing, shoes, tools, and more can easily compete globally.
The direct competition for Argentina would not be China- it would be Japan and Germany and Italy, all of which have hundreds of SMEs making relatively small quantities of high value added well designed premium products. And Argentina can and, in some cases does already, compete on many of those stages.

 

[Ries]

A couple more industries, each with clusters of factories, that are ripe for export-
Transformadores- beyond making the little ones to convert your 110volt blender, Argentina has a decades long history of making Large Transformers, to power factories, neighborhoods, and to build rural and urban electrical grids with.
Here is one typical company, but there are several at this scale. https://vasile.com.ar/en/home-2/

Small machinery - Since the success of tv knifemaking shows like Forged in Fire, knifemaking as a hobby has been catching on like crazy around the world (including Argentina). One of the most basic and essential tools are these small benchtop belt sanders. Several companies make them here, these in particular are sturdy, capable, and not too expensive. A few years ago, a friend in the USA got quotes for one of these. Argentine price- 1/3 equivalent US price. Duties and taxes to ship from Argentina, more than the cost of the machine itself.

SCACNC/ Desbaste

other sectors include pasta making machinery (on an industrial scale) pizza ovens, bread and pastry making industrial equipment, helado making machinery, deli slicing machines, espresso machines, brewing and distilling vessels, and lots of other food processing equipment. All better than chinese quality, competitive with Italian or similar global competitors.

2 or 3 companies in Cordoba make modern, low water usage, computer controlled industrial washing and drying machines for clothing, both for factories and for industrial laundries.

 

[Ries]

And we should not neglect Pur Sang, which makes the best, and only, 1927 Bugatti replicas. They already export, of course. https://pursangargentina.com/

 

[ArgentinaVet]

you guys can argue about median vs mean. My point remains- the GDP is not describing the income of the average working person. Most of the wealth in the GDP, here, there and everywhere, goes to people like Musk and Bezos.

And in Argentina, raw material extraction would have the same effect as it has in Venezuela, Saudi Arabia, PNG, or Russia- concentration of wealth and power in the hands of the very few rich and powerful. (economies that depend on raw material export also tend to be military or hereditary dictatorships..)
It would not produce any significant amount of jobs. Chile produces 24% of the world's copper, which is worth around 50 billion dollars. A couple hundred thousand people, out of 20 million, work in the entire mining sector. Most are paid about double the average salary of Chile, which is great, but not a very significant amount of the population.
Lithium, Copper, and Oil all mainly employ single young men in remote rural locations.

There are over 1 million SME's in Argentina. somewhere between 5 and 10 million jobs. To lose those jobs would be "not helpful".
The macroeconomic situation and focus on it is the problem, not the solution.
Multinationals have a centuries long history of extracting profit and raw materials, not of providing jobs and a decent standard of living to the entire country.
The one million SME's do just that.
There are at least 300,000 jobs, in the areas where people actually live, not in remote mountain areas, in the textile sector alone.
Abandoning those to Vietnamese and Chinese sweat shops benefits nobody in Argentina. Cheap T shirts be damned.

And automobile manufacturing is very different- its something that really does do good things for the economy- and that Milei, like all his predecessors, is not interesting in helping, because the export tax is already in place, and actual tax reform is hard and slow.
A ford pickup made in Zarata is around $2000 more expensive in Santiago Chile than the exact same pickup made in Thailand and shipped across the pacific, and its due to regressive export taxes and fees in Argentina.
Fix that, not destroy middle class jobs in manufacturing. Auto manufacturing supports dozens of locally owned SMEs across Argentina. Mining does not.

I appreciate you taking time in your subsequent posts to list other (small scale) manufacturers that are either currently exporting or could/should be exporting when/if the economy is truly deregulated.

Argentina exports about the same in USD terms as Chile yet has a population about 2.25x larger than Chile and has a constant current account problem and chronic lack of foreign currency.

Argentina simply does not export enough at the moment to support its economic needs and the reality is the combined exports of all the small manufacturers you listed would not be even a small drop in the bucket.

Developing the mining and energy industries to their fullest potential is the only way this constant lack of export earnings can realistically be addressed. As I mentioned in the previous post its not just raw ore and petroleum extraction; refining/ smelting/ liquifying (natural gas for export) are all value adding and will create tens or hundreds of thousands of good paying legitimate jobs.

 

[Ries]

I appreciate you taking time in your subsequent posts to list other (small scale) manufacturers that are either currently exporting or could/should be exporting when/if the economy is truly deregulated.

Argentina exports about the same in USD terms as Chile yet has a population about 2.25x larger than Chile and has a constant current account problem and chronic lack of foreign currency.

Argentina simply does not export enough at the moment to support its economic needs and the reality is the combined exports of all the small manufacturers you listed would not be even a small drop in the bucket.

Developing the mining and energy industries to their fullest potential is the only way this constant lack of export earnings can realistically be addressed. As I mentioned in the previous post its not just raw ore and petroleum extraction; refining/ smelting/ liquifying (natural gas for export) are all value adding and will create tens or hundreds of thousands of good paying legitimate jobs.

You completely miss my two points-
1- the reason Argentine exports are so low is because every stage of the process has been made difficult and expensive by government regulation. The government has gotten fat and lazy relying on the extremely regressive and job killing export taxes. Most of the companies I list could easily double, triple, or even increase exports more if there was no export friction in terms of taxes, duties, shipping delays due to customs and port issues, and even more if Argentina, like Germany or Japan or Turkey, had a ministry dedicated to helping, rather than hindering, exports of Argentine products. Turkey, for example, has a building in the fashion district in NYC, housing showrooms of Turkish garment and textile manufacturers. The Turkish government allows manufacturers to deduct the income of exports up to 20% from their taxes. Argentina does the opposite. Turkey, similiar in sophistication and with less education, is now the number 1 exporter of sheet metal machinery in the world. Not because of foreign investment, or allowing multinationals to invest, but because of how they encourage SMEs, which are now exporting $20 Billion in machinery alone per annum. Argentina already has these factories, these products, these technologies, and, like other exporting countries, could do well if the tax and government regulations supported it.

2- overall "earnings" is not a meaningful metric for understanding Argentina. If 3 major multinationals log enormous "earnings" (oil, lithium, copper) but all of that earning is untaxed due to exemptions, and taken abroad to the home countries, it is not helping anything but statistics.
If, instead, 1 million SME's each hire another 5 people, in Argentina, at middle class wages, we can have a situation with less "earnings" but a hugely improved economy for the average Argentine.
And raw material extraction is more like tens of thousands of jobs- existing lithium mining, copper mining and oil employ far fewer people than textiles alone do. The entire mining sector employs less than 40,000 people, from what I can find online.

so the question is- do we need to look good on paper, or do we need to help raise the salaries and living standards of the Argentine people?
I know where I am on this question.